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    Compensation Managemen T Compensation Managemen T

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    Chris Kathoka
    Compensation management involves paying employees hourly wages, salaries, and benefits to motivate work performance. There are direct compensation methods like wages and salaries as well as indirect compensation like incentives, fringe benefits, and employee welfare services. The objectives of compensation include motivating employees, attracting talent, and accomplishing organizational goals through principles like establishing fair pay and evaluating performance. Compensation administration involves recommending pay policies, reviewing wages by department, and ensuring alignment with company policies.

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    Compensation Managemen T Compensation Managemen T

    Uploaded by

    Chris Kathoka
    20 views33 pages
    Compensation management involves paying employees hourly wages, salaries, and benefits to motivate work performance. There are direct compensation methods like wages and salaries as well as indirect compensation like incentives, fringe benefits, and employee welfare services. The objectives of compensation include motivating employees, attracting talent, and accomplishing organizational goals through principles like establishing fair pay and evaluating performance. Compensation administration involves recommending pay policies, reviewing wages by department, and ensuring alignment with company policies.

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    Original Title

    Compensation Management

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    Compensation management involves paying employees hourly wages, salaries, and benefits to motivate work performance. There are direct compensation methods like wages and salaries as well as indirect compensation like incentives, fringe benefits, and employee welfare services. The objectives of compensation include motivating employees, attracting talent, and accomplishing organizational goals through principles like establishing fair pay and evaluating performance. Compensation administration involves recommending pay policies, reviewing wages by department, and ensuring alignment with company policies.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    20 views33 pages

    Compensation Managemen T Compensation Managemen T

    Uploaded by

    Chris Kathoka
    Compensation management involves paying employees hourly wages, salaries, and benefits to motivate work performance. There are direct compensation methods like wages and salaries as well as indirect compensation like incentives, fringe benefits, and employee welfare services. The objectives of compensation include motivating employees, attracting talent, and accomplishing organizational goals through principles like establishing fair pay and evaluating performance. Compensation administration involves recommending pay policies, reviewing wages by department, and ensuring alignment with company policies.

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    © All Rights Reserved
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    of 33

    COMPENSATIO

    N MANAGEME
    NT

    INTRODUCTION
    Compensation is payment in the form of
    hourly wages or annual salary combined with
    benefits such as insurance, vacation, stock
    options, etc. that can positively or negatively
    affect an employee's work performance.

    TYPES OF COMPENSATION
    MANAGEMENT

    Compensation
    Management

    Direct

    Indirect

    Need of Compensation
    Management
    To Motivate the employees.
    To run an organization effectively
    and accomplishing its goals.
    To Attract and sustain the best
    talent.

    Terminologies
    Wages- Aggregate earnings of a employee
    for his service for a day, or a week, or a
    month . It is the price paid for the services of
    labour in the process of production.
    Includes 2 parts- the basic wages & other
    allowance
    Salary- Compensation to an employee for
    service rendered on a weekly, monthly or
    annual basis.

    Objectives of wage & salary


    Administration

    Control of costs
    Establishment of fair & equitable
    remuneration
    Employee motivation
    Fair Wages.
    Attract competent talent.
    Satisfy employee needs.

    Retain good employees.


    Motivate employees for higher productivity.
    Improve union management relations.
    Promote Corporate Image.
    Government Laws.

    Functions of wage & salary


    Administration

    To recommend changes in wage policies


    and in the salary or wage level.
    To review wage and salary department
    wise.
    To check all activities of the salary
    administration against the company
    policies.

    Principles of wage & salary


    Administration
    Wage policies should be carefully
    developed, having in mind the interest of :
    (a) the owners
    (b) the employees
    (c) the consumers
    (d) the community
    It should be clearly expressed in writing.
    It should be checked against the formulated
    policies

    It must inform to the employees in


    right way.
    It should be evaluated from time to
    time.
    Departmental performance should be
    checked periodically against the
    standards set in advance
    Job descriptions and performance
    rating should e checked periodically to
    keep them up to date

    Problems in Wages and Salary


    Administration
    High pressure from employees unions for
    increasing the remuneration.
    High pressure from management to reduce
    cost.

    Methods of Wage Payment

    Methods

    Time
    Wage

    Piece
    Wage

    Time Wage System

    This is the oldest system of remunerating


    labour. Under this method employee is paid
    on the basis of time worked i.e. at hourly,
    weekly or monthly rate, irrespective of the
    quantity of work done.

    Advantages

    Simplicity
    Security
    Maintenance of quality
    Union support
    Convenient

    Disadvantages

    Lack of incentives
    Lack of distinction
    Complacency
    Close supervision
    Expensive

    Piece Wage System

    Wages can be defined as, "a sum of money


    paid to the staff by the employer for
    rendering services as per a contract. Piece
    rate is used for jobs in which the quantity of
    work done by a person or a group is readily
    counted or calculated.

    Advantages

    Motivating
    Higher productivity
    Less supervision
    Society benefits
    Opportunities for talented and Sincere
    employees

    Disadvantages

    Insecurity
    Higher cost of production
    Accidents
    More paper work
    Poor quality

    INCENTIVES
    According to Burack and Smith, An incentive
    scheme is a plan or program to motivate
    individual or group performance. An incentive
    program is most frequently built on monetary
    rewards, but may also include a variety of nonmonetary reward and prizes.

    Types of Incentive Plans

    Individual
    Incentive
    Plans

    Group
    Incentive
    Plans

    Individual
    Incentive
    Plan
    Piecework

    Standard
    hour plan

    Bonus

    Commissi
    ons

    Perquisites

    Stock
    options

    Group
    Incentive
    Plan
    Productivit
    y Gain
    sharing
    Plans

    Profit
    Sharing
    Plans

    Current
    Distributio
    n Plans

    Deferred
    distributio
    n Plans

    Combined
    Plans

    Advantages

    Motivation
    Innovation
    Fosters team-work
    Sharing of rewards
    Lesser supervision

    Disadvantages

    Deterioration of quality
    Overwork
    Neglect of safety measures
    Rivalry

    Fringe Benefit
    Compensation in addition to direct
    wages or salaries, such as company car,
    house allowance, medical insurance,
    paid holidays, pension schemes,
    subsidized meals. Some fringe benefits
    are regarded part of a taxable income.

    Objectives of Fringe Benefits

    Attracting and retaining talent.


    Negotiation tool.
    Promote organizational image.
    Satisfy employee needs.
    Increase satisfaction and morale.

    Types Of Fringe Benefits

    Pension Schemes.
    Personal security.
    Financial assistance.
    Personal needs.
    Company cars and petrol.
    Other benefits.
    Intangible benefits.

    Employee Welfare
    According to INTERNATIONAL LABOR
    ORGANISATION, employee welfare is
    described as to include such services ,
    facilities and amenities as may be established
    in or in the vicinity of undertakings to enable
    the persons employed in them to perform their
    work in healthy, congenial surrounding and to
    provide them with amenities conducive to
    good health and high morale.

    Types of welfare services:


    Intramural welfare services
    Proper drinking water facility.
    Creches.
    Washing and bathing facilities.
    Rest shelters.
    Canteens.
    Medical aid.
    Recreational facilities.

    Extramural welfare services


    Housing facilities.
    Transportation facility.
    Education facility.
    Health facility.

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