SCHOOL OF OPEN LEARNING

Rewards and
Compensation
Management
MBAFT-7806

By Priyanka Gupta
Course Understanding to various components of
executive and non-executive compensation

objective Tools and techniques of job evaluation for

assessing and monetising the relative value
of jobs/ job categories;

Understanding in designing a compensation

policy .

Managing
compensation system on the principles of
equity, fairness and efficiency
Compensation
Is what employees receive in exchange for their
contribution to the organization.
-Keith Davis

B. Flippo, “The function compensation is defined as

adequate and equitable remuneration of personnel
for their contributions to the organizational
objectives.”

R. S. Schular: Compensation is such an activity

through which organization on the basis of its
ability and within law reasonably assesses the
contribution of employees directly and indirectly for
the distribution of financial and non financial
remuneration.
Employee POV
Selling Skills and Time: Sell their hand and brain to fulfill
primary needs

Fulfill cost of living and Lifestyle

Skill Set Valuation: Employees are aware that their skills

have a market value and expect to be compensated
accordingly.

Job Satisfaction & Performance: Adequate and fair

compensation is a key driver for job satisfaction and,
consequently, performance.

Skill Acquisition & Cooperation: Compensation packages

that include educational benefits can incentivize skill
acquisition and foster a cooperative environment.
 "Jane, the City Dweller vs. Emily, the Small-Town Resident"
Objective:
To understand how geographical location and lifestyle choices affect an employee's expectations and
satisfaction with their compensation package.

Emily, the Small-Town

Jane, the city dweller
Lives in a major city, works for a tech
company, earns a high salary but also
faces high living costs.
Resident
Lives in a small town, works for a local
business, earns a lower salary but
enjoys a lower cost of living.
Employer POV
Consider the operating cost of their business

Impact retention, attraction, productivity and

growth of the business

Business Outcomes: Employers evaluate the ROI of

their compensation packages by looking at the
outcomes employees bring

Long-term Strategy: Employers need to think

long-term, aligning compensation strategies with
the company's future goals and industry trends.
 "How Company X Increased Productivity by Offering
Educational Incentives"
Background:
Company X, a mid-sized tech firm, noticed a plateau in productivity
and innovation within their engineering department.

The Initiative:
Introduced an "Educational Incentive Program," offering to cover
the costs of relevant courses, certifications, and workshops.
They also allowed employees to dedicate 10% of their work hours
to educational pursuits.
Implementation:
Course Catalog creation
Flexible Hours
Peer Learning

Results:
• 20% increase in productivity.
• Innovation doubled
• 30% increase in employee satisfaction scores.
• Turnover reduced by 15% in the year following the
program's implementation.
Wage:

The basic monetary payment made to employees, usually calculated on an

hourly or daily basis.
⚬ subject to minimum wage laws.

Compensation:

A broader term that includes not only wages but also other financial and
non-financial benefits.
⚬ Includes base salary, bonuses, benefits like healthcare, retirement
contributions, and other perks. It is often tailored to individual roles
and responsibilities.

Rewards:

Encompasses all forms of financial returns, tangible services, and

mechanisms for recognition.
⚬ Include recognition, career development opportunities, and work-life
balance initiatives.
 Compensation

Uses complex data Better than Industry Non monetory benefits

analytics
Employees at Google are Life, health Insurance, pet
Use analytics to determine paid 11% more than the friendly environment,
compensation. global average Sleeping pods
Rewards Strengthen Core Values

Beyond
“Do the right thing”. Conscious efforts are made towards
being a fair-wage and equal-pay employer,

Salary" at
Focus on Talent

Market-leading Share Ownership Policy

British multinational consumer goods
company behind well-known brands like
Dettol, Strepsils, Air Wick etc
Do you have any questions?
 Outcomes

Compensation and rewards should be

A successful compensation and
designed to align with the company's
rewards strategy needs holistic
strategic goals and objectives,
approach

companies need to have flexible Well-rounded rewards system can

compensation strategies significantly impact employee
engagement, job satisfaction, and
retention

understanding compensation strategies The use of analytics and data can help in
across different cultures and markets making informed decisions regarding
can offer a competitive advantage compensation