Remuneration

Remuneration in other terms also called as Employee Compensation which an employee receives in return for his or her contribution to the organization. For employer too remuneration is important because of contribution to the cost of production.

Objectives Of Employee Remuneration

Attract capable employees to the organization. Motivate them toward superior performance. Retainment of their services over an extended period of time. To study remuneration policy of employees. To study relation between performance and remuneration of employees. To study challenges faced by employees for remuneration. To study factors influencing employees for remuneration.

Factors affecting Remuneration

Internal Factors : Ability to pay Productivity of labor Business strategy The employee Goodwill of company Job evaluation & performance appraisal Non Financial Benefits Employee benefits

External Factors
Demand Supply Cost of living Bargaining power of unions Labor rates Condition of product market Comparative wage Government policy Society

Classification of Remuneration
COMPENSATION

Financial

Non financial

Direct

Indirect

Job Content Challenges & Responsibilities

Hourly Wages & Monthly Salary

Incentives

Fringe Benefits

Perquisites

Classification & Components of Remuneration

Wage & Salary- Wages refers to hourly rates of pay and salary refers to monthly rate of pay.
Incentives Payments by result, depends upon productivity, sales, profit, or cost reduction. Fringe Benefits employee benefits such as PF, Gratuity, Medical care, Hospitalization, Accident relief, Canteen, Uniform, Recreation etc.

 Perquisites Includes Company car, Club membership, Paid holidays, furnished house, stock options, etc. these are provided to retain the employees.
Non Monetary Benefits includes challenging jobs, responsibilities, recognition of merit, growth prospects, comfortable working, job sharing, flexi time etc.

Devising a remuneration plan

Remuneration plan should be understandable workable acceptable

Devising Remuneration Plans

Job Description Job Evaluation
Job Hierarchy Pay Survey Pricing Jobs Pay Levels Pay Grades

 Job description
Helps to define and weigh compensable factors eg skills, experience, effort

Job evaluation
To establish relative worth of jobs

Job hierarchy
Established by aggregating all points assigned to the compensable factors Higher point total is higher hierarchy

 Pay surveys sources

To establish prevailing wage and salary rates in the labour market

Other companies Labour dept Trade unions Consulting firms

Pricing jobs

Establishing the appropriate level for each job Grouping the different pay levels into pay grades

Difference between Compensation & Remuneration

Comp is usually used in a more negative sense. That is: If you have been injured in an accident the other person will "compensate you for your loss." If you have to work overtime you will be compensate for the inconvenience. Remuneration is used in a more positive manner. You will be given suitable remuneration for your hard work. Suitably qualified applicants will be remunerated accordingly. Compensation= Cash payments only - salaries, bonus, variable pay

Remuneration = Compensation + Benefits

Wages
Hourly payment depending upon type of task, productivity, skills, capabilities to the workers. A wage policy offers certain guidelines for determining a wage structure. The term wage structure refers to various pay scales showing rages of pay within each grade. Three important elements of wage policy in India need to be elaborated here

 Minimum wage: Wage sufficient to sustain and preserve the efficiency of the worker and offer basic amenities of life
Fair wage: It is above the minimum wage but below the living wage. It is fixed, taking into account factors such as the productivity of labour, prevailing wage rates, level of national income and its distribution, the employers capacity to pay etc. Living wage: This is the highest amount of wages proposed by the government, offering basic amenities of life and satisfying the social needs of worker.