Compensation is the process of

directly and indirectly rewarding

employees on a current
or deferred basis, for their
performance of assigned
tasks

Legal Compliance with all appropriate
laws and regulations

Cost effectiveness for the organization

Internal, External and Individual equity for
employees

Performance enhancement of the
organization
Basic
Gross
Net
DIRECT INDIRECT
Base Pay
Wages
Salaries

Variable Pay
Bonuses
Incentives
Stock/shares
Options
Benefits
Medical Insurance
Provident Fund
Retirement Pensions
EOBI


HR Manager Line Manager
Develops and
Administers
Compensation system
Conducts job evaluation
and wage surveys
Develops wage / salary
structures and policies
Attempt to march
performance and rewards
Recommend pay rates
and increments based on
guidelines from HR unit
Evaluate employee
performance based
compensation purposes

Compensation Philosophies
Strategic Compensation Design
Compensation and Organizational Culture
Cost Effectiveness and Labor Market Positioning
Competency Based Pay
Broad banding and Career Development
knowledge, Skills and the Attitude
needed by any individual employee to
carry out their job effectively. These can
be incorporated into a pay system to
reward individuals who positively
contribute to the overall values and
objectives of an organization.
Rewarding the way people work, not just
recognizing what they can deliver
Broad banding is the term applied to having
extremely wide salary bands, much more
encompassing than with traditional salary
structures
Broad banding evolved because organizations want
to flatten their hierarchies and move decision-
making closer to the point where necessity and
knowledge exist in organizations. In flattened
organizations, fewer promotional opportunities
exist so the broad banding structure allows more
latitude for pay increases and career growth
without promotion
ENTITLEMENT PERFORMANCE
Seniority Based No raises for length of service
Across the board raises No raises for longer service for poor
performers
Guaranteed movement of scales Market adjusted pay structure
Industry comparisons only Broader Industry comparisons
Santa Claus Bonuses Bonuses tied to performance results

Some companies are now seeking to design
compensation plans that not only reward
performance but also improve it. They want
techniques that look forward, beyond their
current situation and even beyond pay
systems themselves. This approach is called
strategic compensation design. It involves
focusing on what an organization needs to do
to become more competitive and then on
developing a compensation plan to help
It is commonly assumed that compensation
and rewards systems reflect the cultures of
the organizations that implement them
Company's culture to be highly
individualistic, and the more idio-centric
Employees are paid more for doing jobs that
require more variety of tasks, more
knowledge and skills, greater physical effort,
or more demanding working conditions
Yesterday Today Tomorrow
Fixed salary Variable pay as add-on
to salary
Low fixed salary, more
variable pay
Bonuses/perks for
executives only
Variable pay emerging
throughout organization
Variable pay common
throughout the organization
Fixed benefits,
reward long tenure
Flexible benefits Portable benefits
Company-based
career moving up
Industry-based career,
moving around
Skill-based, interim
employment
Hierarchical
organizations
Flatter team-based
organizations
Network virtual
organizations
Cookie cutter pay
plans
Total compensation
(Look at benefits, too)
Customized, integrated pay
systems; pay, benefits,
intangibles

INTERNAL:
Job Analysis, Job Descriptions, Job Evaluation,
Internal Work Structure
EXTERNAL:
Market definitions, Market surveys, Policy lines,
Pay structures
INDIVIDUAL:
Seniority based, Performance based, Incentive
guidelines, Incentive programs
PROCESS:
Planning, Budgeting, Communicating, Evaluating
PRINCESS & THE PEASANT
A peasant wanted to marry a princess. Her father, the King
was furious and ordered that the peasant should have his
head cut off for impertinence.
Peasant was handsome and the Queen was sentimental who
wanted her daughter to be happy so she persuaded the King
to give the peasant a sporting chance.
It was agreed that he should draw one of the two cards out of
a box and accept what was written on it as his fate. One card
would say Marriage and the other Death. If he refuses to
draw he dies.
The King cheated and marked both cards Death and put
them in the Box.
PRINCESS & THE PEASANT
When the time came the peasant appeared unafraid. He
drew a card and married the princess and lived happily
ever after
TERM OF THE DAY
Expatriate
Repatriate
Impatriate
Inpatriate