COMPENSATION
MANAGEMENT
Presented By :
Dushyant Sinha
Sandeep Shah
Naman Bhatia
Ishaan Khanna
Pratik Manwar
Introduction
Human Resource is the most vital resource for any
organization.
It is responsible for each and every decision taken, each
and every work done and each and every result.
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
Contd….
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.
Compensation Management
Compensation management is an integral part of human resource
management which helps in motivating the employees and
improving organizational effectiveness.
The Compensation Management component enables you to
differentiate between your remuneration strategies and those of
your competitors while still allowing flexibility, control and cost
effectiveness.
It provides a toolset for strategic remuneration planning that
reflects your organization culture and pay strategies.
Types of compensation
Compensation provided to employees can direct in the form of
monetary benefits and/or indirect in the form of non-monetary
benefits known as perks, time off, etc.
Financial Compensation:
Total Financial compensation = Direct + Indirect Compensation
Direct Financial Compensation
– pay received in forms of wages, salaries, bonuses and
commissions , fringe benefits
Fringe Benefits
Fringe benefits described as
Welfare expenses
Wage supplements
Perquisites other than wages
Sub wages
Social charges
Types of compensation (contd..)
Indirect Financial Compensation(benefits)
All financial rewards not included in direct compensation.
For examples workers compensation, Family & medical
leave, Disability Protection,
Nonfinancial Compensation
- Satisfaction person receives from psychological & or physical
environment in which person works. For examples, skills
variety, experiences, good working conditions, flextime
Need of Compensation Management
A good compensation package is important to motivate the employees to
increase the organizational productivity.
Unless compensation is provided no one will come and work for the
organization. Thus, compensation helps in running an organization effectively
and accomplishing its goals.
Salary is just a part of the compensation system, the employees have other
psychological and self-actualization needs to fulfill. Thus, compensation
serves the purpose.
The most competitive compensation will help the organization to attract and
sustain the best talent. The compensation package should be as per industry
standards
Objective Of Compensation Management
Contd…
To help the organization achieve strategic success while
ensuring internal and external equity.
Internal equity- ensures that more demanding positions or
better qualified people within the organization are paid more.
External equity - assures that jobs are fairly compensated in
comparison with similar jobs in other firms
Attract qualified personnel
Retain current employees
Reward desired behaviour
Control costs
Facilitate understanding
DETERMINING COMPENSATION
Internal Factors:
Employers Compensation strategy
Worth of a Job
Employees Relative Worth
Employers Ability to Pay
Contd……
External Factors:
Labor Market Conditions
Area Wage Rates
Cost of Living
Collective Bargaining
The Compensation Structure
Wage and Salary Surveys
Collecting Survey Data
The Wage Curve
Pay Grades
Competency Based Pay
Governmental Wage Policy of India
Payment of Wages Act, 1936
Industrial Dispute Act, 1947
Minimum Wages Act, 1948
Equal remuneration Act, 1976
Payment of Bonus Act, 1965
Wage Board
Wage boards
Wage boards consist of an impartial chairman , two
other independent members and two or three
representatives workers and employers each
The recommendations of the board are first submitted
to the government for the acceptance
After acceptance the government requests the parties to
implement them.
Objective Of A Good Wage Policy
To establish good labor relations.
To decide on appropriate wages
To decide wages based on individual’s capability
To develop a pre-determine scheme for payment of wages
To establish linkages of wages payment with performance
To provide for incentive payment
To guarantee minimum wages
To provide for neutralization of price rise
To develop a wage structure which can attract talent
Compensation Issues
The Issue of Equal Pay for Comparable Worth
The Issue of Wage Rate Compression
Living Wage Laws
The Issue of Low Salary Budgets
k Y o u
Th an
