Introduction

 Human Resource is the most vital resource for any

organization.
 Employees should be managed properly and
motivated by providing best remuneration and
compensation as per the industry standards.
 The good compensation will also serve the need for
attracting and retaining the best employees.
Compensation
Compensation is the remuneration received by an employee in
return for his/her contribution to the organization.
 It is an organized practice that involves balancing the work-
employee relation by providing monetary and non-monetary
benefits to employees.
Needs For Compensation
 When managed correctly, it helps the organization
achieve its objectives and obtain, maintain, and retain
a productive workforce.
 Compensation is a key factor in attracting and keeping
the best employees and ensuring that your
organization has the competitive edge in an
increasingly competitive world.
 Without adequate compensation, current employees
are likely to leave and replacements will be difficult to
recruit.
 The outcomes of pay dissatisfaction harm productivity
and affect the quality of work life.
Goals and Strategy of compensation
Basic Goals of a Compensation System
 Attract Employees
 Retain Employees
 Motivate Employees
 Compliance with Pay Laws
 Administrative Simplicity
 Cost Effective
Compensation component
compensation

monetary Non monetary

direct indirect
 Monetary Compensation

Direct
Compensation Indirect Compensation
Base Pay Pay for Time Not Security Plans
Worked
• Wages • Pension
• Vacations
• Salary • Social Security
• Breaks
Incentives
• Holidays • Disability
• Commissions • Sick Days Insurance
• Piece rate • Jury Duty Employee Services
• Bonuses Insurance Plans • Educational
• Stock Options • Medical Assistance
• Profit Sharing • Dental • Recreational
• Life Programs
• Gains Sharing
• Food Services
 Compensation System
 Indirect  Direct
 Protection Programs  Base Pay
 Medical Insurance  Salary
 Life Insurance  Wage

 Disability Income  Merit Pay

 Pension
 Social security
Cont..
 Indirect  Direct
 Pay For Time Not  Incentive Pay
Worked  Bonus
 Vacations  Commission
 Holidays  Piece Rate
 Sick Leave  Profit Sharing
 Jury Duty  Stock Option
 Shift Differential
Cont..
 Indirect  Direct
 Services And  Deferred Pay
Perquisites  Savings Plan
 Recreational  Stock Purchase
 Facilities  Annuity
 Car

 Financial Planning

 Low-Cost or Free
Meals
Non monetary
 Enhance dignity & satisfaction from work
performed.
 Promote social relationship with co-workers.
 Allocate sufficient resources to perform work
assignments.
 Offer supportive leadership & management.
 Enhance physiological health, intellectual
growth.
Factor affecting
External Internal

 Demand & supply of  Compensation policy

labour  The org. ability to
 Cost of living pay
 Society  Job analysis &
description
 Labour unions
 Employee’s relative
 The economy worth
 Legal Requirements  Worth of Job
Equity Theory
 Equity is balance between the inputs an individual
brings to a job & the outcomes he or she receives from
it.
 Employees inputs includes experience, education,
special skills, efforts and time worked.
 Outcomes includes pay, benefits, achievement,
recognitions, and any other rewards.
 Equity theory suggest that individuals determine
whether they are being fairly treated by comparing
their own inputs/outcomes ratio to the input/outcome
ratio of others.
 Cont…
Person Comparison Others
My Rewards(outcomes) Other’s Rewards Equity
My Contributions(inputs) Other’s Contribution

My Rewards(outcomes) Other’s Rewards Inequity

My Contributions(inputs) Other’s Contribution (under reward)

 Action to restore equity from Under – reward Inequity

 Person could ask for a raise in salary.
 Person could reduce contributions (work less hard)
 Person could try to get others to increase contribution(work
harder)
 Last resorts : quit or choose another comparison other.
Cont..
My Rewards(outcomes) Other’s Rewards
My Contributions(inputs) Other’s Contribution

Inequity(over reward)

 Action to restore equity from Over –Reward Equity

 Person could increase contribution
 Person could ask for a pay cut
 Person could attempt to get other a raise
 Person could attempt to get other to reduce his or her
contribution
 Last restore quit the job or choose another comparison
Designing equitable compensation
system
 Three element of equity can be distinguished as
external, internal and individual.
 External equity refers to comparison of similar jobs in
different organizations.
 Internal equity refers to the relationship among the jobs
within a single organization.
 Individual equity refers to comparison among the
individual in the same job with the same organization
Linking pay to performance
“Employers believes that reward in general and
incentives in particular influence performance.”
 Reason to link pay to performance
 Motivation
 Retention
 Productivity
 Cost savings
 Organizational objectives
Benefits
The major reason for the increased attention in
benefits is costs.
 Role of benefits:
 To attract new employees
 To retain the customers
 Types of benefits:
 Mandatory protection programs
 Social security
 Unemployment compensation
 Workers compensation
Cont..
 Types of benefits
 Compensation for time not work
 Holidays
 Vacations
 Sick leave
 Personal days
 Other leave
Other benefits
 Child care assistance
 Wellness program
 Educational assistance
 Insurance benefits
 Workers
 Retirement benefits
 Social security
 Pension plan
 Early retirement plan
Examples of different organizations
compensation and benefits plan
 Google
 Procter & Gamble
 Apollo
 Wipro
Google
 Health care , plus on-site physician and dental care
 Vacation days and holidays, and flexible work hours
 Maternity and parental leave
 Adoption assistance
 Google Child Care Center
 Fuel Efficiency Vehicle Incentive Program
 Employee discounts
 Onsite dry cleaning
Procter & Gamble
 Financial Benefits & Compensation
 Health & Family-Friendly Benefits
 Vacation & Personal Time-Off
 Employee Engagement.
 Community Involvement
Apollo Hospitals
 Benefits include the traditional medical and dental.
 401k, company-paid life insurance.
 Child care subsidies
 Flex time
 Educational assistance and
 Professional development programs.
Wipro
 Flexible Benefits.
 Medical Assistance Plan and Medical claim benefits.
 Group Life Insurance Program and Employee Deposit
Linked Insurance (EDLI) Program.
 Wipro Cares “Mitr”
 Kids @ Wipro (fun way of learning)
 Fit for Life.
 Eco Eye.