Answer 1

Compensation: The phrase "compensation" is relatively new, and it refers to

whatever an employee receives in exchange for their daily, weekly, or monthly
efforts to complete a specific assignment. Included are pay, salary, bonuses, perks,
benefits, and/or incentives. In essence, it is the mechanism by which an employee
supports his or her family, earns a living, and maintains a level of life. Therefore, it is
a component of the employer-employee relationship.
In a broader sense, compensation refers to the financial assistance provided to
workers by an employer pursuant to a written agreement in exchange for the
services provided. The compensation for employees enables them to maintain
themselves and their families and is related to production.
Agritech startup after merging with the big MNC would need an advanced
compensation strategy but before that, it becomes significant to understand the
compensation strategies and the factors which influence them
Therefore, Strategies for determining employee benefits and pay are known as
compensation plans. These plans provide details on the company's compensation
objectives as well as pay scales for various job roles. It also describes the process
the business uses to assess personnel before deciding on pay. This often contains a
description of the goals for internal equity and the external competitive market, a
specification of the pay programs that will be used and why, and details on how the
plans will be implemented.

Factors influencing compensation strategies: Designing compensation strategies

entails figuring out the hierarchy of grades, creating a compensation structure, and
deciding on pay packages with the intention of luring and keeping outstanding
employees. A compensation approach is influenced by the following external and
internal factors:
1. Individual factors: Employers take into account the employees' concerns
while developing their remuneration strategies. The level of the job is fixed in
part by the individual's ability, knowledge, expertise, attitude, gender, work
 environment, and experience, all of which are taken into consideration when
establishing the compensation plan.
An individual should have a personality that matches the requirements of the
position.
Similar to how, in some occupations, the drive for originality, invention, and
imitation matters.

2. Organizational factors: Employee productivity and efficiency, which influence

the design of the remuneration plan, are key factors in organizational learning.
The company's capacity to pay is gauged by this. In addition, other crucial
considerations include the size, technology, and control span needed to
complete any activity, which varies according to the size and structure of the
organization. The company's financial stability, together with the size, kind,
number of layers, and price of the technology it uses, all affect the
organization's ability to pay.

3. Competitive factors: Additionally, the organization's goal and vision have an

impact on the compensation approach. It refers to whether the organization is
prepared to take the reins, increase its level of competitiveness, or adapt to
changing environmental conditions.

4. Product cost factors: It is a method of turning the cost of the project into a
payment given to the person doing the work or going through with it. to do the
task. Thus, the process includes work analysis, job pricing, W/S survey
considerations, government laws, organizational ability to pay, and generating
pay packages for various levels of employees as an essential component of
compensation strategy.

Along with the given factors, the below-mentioned points need to be considered as
well while formulating the new strategy-
1. Company’s objective and mission: Every organization, regardless of its size,
nature, or technology, has its own goals and HR policy, as well as varying
amounts of grades or hierarchies to carry out its objectives.

2. Marketing rates and trends to fulfill objectives of external equity: Market

pricing and employee expectations are always changing due to shifting
corporate circumstances. The employer must thus comprehend the current
market conditions and developments in order to establish the most
appropriate remuneration strategy.

3. The organizational ability to pay to maintain the commitments: Despite the

fact that every employer is required to pay at market rates, some may have
personal restrictions that prevent them from paying at Considering the size,
technology, and workforce, par is appropriate. As a result, when developing
the strategy, the ability to pay is crucial.

4. Cost of living in the region: The variable component of remuneration must

take into account the fact that living expenses or standards of living vary from
location to location in order to create a sufficient buffer against rising living
costs.
 5. Company’s image and goodwill in the market: The market reputation and
goodwill accumulated by the firm heavily influence how it designs its
compensation plans.

Position

Compensation Pay By Person

Performance

FIGURE 1: COMPENSATION STRATEGY

Pay for a position: Pay for position balances with the benefits and difficulties of the
job. A significant initial salary and minimal variable benefits form the foundation of
the position-based approach. With their high-level salary, the employees are
supposed to be motivated, and under a fixed pay model, the "carrot" is offered prior
to the performance.
Pay for person: Pay for Person compensates for those personal and professional
qualities necessary for efficient performance as well as other components necessary
for attracting and keeping qualified personnel. The hardest and most subjective part
of compensation management is paying for the individual.
Pay for performance: The goal of pay for performance is to create a productive,
successful company that boosts employee performance and motivation. Pay for
performance links an employee's salary to his or her performance at work.

Hence, after analyzing the factors which influence the compensation strategy, the
new management of the start-up company must also look into the different basis on
which compensation is based i.e. Person, Position, and Performance.

Answer 2
International compensation: For multinational corporations, managing pay in an
international setting is a particularly challenging and important task (MNCs).
Comparable occupations are given vastly different pay and salaries owing to various
economic systems and levels of development in various nations, political variables,
customs, and cultural elements. Large companies are gradually replacing their
traditional expatriates with managers who have a stronger global perspective. Unlike
the conventional pay policy, which consisted of lump-sum reimbursements for
expatriate "discomforts," these managers need to be taken into account when
creating a global compensation strategy. A comprehensive understanding of the
employment and tax laws, social security systems, customs, and cost of living
indices of the host countries (where the subsidiaries are situated) is necessary for
developing an internationally recognized and equitable compensation scheme.
Therefore, it is crucial for MNCs to comprehend the components of an international
compensation system, as well as the new challenges in global compensation and the
unique issues related to relocating expatriates to their home companies. Because of
the complexity of international compensation, global organizations operating in a
multinational environment must pay particular attention to this issue.

Key components of International compensation: The total pay package

frequently varies from nation to nation. Due to variances in legally required benefits,
taxes, cultures, etc., compensation packages will vary. The following are the factors
that make up expatriate remuneration that is most crucial:
1. Base salary- Base pay is the sum of money that is used as a standard for all
other forms of remuneration (e.g. bonus, benefits). It is the main benefit of a
package of allowances for expatriates, many of which are tied to base pay
(such as housing allowances, cost of living adjustments, and foreign service
premiums). Base pay may be given in the local currency, the home currency,
or a mix of the two. However, the basic pay for foreign workers varies
depending on whether they are PCNs (Parent Country Nationals) or TCNs
(Third Country Nationals), or if an international rate is paid.

2. Benefits- Although benefits make up around one-third of the pay for regular
employees, they could make up more of the remuneration for expatriates.
Some of the issues an MNC should take into account in this respect are:
a) Whether the MNC should continue offering benefits to expatriates in
their home countries, especially if those benefits are not tax deductible.
b) Whether the MNC has the choice to sign up foreign nationals for host
country benefit programs and/or make up any coverage gaps.
c) Whether the host country's employee termination laws have an impact
on employee benefit rights
 d) Whether social security benefits for expatriates are provided by the
home or host nation.
e) whether benefits should be governed by home/host country
requirements.
f) Which nation should foot the bill for the benefits?
g) Whether other benefits should be utilized to make up for any coverage
gaps
h) Whether local nationals should have access to the home country
benefits programme (PCNs).
MNCs offer unique leaves and vacations in addition to the aforementioned benefits.
Special leaves like yearly home leave are frequent perk provided by many MNCs.
Other frequent advantages that expatriate managers typically receive include rest
and rehabilitation leave, free air travel for the manager and their family, and
provisions for emergency leaves in the event of unforeseen situations back home.
3. Allowances- MNCs provide their managers with a variety of perks. The
following are the most typical allowances:
a) Cost of Living allowances- The purpose of the allowance is to make up
for the disparities in the expense of living at home and abroad. Since it
is challenging to calculate COLA, the majority of MNCs enlist the help
of qualified agencies to supply the pertinent data and calculate the
COLA using the agency's data. Payments for utilities, personal income
tax, and discretionary purchases may also be included in the COLA.
b) Relocation allowances- The manager's own furniture, clothes, and
other goods that must be transported to the new assignment site are
often included, as are moving, shipping, storage, and temporary
housing expenses. Car and club dues in the host nation may also be
related costs.
c) Housing allowance- Housing allowances are given with the intention of
assisting foreign-based managers in maintaining their level of life.
Occasionally, accommodations are also given in accordance with the
rights of the particular management. Either an evaluated basis or an
actual basis is used to pay this kind of payment. This can either be a
set sum of money or a fraction of one's salary used to cover actual
housing expenses.
d) Education allowance- This is a crucial part of the remuneration for
expatriates. It pays for the costs associated with the children's
education, including enrollment fees, tuition fees, language instruction,
the cost of books and other supplies, as well as transportation costs to
and from school.
e) Hardship premium- PCNs are offered a wage increase as an incentive
to accept a foreign assignment or as payment for any hardship the
move may have caused. This issue needs to be addressed very
cautiously since it is quite difficult to determine which sites are more
difficult and which are less so.

4. Incentives- MNCs have also been developing unique incentive programmes to

keep international workers motivated.
 5. Variable pay- Plans for variable compensation for international employees
may resemble local initiatives. However, a poor performance rating may result
from the appraiser and appraisee's physical separation.

6. Bonuses- There are many different types of bonuses. One is a percentage

added to basic pay, which can be between 10% and 30% of base pay. The
primary issue with this strategy is that it is viewed as a component of basic
pay and is withheld upon repatriation, resulting in a pay reduction. This might
result in resentment and complaints. A lump-sum payment at the start of the
overseas assignment is a second strategy. This has the benefit of giving
expatriates cash at a time when their costs are high. The drawback of this
strategy is that it might result in an increase in the employee's tax rate and an
increase in income in a single year.

Answer 3 (a)
Salary and compensation survey: The most crucial and versatile instrument for
managing pay is the compensation and salary survey. It enables the W/S
Administrator to gather crucial information on the local community rates and
procedures to implement the inter-industrial equality idea and offer data to create
efficient W/S structures and wages, and pay methods for employees. Additionally, it
aids in resolving W/S for management.

Only the solid basis of accurate and substantial information or data may be used to
construct an effective and socially relevant compensation scheme. Data on the
method used to determine wage pay and compensation structures for various
occupations and levels, the number of differentials, and market prices for positions
are to be evaluated on the wage and salary standards in the region.
These surveys can also help food & health Pvt ltd. to know the following-
• Information: on the several pay components, including base pay, perquisites,
incentives, and revision rates as well as the manner of payment.
 • Selection of job: should be those who have undergone a job evaluation
programme and are accessible in other organizations in the specified location.
• Units selected: should be firms that are similar in terms of size, industry,
location, and compensation philosophy.
This survey can also serve various purposes in the organization such as-
1. It can help to compare or draft company HR policies.
2. research comparable industries' income levels and return percentages
3. To understand wage differentiations.
4. To assess the competitive entry-level of employees
5. to set hiring rates that are beneficial to the community
6. To reduce employee turnover brought on by wage inequality.
7. To boost the morale and happiness of employees.
8. To get aware of the market's trend for bonuses and perks
9. to fix the pay issues that are now plaguing the labour force.
By providing the organization with accurate benchmarks based on food and health
sector, company size, and closest rivals for talent, compensation surveys can enable
the company to make fully educated business decisions. Instead of being controlled
by the market, it will enable the company to comprehend and manage the talent
market.
If we are going to engage people in full capacity and hire new recruits then we may
provide new employees precisely what they want and attempt to keep things under
wraps, but in today's millennial-dominated workplace, striving for secrecy doesn't
actually work well. Having a clear wage structure in place to direct how job offers are
made is the best course of action. Excellent market statistics are necessary to get
there, though. We must be able to make and explain pay choices in a transparent
manner while also being consistent and up to date with the help of a good
compensation survey.

Answer 3 (b)
Types of salary and compensation surveys: Depending on the goals or purposes
of the organization, its size, and the available resources in terms of time and money,
wage surveys are carried out in a variety of methods. The main goal of a
compensation survey is to ascertain the external equity of a company's
remuneration. It aids in comparing the compensation philosophy, level, structure,
and system aspects of a company to those of other similar companies.
However, it is significant to understand the objectives of the compensation survey
before learning about the types. Some of its objectives are-
1. creating the company's external compensation policy.
2. Identify the topics that will be covered in a survey.
3. Planning and carrying out surveys.
4. Applying and interpreting survey results.
5. designing price points, incentives, and ranges.
6. balancing internal, external, and individual equity by modifying the structure.
Types-
 1. Informal survey: Informal surveys, as the name implies, are carried out in a
casual, cordial way by leveraging personal connections with others like
businesses or sharing information on matters relating to remuneration. With
this approach, the needed information may be obtained from businesses in
the same industry or from businesses in other industries. The main benefit of
an informal survey is a quicker response time and more precise and accurate
information being sought. Since the expense is almost little, the business may
conduct such surveys more regularly. The main drawback of an informal
survey is that the accuracy and dependability of the data rely on how mutually
trusted and understood the participants are.
2. External survey: The compensation surveys are carried out by outside
organizations or people. Professional organizations typically undertake
external surveys for the benefit of their members, and these surveys are
typically sector-specific, such as engineering, ITeS, textiles, fertilizer, cement,
food& health, and so on. Under the consideration of a professional fee,
management consultants or businesses that specialize in external surveys
also conduct compensation surveys for their clients. However, these surveys
are frequently expensive, making them unaffordable for many businesses to
conduct. Finally, depending on the information provided by applicants
regarding remuneration, employment agencies and career registrars also
undertake external compensation surveys.
3. Commissioned or packaged survey: Since the data are gathered from a
research organization or agency that consistently conducts such surveys and
publishes the data upon request, these are also known as commonly
published surveys. They do, however, charge for it. These figures, though
they may pertain to the same business, may not accurately reflect the size,
the number of employees, or the number of jobs required for any given
industry, thus they should be carefully examined.
Surveys can range in quality and breadth, so it's critical to choose the ones that are
most suited for the firm based on the respondents, the occupations they hold, and
the relevant labour markets where they are located. Because data will differ from
source to source, it is ideal for the food & health company to employ a variety of
surveys to market price tasks. Combined results from various sources are often
more accurate indicators of the going market rate.
However, it frequently happens that one survey is given priority over others because
it represents a set of organizations that are peers, the local labour market, or some
other significant cross-section of firms. A company eventually connects its pay
scales to this one source, but it's still crucial to get information from different surveys
to compare and contrast results and make such decisions.

Source: Textbook