Rewards, Compensation and

Employee Benefits
Jr. Class PGDBM
EDI, Gandhinagar
March 2021
 Universe
Incentive
schemes • Selective distribution
Rewards
Performance • Recognition tool
bonus

• Agreed upon Salary

• Governed through condition Compensation Amount
• Sustenance tool Against Loss

Accommodation • At large,
Canteen Employee
• Minimum selection barrier
Transport Benefits
Health • Retention Tool
Incentives

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 Objectives
• Reward according to • Alight business goals and
values and wants employee gains
• …for value they create • Operate fairly
• ….for right things to • Apply equitably
convey right message • Function consistently.
• ….for developing a • Operate transparently
performance culture
• …for motivating people
bad obtain their
commitment
• To retain and attract

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 Differentiation
• Are all three same?
• What is the difference between Award and
Reward?
• Historical Perspective

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The Towers Perrin Model
Transactional (tangible)

Pay Benefit

Communal
Individual

Work
L&D
Environment

Relational (intangible)
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Correlation with Employee Life Cycle
As long as he

Compensation
works
Without which As long as you

Benefits
no work wish quality
Regular retention
As and when

Rewards
Occurrence Have to be as he deserves
Governed par as possible
No categorical
through Irreversible – specification
mutually mostly
agreed terms Has to
Longer befitting to
awarding the Maslow’s
becomes Mark
nearly
mandatory To maintain
the high point
Motivation
example and
booster

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END OF SESSION 1

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 Reward Strategy Model
Analyse Business
Strategy and Needs

Develop HR Strategy
Analyse present HR and Assess needs of
reward policies and stakeholders – line
practises Develop & Justify managers & other emp.
reward strategy and
define guiding
Consult and involve principles Consult, involve and
senior management Communicate with
Prepare and test plan employees

Consult and involve Implement plan

senior management Final Communication
Review and Modify
as required

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 Economical Theories
The Law of Supply and Demand

Efficiency wage theory

Human Capital Theory

Capital Theory

Agency Theory

The Effort Bargain

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 Total Reward Model
Base pay

Contingent
Transactional
Pay

Employee
Rewards Benefit

L&D
Relational
The Work
Experience

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 Interwoven Mechanism

Employee Performance
Basic Pay
Benefits Management

Non –
Job Evaluation Contingent Pay Financial
Rewards

Market Grade and Pay

Analysis Structure

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Compensation Structure

Taxed
Reimbursed

Allowance

CTC
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 Rewards Types
Non
Monitory
Monitory
ESOP Recognition

Profit Share Felicitation

Exceptional
Variable Pay
Benefit

Incentives

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 Benefits
Purpose

• Motivation Builder
• Institutionalization
• Image Enhancer

Coverage

• Must be as large as possible

• If not all then a category
• No differentiation in one group

Check Points

• Sustainability check
• Nearly one way process
• Caution for interpretation

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 Extension of the RCEB Universe
Family Individual CSR

• Children • Health • Activity

Education Monitoring Appreciation
• Spouse • Health Support • Initiative
Involvement • Counseling Support
• Integration • Financial • Encouragement
Activity Assistance for Social Image
• Prestige building
Measures

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 Examples
Compensation Rewards Benefits

• Salary • Achievement • Vehicle

• Compensation Recognition • Vehicle
against loss • Completion Allowance
prize • Comfort
• Staff
Accommodation
• Free/Paid
Canteen/Food

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 Legal Framework
• Wage Period
Payment of Wages Act 1936 • Date

Provident Funds and • Coverage Limit

Miscellaneous Provisions Act • Security
1952 • Formula

• Minimum Rate for Day’s work

Minimum Wages Act 1948 • Skilled and Unskilled both

• Beneficial for both employee and employer

Employee State Insurance Act • Trouble Prevention tool
1948 • Unemployment allowance provision

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 Various Breakups
Scheme/Act Name Employee contribution Employer contribution

Employee provident fund 12% 3.67%

Employees’ Pension scheme 0 8.33%

Employees Deposit linked

0 0.50%
insurance

EPF Administrative charges 0 1.10%

EDLIS Administrative charges 0 0.01%

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