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Strategic compensation planning allows an organization to focus on its strategic objectives and develop a
comprehensive plan, considering base pay, short- and long-term incentives, benefits and growth opportunities.
This kind of planning helps ensure that the compensation system will support the organization's long-and short-
term objectives without overlap, which would have more than one pay plan driving the same objectives.

The ultimate objective of this process is to ensure that the compensation system attracts and retains the desired
employees and that it motivates them to do those things that support the business plan.

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The pay structure of a company depends on sever al factors such as labour market
conditions, company¶s paying capacity and legal provisions:
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In India, different Acts include different items under wages, though all the Acts include
bas ic wage and dear ness allowanc e under the t erm wages. Under the W orkmen¶s
Compensation Act, 1923, ³wages for leave period, holiday pay, overtime pay, bonus,
attendance bonus, and good conduct bonus´ form part of wages.
Under the Payment of W ages Act, 1936, Section 2 (vi), ³any award of settlement and
production bonus, if paid, constitutes wages.´
Under the Payment of W ages Act, 1948, ³retrenchment compensation, payment in lieu
of notice and gratuity payable on discharge constitute wages.´
The term µAllowances¶ includes amounts paid in addition to wages over a period of time
including holiday pay, overtime pay, bonus, social security benefit, etc. The wage structure
in India may be examined broadly under the following heads:
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The basic wage in India corresponds with what has been recommended by the Fair
W ages Committee (1948) and the 15th Indian Labour Conference (1957). The various
awards by wage tribunals, wage boards, pay commission reports and job evaluations
also serve as guiding principles in determining µbasic wage¶. W hile deciding the basic
wage, the following criteria may be considered: (i) Skill needs of the j ob; (ii) Experience
needed; (iii) Difficulty of work: mental as well as physical; (iv) Training needed;
(v) Responsibilities involved; (vi) Hazardous nature of job.
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It is the allowance paid to employees in order to enable them to face the increasing
dearness of essential commodities. It serves as a cushion, a sort of insurance against
increase in price levels of commodities. Instead of increasing wages every time there is
a rise in price levels, DA is paid to neutralise the effects of inflation; when prices go
down, DA can always be reduced. This has, however, remained a hypothetical situation
as pric es nev er c ome down t o nec ess it at e a cut in dear ness allowanc e payable t o
employees.

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A review of case studies of ethical problems various organizations have encountered show that many common
ethical problems that organizations find themselves facing arise from individuals protecting their own financial
benefit and/or the short-term economic goals of their organizations and not protecting other key stakeholders of
the business or organization. Organizations can avoid serious consequences by considering the consequences
of their actions to six key stakeholders, including; business partners, customers, employees, opinion formers,
community and authorities By reviewing how companies have both effectively and ineffectively responded to
severe ethical dilemmas, leaders of organizations can identify 8 steps for preventing ethical dilemmas in their
own organizations.

1. Top down responsibility for ethical behavior must exist within an organization. The head of the organization
must take responsibility to manage the ethical behavior of the organization..

2. Organizations must design a code of ethics for the organization. This code should be developed with input
from a broad section of individuals within the organization.

3. Policies must be established and reinforced in the organization regarding how to report ethical abuses. 4.
Ethical responsibility must be taught to members of the organization. This must be done in various settings
including on boarding of new employees, ongoing workshops, business meetings, round-table discussions with
leaders, newsletters, websites, etc.5. Practices must be incorporated to ensure that discussions regarding ethics
are included in the decision making process.

6. Accountability for ethical behavior must be taken seriously by all levels of the organization. Unethical behavior
should be punished and not allowed to continue. Ethical behavior must be rewarded.

7. Organizations should act swiftly to protect stakeholders when dilemmas occur. Contingency plans should be
made for dealing with a crisis in order to act quickly to protect stakeholders in times of emergencies.

8. Members of the organization must know that their primary responsibility is to defend and maintain the high
reputation of the organization at all times

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Importance of Human Resource Management can be explained at four levels such as corporate, social, national,
professional etc.

a





Through Human Resource Management, an organization can achieve its goals more efficiently and effectively in
the following ways:

a) Motivating and retaining the required talent by effective human resource policies such as human resource
planning, recruitment, selection, placement, orientation, compensation and promotion etc.

b) Proper utilization of the available human resources.

c) Developing the necessary skills through training and development, performance appraisal etc among the
employees.

d) Establish the willing co-operation of employees through motivation and participation.

Effective Human Resource Management provides facilitation to improve the quality of work life and teamwork
among employees through better healthy working environment. The professional growth can be achieved in the
following ways:

a) Facilitating maximum opportunities for individual growth of each employee.

b) Establishing healthy relationships between individual and different work groups.

c) Allocating work properly.


 



Human Resource Management has a great importance for the society to enhance the dignity of labor in the
following ways:

a) Providing better employment that fulfills the social and psychological satisfaction to people.

b) Maintaining a balance between the available jobs and job seekers.

  




Effective utilization of Human Resource helps in exploitation of natural, physical, financial resources in a better
way. People with right skills and proper attitude helps the nation to move forward and provide world to better
standard of living with better employment.
The human resource function provides significant support to the management and considers that people are the
source of competitive advantages for business and are the responsibility of Human Resource. Managers use
Human Resource when it is going to be beneficial and it is usually a problem solving and welfare function. In
HRM, manpower is considered as one of the assets of the company. They are not just producing something, but
they are considered as the key role in the organizations operation. So, more importance is given to the people in
which human resource manager play a significant role.

÷ ESSENTIALS OF A SOUND PROMOTION POLICY

÷ A comprehensive and realistic promotion policy should cover the following points:
÷ (1) There should be clear-cut lines of promotion describing education, experience, ability etc.
required for each job.
÷ (2) The opening for promotions must be communicated to the employees well in advance.
÷ (3) Scientific performance appraisal should be used to ensure rational and fair decision
regarding promotion.
÷ (4) Potential candidates should be given training for promotion.
÷ (5) Supervisors recommendation must be duly considered by management
÷ (6) There should be a probationary period of say one year before confirmation.
÷ (7) The basis of promotion should be seniority at lower levels, seniority-cum-merit at middle
levels and merit at higher levels.
÷ (8) Middle and Higher Management level jobs should, whenever possible, be filled up through
promotion from within.
÷ (9) A provision for arbitration should be available to deal with grievances pertaining to
promotion from aggrieved party/trade unions.
2. A good transfer policy should have the following features.
÷ (1) Clarify the conditions under which transfers will be made.
÷ (2) Decide the persons who will have authority for initiating and implementing transfers.
÷ (3) Clarify the jurisdiction within which transfers will be made such as within a unit, between
departments, divisions, plants, etc.
÷ (4) Decide the basis of transfer.
÷ (5) Decide the rate of pay and the cost of moving to be given to the transferee.
÷ (6) Communicate duly the fact of transfer in writing to the concerned persons well in advance
and all other concerned persons.
÷ (7) Avoid frequent transfers and transfer for the sake of transfer only.
3. Advantages of a Good Transfer Policy:
÷ (1) It increases employee productivity and organisational effectiveness,
÷ (2) It provides greater job satisfaction to the concerned employees. Hence,they contribute their
best efforts to the organization,
÷ (3) It remedies faulty placements,
÷ (4) It increases motivation by avoiding monotony,
÷ (5) It develops the employee for future promotion,
÷ (6) It improves superior- subordinate relations,
÷ (7) It helps to stabilize fluctuating work requirements.