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INTRODUCTION TO
1. Concept of Compensation,
2. System of Compensating,
7. Wage concepts,
CONCEPT OF COMPENSATION
Compensation is what employees receive in exchange for their contribution to the organization
An employees standard of living, status in the society, Motivation, Loyalty and Productivity depend upon the compensation he/she receives
For the employer to employee remuneration is significant because of its contribution to cost of production
NATURE OF COMPENSATION
Compensation can be offered by an organization both directly( Base Pay & Variable Pay) and Indirectly (Benefits)
1. Base Pay -Basic compensation an employee gets usually as a wage or salary 2 Variable Pay -Compensation linked directly to the performance 3. Benefits- Indirect rewards given as a part of organizational membership.
1. Internal Equity- Ensures that more difficult jobs are paid more.
2. External Parity- Aims to compensate fairly in comparison to similar jobs in labor market.
To attract talent
To retain talent
Ensure equity
Control cost
Ease of operation
I. External Factors
i. Labor Market
iv. Society
v. Economy
Contd./
i. Business Strategy
Appraisal
iii. Employee
SYSTEM OF
COMPENSATING
Dimensions
Amity Business School
Deferred Income
Compensation may be adjusted according the business needs, goals, and available resources Compensation may be used to:
Job Descriptions
Job Analysis
Job Evaluation
Pay Structures
Salary Surveys
Base Pay Commissions Overtime Pay Bonuses, Profit Sharing, Merit Pay Stock Options Travel/Meal/Housing Allowance Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes...
COMPENSATION PLAN
Develop a program outline Designate an individual to oversee Develop a compensation philosophy Conduct a job analysis of all positions Evaluate jobs Determine grades Establish grade pricing and salary range Determine an appropriate salary structure Develop a salary administration policy Obtain top executives' approval of the basic salary program Communicate the final program to employees and managers Monitor the program
CONCEPT OF REWARD
OBJECTIVE OF REWARD
Enhance Loyalty
Satisfaction
FINANCIAL REWARDS
commitment.
REWARD SYSTEM
Rate of Pay
Level of skill
Adopted from Banfield Paul and Kay Rebecca Introduction to HRM. Oxford University Press Vol. 4 Page No. 308
REWARD MECHANISMS
will be rewarded
Whom to Reward?
Individual Employees
Teams
Organization
Outsiders
What to Reward?
Performance
Organizational Level
Loyalty
Innovation
Upholding Values
Technical Solution
Learning
Good Behavior
Sense of Humor
Teaching
Publications
Event Management
Social Concern
Characteristics of rewards
Value
Relevant
Purpose
Behavioral effect
Recognition
Direct Financial
Indirect Financial
Identification
Work Content
Career Opportunities
Pay is not a motivator Rewards punish Rewards rupture relationships Rewards ignore reasons Rewards discourage risk taking Rewards undermine interest
ECONOMIC THEORIES
Wage fund Theory Residual Claimant Theory
Subsistence Theory
Theory
Competitive Theory
3.Behavioral
Theories
fully flexible. Assumption of Full Employment Wages could be influenced by factors other than wages too. Wage and Benefits reflect Industry characteristics and personal characteristics. Interference by government Technology and Productivity are major determinants Pressure for linking labour standards with International Trade.
Policies
Techniques
Objectives
ALIGNMENT
Work analysis
EFFICIENCY
COMPETITVENESS
Market
CONTRIBUTION
MANAGEMENT
Costs
INTERNAL ALIGNMENT
Levels
Differentials
Criteria -Content and Value -Use Value and Exchange Value -Job and Person Based
EXTERNAL COMPETITIVENESS
CONTRIBUTION
Seniority Based
Merit Guidelines
MANAGEMENT
Pay
WAGE CONCEPT
Definition of Wage
Wage vs Salary
ROLE OF EMPLOYERS
Ability to pay
Cost effect
Wage costs
Cost reduction
ROLE OF EMPLOYEES
Price effect
Wage levels
Effort put in
Wage maximization
Five Year Plans & Wage Policy -Payment of Wages Act 1936
-Minimum Wages Act 1948 -Payment of Bonus Act 1965 -Equal Remuneration Act 1976
Legal Framework
Pay Commissions
Wage Boards
Adjudication
ROLE OF UNIONS
Agreements
THANK YOU!