COMPENSATION ADMINISTRATION

- It is the maintenance function that is most sensitive to conceptualize and

operationalize.

- It includes the reward structure, its philosophy and bases.

Compensation- is the equivalent in any form that is given to the individual

for his work.This recompense is also called job reward.

TYPES OF REWARDS AND REWARDS STRUCTURE

Intrinsic rewards- are those related to the job itself like the motivators of
Herzberg. It includes workers involvement in making greater job freedom
and discretion more responsibility interesting and challenging work,
opportunities for personal growth and diversity of activities.

Extrinsic rewards- “the most obvious form…and the one that is probably
responsible for more gossip and disgruntlement than any other, is direct
compensation.

Classifications:
Basic salary or wage
Overtime
Holiday pay
Performance bonuses
Profit sharing
Stock options- right to purchase stock at a specified price at some later
time.
Pensions, retirement pay and business partnership

Indirect compensation- covers protection program, pay for time not

worked, services and perquisites.
Safety and Security Plans like Insurance, tenure, security guards, burglar
alarms

Non Financial Compensation- this consist of material and physical

accoutrements.

FACTORS AFFECTING COMPENSATION ADMINISTRATION PROGRAM

Institutional Factors- the financial condition of the organization, size of the

organization’s work population, management- labor relations and internal
politics are the ex. of this.
Environmental Factors- the external environment may either be
conducive or frustrating to the program. Variables like standard and cost of
living, labor supply and demand rewards structure of other companies should
be considered in determining the content packages of the program.
Personal Factors- The values of the owners and managers influence their
decisions on the type number and amount of the compensation packages
that are given to the employees.

COMPENSATION ADMINISTRATION PLAN

A plan has to be evolved in order to put the compensation administration
program on a secure
and stable footing.
Steps:
1. Determine a clear cut philosophy for the program.
2. Make a study and analysis of each job including job description and job
specification.
3. Determine the money worth of each job by doing job evaluation.
4. Conduct a local, national and if possible an international survey of pay
policies.
5. Determine suppl and demand of labor.
6. Formulate overall compensation policies.

PHILOSOPHY OF COMPENSATION ADMINISTRATION PROGRAM

1. To establish a just and equitable reward system

2. To attract capable employees to apply to and work for the
organization.
3. To maintain them by meeting their basic needs through adequate
compensation.
4. To retain them in the organization as long as possible utilizing
rewards as motivation and incentives for greater productivity.
5. To control costs since personnel emoluments take a big slice of the
organization’s budget.
6. To insure consistent administration of the program.
7. To maintain the competitive position of the company at a
reasonable level.
8. To help establish and maintain good employee relations
9. To provide a yardstick for measuring workers fast performance and
present effectiveness.
10. To comply with the requirements of minimum wage law.
Job analysis
Job evaluation
Survey on Pay Policies
Labor Supply and Demand

FORMULATION OF OVERALL COMPENSATION POLICIES

1. What an organization is willing to pay, is able to pay and is

compelled to pay.
 2. Types of benefits and manner of administration.

3. Determinants of rewards.

Seniority- this factor which is easy to determine being quantifiable

dominates much in the government sector.

Educational Qualifications- Where labor supply is way over demand, most

organizations tend to be “credential crazy”

Effort- This basis can count more than actual performance.

Job Difficulty- This refers to the complexity and sophistication of the job.

4. Pay information secrecy vs. openness

5. Work technology

6. Individual or Group benefits.

SOME PHILIPPINE STUDIES ON COMPENSATION ADMINISTRATION

1. Slightly higher pay for accounting than auditing positions.

2. Fairly consistent salary levels among the lower end positions across
industries

3. General clerk- typist, messenger receptionist/ telephone operator company

driver and accounting clerks occupying the five lowest paying positions.

4. Wider differences of industry rates for sensitive positions in accordance with

nature and size of enterprise.

5. Rank and salary levels of administration and personnel position being

influenced by the sensitive nature of the job and accessibility to confidential
information.
Reported By:

Avegail G. Florida

Alas Figueroa

Mark Louis Francisco

Brenz Furio

Nino Conrad Bueno

BSA 2A

Prof: Dela Llarte

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