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All forms of pay or rewards going to employees and arising from their employment. Gary Dessler Two main components of compensation are :
1. Direct Financial Payments: Pay in form of wages salaries, incentives, commission and bonuses. 2. 3. Indirect Financial Payments: Pay in form employer paid insurance, vacations, etc.
TYPES OF COMPENSATION
INCENTIVES
INCENTIVES
Financial Incentives: Financial rewards paid to workers whose production exceeds some predetermined standards. Frederick Taylor
It is also called payment by results, and is paid in addition to wages and salaries depending upon the productivity, sales, profit, or cost reduction efforts.
IMPORTANCE OF INCENTIVES
Motivation to the workers Enhancement in employees earnings Reduction in total and unit cost of production Reduced supervision Better utilization of equipments Reduced scrap, lost time, absenteeism.
The co-operation of workers in the implementation of an incentive plans. The scheme must be based on scientific work measurement (realistic, necessary equipments, motivate for performance) Incentive plan should cover indirect workers also. Like : supervisor, foremen, helpers, canteen staffs, store keeper, clerical staffs, etc. Proper planning for incentive schemes, or will create problems.
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FRINGE BENEFITS
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WHAT IS BENEFITS
Includes any benefits that the employees receive in addition to direct remuneration. The synonyms used are fringes, services programmes, employees benefits and hidden payroll.
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FRINGE BENEFITS
These include employee benefits such as provident fund, gratuity, medical care, hospitalization, accidents They help build up a good corporate image. they have wider dimensions than immediate gains to the employees. An organization with fringe benefits enhances employees morale, is cost effective and introduces changes with resistance.
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PRINCIPLES OF FRINGES
It must be provided for genuine interest rather than charity. Must satisfy a real need. Must be cost effective. As Broad based as possible. Administration should be preceded by sound planning Wishes through union must be considered. Employees education to make use of fringe benefits.
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THANK YOU
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