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Flow Of Presentation
What is Compensation ? Nature &Purpose Of Compensation. Compensation Dimensions 3-P Compensation Concept. Strategic Compensation Policies. Basis For Compensation Fixation.
What is Compensation ?
Defined as money received in the performance of work plus the many kinds of benefits &services that organization provide their employees. Compensation Provides Reward for past service Stimulus for performance in future The progressive organization utilizes compensation as effective tool to develop, build & maintain human capital for Competitive Advantage.
Types Of Compensation
Direct Compensation
Money
E.g.-
Indirect Compensation
Health
insurance Mediclaim provident fund Gratuity Pay for vacation & illness
To establish &maintain equitable wage & salary structure. Maintain equitable labour cost structure. Conflict minimization & Optimal balancing of personnel interest. Compensation with financial aspect of need, motivation and reward. To retain employees in Organization & attract qualified applicant to organization.
Compensation Dimension
Pay for work & performance. Pay for time Not worked. Continuation of income in event of physical disability. Differed income. Spouse(family)income continuation. Health, Accident & Liability protection. Income Equivalent payments.
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3. 4. 5. 6. 7. 8.
Organizations ability to pay. Supply & Demand of labour. Prevailing market rate. Trade unions bargaining power. Job requirements. Managerial attitudes. Cost of living. Productivity
Continue..
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Pay for performance. Skills level available in market. Psychological & Sociological factors. Region & Area in practice. Attraction & Retention. Merit & Seniority progression.
Companies with good sales & profits tends to pay higher compensation. In the long run it is important because in prosperity time ,employers pay high to carry profitable operation. But in depression wages & compensation are cut down due to non availability of funds. Where ever minimum wages legislation is applicable organization should pay, irrespective of their capacity to pay.
Labour market condition always operate at National, Regional& local level. Higher demand & low supply of skilled person results in rise in compensation. Lower demand & higher supply results in decrease in compensation.
Also known as Comparable wage or Going wage rate. Going rate system involves fixing wage/salary rate in tune with what is paid by different units of an industry in a locality. Going rates are generally paid in the initial day of company and plant operation.
Generally stronger & more powerful the trade union ,higher the wages and compensation. But the concept is changing with collective bargaining and strong Industrial relation.
5. Job Requirements
More difficult the job, Higher the Wages & Compensation. Measure of Job difficulty, used with relative value of job to another Organization (Comparison). Job Grading
Relative
Skills
Efforts
Responsibility Job
Conditions
6. Managerial Attitude
Average Rate Above Average Rate What Job Factors used to reflect Job Worth Performance or Length of Service
7. Cost of Living
Negative Effect
Increase
in Cost of Living usually possess additional burden on Employer without corresponding improve in Productivity
8. Productivity
Improvement Better Organisation & Management Better Methods of Production Greater Skills by Labour
Negative
Productivity
Linking Pay to Performance Jobs & Work Flows Continues Appraisal Incentive Methods
With growth of Industries, Business & Trades all over the world results in Shortage of Skilled Resources Technological Advancement Automation of Work Process Computerization
hard a person work for Compensation What Pressure he exerts to get increased Compensation
Psychological
Level
Sociological
No
1 Tier 2
Employee Retention Strategy through Perks & Fringe Benefits Policy of Wage Leaders in the Organization
Include
Logic for Seniority Progression is that Person gains Experience, his skills get sharpened
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