Vous êtes sur la page 1sur 28

Compensation

Compensation Management

“If you pick the right people and give them the

opportunity to spread their wings - and put

compensation and rewards as a carrier behind it -

you almost don’t have to manage them.” — Jack Welch

Overview

The total of all rewards provided to employees in return for their services.

It is the package of quantifiable rewards an employee receives for his or her labors.

It includes three components:

Base compensation Pay incentives Indirect compensation/Benefits

Base compensation is the fixed pay an employee

receives on a regular basis, either in the form of a

salary or as an hourly wage.

Pay incentive is a program designed to reward employees for good performance.(bonus, profit

sharing)

Benefits includes health insurance ,medical care , Pf,gratuity,uniform,recreation,etc. A special

category of benefit is called perquisites or perks.

Components of Remuneration

Environment

Remuneration Financial Non Financial Job Context Fringe Benefits Prerequisites Incentives Hourly and monthly Individual PF Company
Remuneration
Financial
Non Financial
Job Context
Fringe Benefits
Prerequisites
Incentives
Hourly and
monthly
Individual
PF
Company Car
Club –
Membership
Challenging Job
Responsibilities
Recognition
rates
Plans
Gratuity
Growth Prospects
wages
Medical Care
Paid Holidays
Salaries
Group
Plans
Accident Relief
Health &
Group
Insurance etc.
Furnished
House
Stock Option
Supervision
Working Conditions
Job Sharing etc.
Scheme etc.
Direct
Indirect

Factors influencing compensation

External Factors

Labour market Going rate system Cost of living Labour unions Labour laws Society The economy

Internal Factors

Business strategy Job evaluation Performance appraisal

Objectives of compensation planning

Equity: (fairness)

Internal equity: The perceived fairness of the pay structure within a firm.(more difficult jobs are paid more)

External equity: The perceived fairness in pay relative to what other employers are paying for the same type of labor.

Individual equity: The perceived fairness of individual pay decisions.

Consequence of Pay Dissatisfaction

Performance

Consequence of Pay Dissatisfaction Performance Strikes Desire for More Pay Grievances Absenteeism Search For Higher Paying
Strikes
Strikes

Desire for More Pay

Grievances
Grievances

Absenteeism

Consequence of Pay Dissatisfaction Performance Strikes Desire for More Pay Grievances Absenteeism Search For Higher Paying

Search For Higher

Paying Jobs

Turnover
Turnover
Consequence of Pay Dissatisfaction Performance Strikes Desire for More Pay Grievances Absenteeism Search For Higher Paying

Psychological

Withdrawal

Pay

Dissatisfaction

Lower Attractiveness

of Jobs

Job

Dissatisfaction

Consequence of Pay Dissatisfaction Performance Strikes Desire for More Pay Grievances Absenteeism Search For Higher Paying
Consequence of Pay Dissatisfaction Performance Strikes Desire for More Pay Grievances Absenteeism Search For Higher Paying

Visits to the

Doctor

Absenteeism

Visits to the

Doctor

Motivation & Performance Model

Feedback to

Employees

Employee Sets

Expectations and

Goals

Performance is

Rewarded

Employee considers equity of

Performance

Rewards

Rewards

Motivation & Performance Model Feedback to Employees Employee Sets Expectations and Goals Performance is Rewarded Employee

Are Given

Motivation & Performance Model Feedback to Employees Employee Sets Expectations and Goals Performance is Rewarded Employee

Employee Sets New Goals And

Expectations Based on Prior Experiences

The Wage Determination Process

Job Analysis

Job Description & Specification

Performance

Standards

Wage Legislation

Wage Structure

Wage Structure

Wage Structure

Rules of Administration

Differential Employee Appraisal
Differential
Employee
Appraisal
The Wage Determination Process Job Analysis Job Description & Specification Performance Standards Wage Legislation Wage Structure

Wage Payments

Wage Surveys
Wage
Surveys
The Wage Determination Process Job Analysis Job Description & Specification Performance Standards Wage Legislation Wage Structure

Job Evaluation

The Wage Determination Process Job Analysis Job Description & Specification Performance Standards Wage Legislation Wage Structure
The Wage Determination Process Job Analysis Job Description & Specification Performance Standards Wage Legislation Wage Structure
The Wage Determination Process Job Analysis Job Description & Specification Performance Standards Wage Legislation Wage Structure

Job evaluation

A job is rated in order to determine its value relative to all other jobs in the organisation

which are subject to evaluation

The relative job value is then converted into money value to translate the job classes into rate ranges.

Methods of job evaluation

Non-quantitative methods: here a job is compared

as a whole with other jobs.

Ranking or job comparison Grading or job classification

Quantitative methods: Key factors of the jobs are selected and measured

Point rating Factor comparison

Point method

Determine the job to be evaluated.(benchmark jobs)

Select the factors. (measurable)

Define the factors

Determine the degrees

Determine relative values of job factors

Assign point values to degrees

Find point value of the job

Assign money values.

Example:

Factors: skill, effort, responsibility & job conditions

Factors

Skill

Effort

Sub Factors

Education, Experience & Training

Physical &

MEntal

Education:

Degrees

Graduation

Inermediate

School

Read & Write

4

3

2

1

Factors

No. of

1s t

2

nd

3

rd

4h

Points

Degree

Degree

Degree

degree

Skill

148

       

Education

40

10

20

  • 30 40

 

Experience

88

22

44

  • 66 88

 

Training

20

5

10

  • 15 20

 

Assigned Money Value

Point Range

Daily Wage Rate

Job Grade

100-150

Rs. 15-25

1

150-200

Rs. 25 -35

2

200-250

Rs. 35-45

3

     

Wage & salary surveys: It ensures external equity.

Determine pay grades: (Job evaluation)

Price each pay grade or ‘Rate ranges’: (Wage curve)

Plotting a Wage Curve

Wage Curve 10 9 8 7 6 5 0 100 200 300 400 500 Wage Rates
Wage Curve
10
9
8
7
6
5
0
100
200
300
400
500
Wage Rates ( In Rs.)

Points For Jobs

From above fig (example):

Grade I = 50-100points = Rs. 2,000- Rs. 5,500

Grade II = 100- 150 points =Rs. 2,800- Rs. 6,500

Grade III = 150 points-200 points = Rs. 5,800- Rs. 7,500

Broadbanding

It means collapsing salary grades and ranges

into just a few wide levels or bands, each of

which contains a relatively wide range of jobs and salary levels.

Wage policy in India

Minimum wage

It is the wage which provides not only for bare sustenance of life, but also for preservation of efficiency of worker.

Need based minimum wage-

Fair wage

Equal to the rate prevailing in the same trade and in the neighborhood, or equal to the predominant rate for similar work through out the country.

Living wage

Higher than fair wage, provides for bare essential plus frugal comforts.

State Regulation of Wages

Employer Collective Bargaining Legislation

Minimum Wages Act Payment of Wages Act Adjudication Machinery

Wage Boards Pay Commissions

Types of Fringe Benefits Payment for Time Not Worked Welfare Employee Security Safety & Health Recreational
Types of Fringe Benefits
Payment for Time
Not Worked
Welfare
Employee Security
Safety & Health
Recreational
Facilities
Old Age &
Retirement
Benefits
Hrs of
Retrenchment
Safety Measures
Work
Compensation
Canteens
Provident Fund
Paid
Consumer
Workmen’s
Holidays
Lay off
Compensation
Societies
Compensation
Credit
Shift
Deposit Linked
Insurance
Societies
Premium
Health Benefits
Gratuity
Holiday
Housing
Pay
Paid
Legal Aid
Employee
Counseling
Welfare Orgns.
Medical Benefits
Vacation
Pension
Holiday Homes
Educational
Facilities
Miscellaneous
Transportation
Parties &
Educational
Picnics
Facilities