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COMPENSATION

MANAGEMENT

Presented By :
Dushyant Sinha
Sandeep Shah
Naman Bhatia
Ishaan Khanna
Pratik Manwar
Introduction

Human Resource is the most vital resource for any
organization.
It is responsible for each and every decision taken, each
and every work done and each and every result.
Employees should be managed properly and motivated
by providing best remuneration and compensation as
per the industry standards.
The good compensation will also serve the need for
attracting and retaining the best employees. .
Compensation

Compensation is the remuneration received by an
employee in return for his/her contribution to the
organization.
It is an organized practice that involves balancing the
work-employee relation by providing monetary and
non-monetary benefits to employees
Contd….

 When managed correctly, it helps the organization achieve its objectives
and obtain, maintain, and retain a productive workforce.

 Compensation is a key factor in attracting and keeping the best


employees and ensuring that your organization has the competitive edge
in an increasingly competitive world.

 Without adequate compensation, current employees are likely to leave


and replacements will be difficult to recruit.

 The outcomes of pay dissatisfaction harm productivity and affect the


quality of work life.
Compensation Management

 Compensation management is an integral part of human resource
management which helps in motivating the employees and
improving organizational effectiveness.

 The Compensation Management component enables you to


differentiate between your remuneration strategies and those of
your competitors while still allowing flexibility, control and cost
effectiveness.

 It provides a toolset for strategic remuneration planning that


reflects your organization culture and pay strategies.
Types of compensation

 Compensation provided to employees can direct in the form of
monetary benefits and/or indirect in the form of non-monetary
benefits known as perks, time off, etc.

 Financial Compensation:

Total Financial compensation = Direct + Indirect Compensation

 Direct Financial Compensation


– pay received in forms of wages, salaries, bonuses and
commissions , fringe benefits
Fringe Benefits

Fringe benefits described as
 Welfare expenses
 Wage supplements
 Perquisites other than wages
 Sub wages
 Social charges
Types of compensation (contd..)

 Indirect Financial Compensation(benefits)
 All financial rewards not included in direct compensation.
For examples workers compensation, Family & medical
leave, Disability Protection,

 Nonfinancial Compensation
- Satisfaction person receives from psychological & or physical
environment in which person works. For examples, skills
variety, experiences, good working conditions, flextime
Need of Compensation Management

 A good compensation package is important to motivate the employees to
increase the organizational productivity.

 Unless compensation is provided no one will come and work for the
organization. Thus, compensation helps in running an organization effectively
and accomplishing its goals.

 Salary is just a part of the compensation system, the employees have other
psychological and self-actualization needs to fulfill. Thus, compensation
serves the purpose.

 The most competitive compensation will help the organization to attract and
sustain the best talent. The compensation package should be as per industry
standards
Objective Of Compensation Management


Contd…

 To help the organization achieve strategic success while
ensuring internal and external equity.
 Internal equity- ensures that more demanding positions or
better qualified people within the organization are paid more.
 External equity - assures that jobs are fairly compensated in
comparison with similar jobs in other firms
 Attract qualified personnel
 Retain current employees
 Reward desired behaviour
 Control costs
 Facilitate understanding
DETERMINING COMPENSATION

 Internal Factors:
 Employers Compensation strategy
 Worth of a Job
 Employees Relative Worth
 Employers Ability to Pay
Contd……

 External Factors:
 Labor Market Conditions
 Area Wage Rates
 Cost of Living
 Collective Bargaining
The Compensation Structure

 Wage and Salary Surveys
 Collecting Survey Data
 The Wage Curve
 Pay Grades
 Competency Based Pay
Governmental Wage Policy of India

 Payment of Wages Act, 1936
 Industrial Dispute Act, 1947
 Minimum Wages Act, 1948
 Equal remuneration Act, 1976
 Payment of Bonus Act, 1965
 Wage Board
Wage boards

 Wage boards consist of an impartial chairman , two
other independent members and two or three
representatives workers and employers each
 The recommendations of the board are first submitted
to the government for the acceptance
 After acceptance the government requests the parties to
implement them.
Objective Of A Good Wage Policy


 To establish good labor relations.
 To decide on appropriate wages
 To decide wages based on individual’s capability
 To develop a pre-determine scheme for payment of wages
 To establish linkages of wages payment with performance
 To provide for incentive payment
 To guarantee minimum wages
 To provide for neutralization of price rise
 To develop a wage structure which can attract talent
Compensation Issues

 The Issue of Equal Pay for Comparable Worth
 The Issue of Wage Rate Compression
 Living Wage Laws
 The Issue of Low Salary Budgets
k Y o u
Th an

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