Compensation and Benefit in India

Compensation and Benefits in Human Resource

Management
The salary and financial and non-financial benefits the company offers its employees in the
workplace are referred to as compensation and benefits in human resource management. It is a
crucial tool used by human resource managers to maximize people’s potential at work. Employees
often evaluate and compare the C&B plans that companies offer and prefer to work for organizations
with better C&B plans. Therefore, compensation and benefits are essential tools to attract quality
talent.
The remuneration structure is the reflection of an organization’s culture. Employee contribution-
based remuneration reflects a performance-driven culture, while skills-based remuneration reflects a
knowledge-driven culture.
To improve the overall performance and efficacy of the personnel working for the firm, compensation
is
crucial in human resource management. It is one of the primary motivators for employees to drive
them to give their best performance.
A good compensation plan should be able to take care of employees’ extra monthly expenses,
contribute to their savings and allow them to cope with inflation rates.
Compensation and benefits (commonly referred to as Comp & Ben or C&B in India) come under the
purview of the Human Resources department. Generally, in small set-ups with up to 150 employees,
HR generalists, in collaboration with the finance team, manage all aspects of C&B, whereas, in large
organizations, dedicated C&B specialists manage the function.
HR will find this toolkit helpful and will be able to use this as a reference to device compensation and
benefits policy for their establishments.

Objectives of Compensation and Benefits

Management
There can be a contrast in the views of employees and employers concerning C&B. While
employees would negotiate to get a higher pay package, employers would like to save big on their
allocated budget for a particular position. Therefore, compensation management should aim to
address and fulfil the needs of the employees and employers to come to a consensus. The
objectives of an excellent C&B plan are:

1. Compensation must satisfy the employees' general requirements and expectations for the
work performed.
2. To create a competent and fair compensation strategy to assist in recruiting qualified talent
and reward achievement.
3. To help prevent talent drain from the organization.
 4. To aid in improving a company’s ranking on digital platforms in terms of employee
satisfaction and motivation
5. To design the compensation and benefits according to India’s legal provisions, labor laws,
and the Minimum Wages Act of 1948. As per the Wages Act 2019, workers from all
industries are entitled to receive minimum wages fixed by their respective state
governments.
6. To control the overall cost to the company (CTC).

Types of Compensation
Typically, employees take compensation as synonymous with salary. Compensation is far more than just the
paycheck. Compensation can be monetary or non-monetary, known as direct or indirect benefits.
1. Direct Compensation
This involves direct monetary benefits given to the employees. This mainly includes employee salary and
variable pay for work. Other direct components include monetary forms of compensation given below.
Monetary forms of compensation include:

1. 1. Salary
2. 2. Bonus
3. 3. Profit share

1. 4. Sales incentives
2. 5. Monetary rewards
3. 6. Overtime payment

1. 7. Retirement pay
2. 8. Allowances
2. Indirect Compensation
Indirect compensation does not involve direct and fixed money transfers to employees. Apart from a fixed
salary, employees are given various types of allowances, reimbursements, and benefits that are not fixed.
Examples of indirect compensation are given below.

1. 1. Medical reimbursement
2. 2. Mobile phone usage reimbursement
3. 3. Internet Reimbursement
4. 4. Fuel reimbursement
5. 5. Health Insurance
6. 6. Life Insurance
7. 7. Stock options

1. 8. Company-paid accommodation
2. 9. Company vehicle for office use
3. 10. Scholarships for courses
 4. 11. Promotion opportunity
5. 12. Shifting to a desired role or location
6. 13. Other forms of public recognition

1. 14. Overtime pay

2. 15. Passes, tickets, or coupons to movies, matches, or shopping
3. 16. Retirement benefits such as pension plans
4. 17. Gratuity
5. 18. Flexitime
6. 19. Transportation or shuttle service
All the reimbursements are to be claimed by the employees and approved by their supervisor. Other
components, such as compensatory off, paid holidays, free lunch, etc., can also be a part of the compensation
and benefits package. One employment may be a better financial proposition than the other even when two
occupations offer the same salary due to differences in the indirect compensation or benefits package.

Mandatory Benefits in India

The employment benefits that are considered a must-offer to keep employees motivated at the
workplace are given below.
1. Health Insurance – As a part of the health insurance benefits policy, employers are mandated to provide
medical insurance to their employees. Generally, this policy covers the employee, spouse, and kids. Employers
can also offer extensive plans to cover an employee’s parents as well.
2. Gratuity – As per the payment of the Gratuity Act 1972, every employee is entitled to gratuity. Gratuity is a
sum of money paid by an employer to an employee for services rendered in the company. The gratuity amount
is equal to one-fourth of the last-drawn basic salary of an employee for each completed six-month period.
See. Gratuity Rules & Calculation

1. Completion of a minimum of five years of service – In case an employee resigns after working for a
minimum of five years with a company.
2. Employee retirement - If an employee retires, the gratuity is factored into the retirement plans given
by the company
3. Employee death - In the event of the death of an employee.
4. Employee disability – In case of an employee suffering any disability due to prolonged illness or
accident.
3. Employee's Provident Fund (EPF) - The employee’s provident fund in India is governed by the
Employees' Provident Fund and Miscellaneous Provision Act, 1952.

1. Employee contribution: As per the Act, employers should determine 12% of employees’ Basic pay +
Dearness allowance to EPF. Employees may also choose to contribute 24% of the EPF.
2. Employer contribution: Employer contribution is designated as 12% of the employee’s Basic pay +
Dearness allowance, out of which 8.33% goes to the employee pensions scheme (EPS), and the
remaining 3.67% goes to the employee provident fund (EPF) account.
The contributions are made on the wage ceiling, i.e., Basic Salary + DA or a new salary threshold of ₹15,000.
However, there are two standard methods for calculating EPF contribution amount if the income exceeds the
wage threshold of ₹15,000. Additionally, the employer is free to apply any of the methods.
See. EPF & EPS Rules & Calculation
4. Leaves and holidays – Leaves and holidays include benefits of paid time off for employees for annual
holidays, maternity leaves, and sick leaves.
See. Leave Encashment Rules & Calculation
5. Workplace security – The service laws of organizations must provide a healthy workplace for employees.
Companies must ensure the protection of employees from all kinds of harassment, such as sexual harassment
of women (covered under the Sexual Harassment of Women at Workplace Act 2013).
In India, sexual harassment is punishable under the IPC organizations must create a policy to prevent it.
It is mandatory for the companies to set up an internal complaint committee in all offices to deal with such
acts.

Salary and its Components

The regular payment (usually monthly in India) made by the employer to the worker for the work done is
termed a salary. The terms and components of the salary structure are mentioned in the employment agreement
or the appointment. The components of the salary structure are:
Basic Salary: Basic salary is the remuneration given to employees for their services to the company. This is
generally offered hourly, weekly, or monthly. The employee’s basic pay is the main part of the salary, usually
comprising 40% to 50% of the total salary. The basic pay is a fixed component of the Cost to Company (CTC)
package.
Dearness Allowance: This is a cost-of-living adjustment allowance mainly paid to government employees,
including pensioners in the public sector. However, companies in the private sector are free to include dearness
allowance as a salary component. It is calculated as a fixed percentage of an employee’s basic salary and is
adjusted per the inflationary trends to mitigate the impact of inflation on the employees.
House Rent Allowance (HRA): This salary component is offered to employees with rented accommodation.
The HRA is partially or fully exempt from taxes under Section 10(13A) of the Income Tax Act. It is fully
taxable if an employee does not live in rented accommodation.
See. House Rent Allowance Rules & Calculation
Leave Travel Allowance (LTA): LTA is the allowance given to employees for travel expenses. Workers must
submit proof of travel to claim the allowance. A salaried person can claim the LTA exemption under Section
10(5) of the Income Tax Act.
Special Allowance: Special allowance component is fully taxable in the salary structure. Special allowance
usually comprises the remaining part of the salary after allocating it to other major components such as basic
pay and HRA.
Bonus: Some employers agree to pay a quarterly, biannual, or annual performance incentive to the employees,
called bonus. The bonus is a part of the gross salary and is fully taxable at the employee’s end.
Employee contribution to the PF: The employee provident fund (EPF), receives monthly contributions of
12% of the employee’s Basic pay + Dearness allowance from both the employer and the employee. A
deduction for the employee's contribution to the EPF is allowed under section 80C of the Income Tax Act,
1961.
Professional Tax: It is levied by the state as the tax on employment. The state can charge a maximum of ₹
2,500 as a professional tax in a financial year. A professional tax of ₹ 2400 yearly is applicable in Karnataka.

Components of Compensation Planning

1. Market Information Based – Keep an eye on the employment markets and what the competitors offer.
This helps create a competitive compensation and benefits plan. Compensation should be commensurate with
the broader job market to keep employees motivated.
2. Performance Based – Salary alone might not be sufficient to keep employees enthusiastic about delivering
their best performance. Building a system of incentivizing performance and allocating rewards can be a game
changer in accelerating performance.
3. Skills, Position, and Job-Based – Keeping employees’ compensation commensurate with their skills and
role in the company is vital in keeping them engaged and retained.
4. Individual career development – Take ownership of the employees’ career growth by providing them
opportunities to upskill themselves and strengthen their existing skills. Businesses prosper where the
knowledge & skills of employees prosper.
5. Consistent and Fair – Build an environment of fairness in the procedure and distribution of payments and
deliver on the promises to earn employees’ trust. Automating the payments helps achieve this objective. There
is a strong correlation between fairness in pay distribution and engagement. Employees tend to increase their
engagement when they understand that their compensation is fair and consistent.

Determining Compensation and Benefits

Organizations are free to fix salaries and set salary structures for each role and level, keeping in mind the
minimum wages set by the Government of India as per the Minimum Wages Act, 1948. However, employers
must be cognizant of the fact that accessing a quality talent pool will be challenging if they are unwilling to
pay the market rate.
Each position has a market rate or, let’s say, the rate at which employees are willing to offer their services.
However, it isn’t easy to ascertain it as people are hardly transparent about their salaries.
To invite compensation data from various organizations, salary surveys can be conducted by the compensation
specialist to determine the market rate for a specific position in a particular sector. Survey results can then be
used to determine the average rate for each position in a business.
Since all candidates differ in experience and skill, their compensation is also ideally different. Hence, the
compensation specialists determine each position's ideal salary and salary range. Each range has a mid-point
known as compa-ratio. Compa-ratio of 100 percent means the exact midpoint of the salary range.
The other method is fixing the salary at an agreed percentile in the salary band. Salary bands differ from
company to company. Percentiles are established based on existing pay ranges or what competitors are
offering in a certain industry.
Determining an individual’s fitment within the salary range is a complex procedure. To determine a fair salary
for a position, the following variables are considered –

 Highest degree earned and specialization

 Total years of experience
 Relevant experience

 Current salary
  Tenure with the company
 Full-time or part-time role

 Individual’s location
 Salary bands or grades followed by the company
 Performance rank or rating

Total Rewards Model

Total Rewards is a scientific approach that considers all the work-life aspects impacting the satisfaction and
motivation of an employee. Following are the elements the model considers while determining an employee’s
compensation.
1.1. Transactional Rewards – These are tangible rewards comprising direct and indirect compensation and
benefits. Transactional rewards and benefits include the following components.
1.1.1. Salary – Fixed base pay and dearness allowance in some cases
1.1.2. Benefits – Other indirect monetary benefits, including allowances, reimbursements, retirement pay, and
health care benefits
1.1.3. Rewards – Bonus, performance incentives, and commissions
1.2. Relational Rewards – These are intangible rewards and benefits, which include the following.
1.2.1. Organizational culture - Culture should be inclusive, supportive of new ideas, free from bias, and allow
for making mistakes and learning.
1.2.2. Recognition – Employee recognition programs include various category awards for performance,
achievements, etc. Promotion and verbal appreciation in peer presence are also examples of employee
recognition.
1.2.3. Total Wellbeing – It includes employee assistance programs to assist them in overcoming financial,
physical, relationship, or mental challenges. Giving employees the opportunity to volunteer for social causes
also foster their well-being. Further, total well-being includes company-sponsored events for employees and
their families to allow employees to socialize, forge peer relations, and foster belonging to the organization.
1.2.4. Flexibility – After the pandemic, flexibility has become essential for employees when selecting a job or
deciding to stay in an organization. Hybrid work arrangements and offering flexitime go a long way in
reducing employee turnover.
1.2.5. Career and personal development – These initiatives include company-sponsored training, educational
programs, and mentorship programs to empower employees by enhancing their competence at work. These
initiatives also serve as the foundation for employees to develop within the company and realize their full
potential.
The basis of this model is the fact that pay alone is not a sufficient factor to keep employees happy and
engaged at the workplace. Other factors, such as culture and management practices, are significant hooks for
employees to be glued to the organization.
i. Evaluate the current system and what is already in place.
ii. Invite employee feedback to determine the missing factor and to take their views on the existing practices.
iii. Involve leadership in identifying goals and priorities of the C&B strategy.
iv. Align the C&B strategy with organizational objectives and values.
v. Keep the total rewards plan inclusive, flexible, and fair.
vi. Communicate total rewards to employees and how they will help achieve the desired results.

Pay Model of Compensation

The pay model of compensation developed by G.T. Milkovich and J.M. Nemwan in 2002 defines
compensation as financial gain and tangible benefits given to employees for work. The model comprises three
components:

1. Compensation Objectives
2. Compensation Policy
3. Compensation Techniques
1. Compensation Objectives
As per the pay model of compensation, the objective of remuneration systems is to achieve organizational
objectives, including fairness, efficiency, and conformity to regulations.
i. Fairness – Fairness refers to having a reward system that rewards performance, not people. It should be
competitive to employee roles, experience, and industry standards. Rewards can be automated to achieve
consistency in payouts.
ii. Efficiency – The effectiveness of compensation systems translates to improved performance, satisfied
customers, and cost reduction.
iii. Compliance with legislations and regulations – For an organization to abide by the law, its compensation
model must conform to the national/ central regulations and legislations. It must be updated from time to time
as per the revised regulations.
2. Compensation System Policies
As per the Pay Model of Compensation, the remuneration system must relate to business objectives,
competitive performance, and the contribution of employees. The policy of compensation structure is based on
the following four pillars.
1. Internal Alignment – Internal alignment means rewarding different sorts of jobs while also matching
remuneration for similar work. Positions are evaluated according to how much they contribute to the
organization’s goals. If employees believe that the compensation structure is just, they will be more likely to
develop and accept training.
2. Competitiveness - The compensation plan must be sufficiently competitive in comparison to what
competitors offer.
3. Contributions – Employee contribution is crucial in keeping their performances competitive to
deserve/attract the best remuneration in a system. Incentives and rewards must be based on what employees
contribute.
4. Adaptable – The remuneration system must be efficient to adapt to new requirements. New requirements
can result from new regulations or new objectives for the business.
3. Compensation Techniques
As per the pay model of compensation, the techniques of the compensation model close the gap between
policy and objectives. Techniques such as skills analysis, work analysis, or market analysis can be adopted to
develop a compensation structure. Tools such as surveys, assessing employee contribution based on
performance guidelines, open communications, etc., are an essential aid to the compensation techniques.
Types of Compensation as Per Pay Model of Compensation
An employer has the freedom to select and put together a basket of benefits that best suit the company’s
objectives and employee needs. The popular forms of compensation, as listed by the pay model, are listed
below.
1. Basic Salary - see above under the section ‘salary and its components.
2. Commission – Commission is generally offered apart from the basic salary for target-oriented roles such as
meeting sales targets, etc.
3. Overtime Pay – As per the pay model, employees should be compensated for the extra hour they work for a
company. Overtime pay is the remuneration given to compensate workers for hours exceeding the regular
work hour mentioned in an employee's employment agreement.
4. Bonus or Profit Sharing – Bonus is given over and above the basic salary. Employers may determine a
bonus pool, of which a certain percentage can be set aside for each role type. A larger bonus share should be
designated for the employees in positions with greater responsibility.
5. Stock Options – A stock option is a benefit wherein employees are awarded company stocks annually.
Employee motivation is increased since they receive a portion of the company's profits and are involved in its
expansion in this way.
6. Reimbursement, such as travel, meal, housing expenses, etc., helps cover employees’ mandatory expenses.
7. Health Insurance – It is mandatory to provide health benefits to employees.
8. Employee Provident Fund and Employee Provident Schemes - see above under the section ‘Mandatory
Benefits in India’.
9. Other benefits that employers can choose from are:

 a. Dental Insurance – Dental treatment is expensive and hence an important consideration in some
countries. In India, this is not much popular or mandatory to provide dental insurance.
 b. Life Insurance
 c. Pension and Retirement Benefits
 d. Tax Benefit Schemes
 e. Accidental Cover
 f. Mutual Funds
The Pay Model Compensation provides a structured way of organizing remuneration systems. The three
components of the model – objectives, policies, and techniques are its three backbones. The compensation
system must be competitive and aligned with the company’s goals.
Net Salary Calculation
Net or take-home salary calculation can be understood by the following illustration.
Illustration:
Your Cost to Company (CTC) = ₹ 10 lakh
Bonus in a financial year = of ₹ 100,000
Then your total Gross salary will be calculated by subtracting the Bonus from the Cost to Company (CTC).
Gross salary =₹10,00,000 – ₹100,000 = ₹ 9,00,000
Following the simple method of EPF calculation, the EPF contribution will be computed on a minimum salary
threshold of ₹15,000 per month. 12% of ₹15000 as the employee contribution will be = ₹1,800 a month or
₹21,600 per year.
Now, the employer will make the exact contribution of ₹21,600 towards the EPF (8.33% of the employer’s
contribution gets diverted to the employee pension scheme).
Total Deductions = Employee Contribution + Employer Contribution
Total Deductions = ₹ 21,600 + ₹ 21,600 = ₹ 43,200.
Take Home Salary = Gross Pay – Total Deductions
Net Salary = ₹ 9,00,000 – ₹ 43,200 = ₹ 8,56,800

Other Deductions
In addition to the above standard deductions, some companies also deduct a yearly amount of ₹ 3,000 towards
employee insurance. Please factor this in total deductions in case your company makes this deduction.
In Karnataka, the professional tax of ₹ 2,400 per year is deducted from the gross salary. Please factor in this
deduction if your employer deducts professional tax.
So, the Total Deductions after factoring in the other deductions will be = ₹21,600 + ₹21,600 + ₹3,000 + ₹2,400
= ₹48,600
Take Home Salary = Gross Pay – Total Deductions
Take Home Salary = ₹ 9,00,000 – ₹ 48,600 = ₹ 8,51,400
Some companies also deduct the amount towards Medical Insurance in which the annual premium payable is
equally borne and paid by employer and employee. In some cases, the entire premium amount is borne and
paid by the employer. This should also be factored in accordingly while calculating net salary.
See. Pay Calculator with Basic+DA taken as Actual for EPF Calculation
See. Pay Calculator with the Threshold of 15k for EPF Calculation
 Unit 3

1. Job Security: "Job security" refers to the level of confidence an employee has in retaining
their current job over an extended period without the fear of being laid off, terminated, or
facing unexpected career disruptions. It is an important aspect for many individuals because
it provides a sense of stability and peace of mind.

2. Factors:
• Economic Conditions: During times of economic stability, companies are more
likely to retain their workforce. In contrast, economic downturns might lead to
cost-cutting measures, including layoffs.
• Industry Trends: Some industries are inherently more stable than others. For
instance, healthcare and essential services tend to be more resilient during
economic downturns compared to sectors like hospitality or retail.
• Company Performance: A well-performing company with consistent growth is
likely to offer better job security compared to companies facing financial
difficulties.
• Automation and Technology: The rise of automation and technology can impact
job security, as certain roles might become obsolete due to advancements in
artificial intelligence and robotics.
• Skill set and Adaptability: Employees who possess a diverse skill set and a
willingness to learn and adapt are often better equipped to weather changes in
the job market.
• Contract Type: Permanent positions typically offer more job security compared to
temporary or contract roles, which can be terminated when projects are
completed.
• Government Regulations: Labor laws and regulations can influence job security by offering
protections against unjustified terminations or layoffs.
• Globalization: In an interconnected world, factors in one region can affect job security in
another. Companies might outsource jobs to countries with lower labor costs.
• Organizational Restructuring: Mergers, acquisitions, and company reorganizations can lead
to changes in staffing, affecting job security for some employees.
• Performance and Attitude: Employees who consistently perform well and contribute
positively to the workplace environment are more likely to be retained during challenging
times.

3. Career Development: Career development refers to the process of managing and advancing
one's career over time. It involves setting goals, acquiring new skills, gaining experience, and
making strategic decisions to achieve professional growth and success. Effective career
development involves careful planning, continuous learning, and adapting to changes in the
job market.
4. Key aspects of career development:
• Self-Assessment: Understand your strengths, weaknesses, interests, values, and long-term
career
aspirations. This self-awareness helps you align your career choices with your personal goals.
• Goal Setting: Set short-term and long-term career goals. These goals could be related to
job title,
 salary, skills, industry, or leadership positions.
• Skill Development: Continuously acquire new skills and knowledge relevant to your field.
This
might involve formal education, workshops, online courses, or on-the-job learning.
• Networking: Build a strong professional network within your industry. Networking can
provide
opportunities for mentorship, collaborations, job referrals, and staying updated on industry
trends.
• Resume Building: Create a well-organized and up-to-date resume that highlights your
achievements, skills, and experiences. Tailor it to different job applications as needed.
• Job Experience: Gain diverse work experiences that contribute to your skillset. This could
include
taking on challenging projects, seeking promotions, or moving to different roles or
departments.
• Seeking Feedback: Regularly solicit feedback from colleagues, supervisors, and mentors.
Constructive criticism can help you identify areas for improvement and growth.
• Career Planning: Develop a clear roadmap for your career path, considering the steps and
milestones you need to reach to achieve your goals.
• Seeking Feedback: Regularly solicit feedback from colleagues, supervisors, and mentors.
Constructive criticism can help you identify areas for improvement and growth.
• Career Planning: Develop a clear roadmap for your career path, considering the steps and
milestones you need to reach to achieve your goals.
• Continual Learning: Stay updated on industry trends and advancements. Continuous
learning
shows your commitment to professional growth and adaptability.
• Leadership and Soft Skills: Focus on developing soft skills such as communication,
leadership,
teamwork, adaptability, and problem-solving. These skills are valuable in any role.
• Mentorship and Coaching: Seek guidance from experienced professionals who can offer
insights,
advice, and support based on their own career journeys.
• Job Market Research: Stay informed about the job market, including in-demand skills,
industries,
and job opportunities. This knowledge can help you make informed decisions.
• Adaptability: Be open to change and willing to pivot your career plans as needed. The job
market
and industries evolve, and adaptability is a valuable trait.
• Company Culture Fit: Consider whether a company's values, culture, and work
environment align
with your own preferences and goals.
• Professional Branding: Establish a consistent and positive online presence, including on
social
media and professional networking platforms.

5. Training:
Training is important for several reasons, both for individuals and organizations. It plays a
crucial role in personal and professional development, skill enhancement, and overall
growth. Here are some key reasons why training is important:
 • Skill Development: Training provides individuals with the opportunity to acquire new skills
and improve existing ones. These skills can be technical (such as using software or operating
machinery) or soft skills (such as communication, leadership, and teamwork).
• Increased Productivity: Well-trained employees are more efficient and effective in their
roles. They can perform tasks with greater accuracy and speed, leading to increased
productivity for the organization.
• Adaptation to Change: Training helps individuals and organizations adapt to changes in
technology, industry trends, and best practices. This ensures that employees remain up-to-
date and capable of handling new challenges.
• Employee Engagement: Investing in employee training demonstrates that the organization
values its employees' growth. Engaged employees are more motivated and committed to
their work.
• Job Satisfaction: When employees feel competent and equipped to handle their
responsibilities, job satisfaction tends to increase. This can lead to higher morale and
reduced turnover.
• Retention: Organizations that provide training opportunities are more likely to retain
talented employees. Employees appreciate employers who invest in their professional
development.
• Innovation: Training can encourage creative thinking and innovation by exposing
employees to new ideas and approaches.
• Consistency: Training ensures that all employees have a consistent understanding of
policies, procedures, and company values. This consistency can contribute to a positive
workplace culture.
• Risk Management: In industries where safety is a concern, proper training can mitigate the
risk of accidents and ensure that employees follow proper protocols.
• Leadership Development: Training programs can identify and nurture individuals with
leadership potential, preparing them for future leadership roles within the organization.
• Customer Satisfaction: Well-trained employees are more likely to provide excellent
customer service, which contributes to higher customer satisfaction and loyalty.
• Competitive Advantage: Organizations that invest in training often have a competitive
edge. Their skilled workforce can help them deliver superior products and services.
• Career Growth: For individuals, training can lead to career advancement opportunities.
Gaining new skills and knowledge can open doors to new roles and responsibilities.
• Confidence Building: Training boosts employees' confidence in their abilities, allowing
them to take on more challenging tasks and responsibilities.
• Compliance and Regulations: In industries with strict regulations, training ensures that
employees are aware of and adhere to legal and regulatory requirements.

6. To whom training is provided?

Training can be provided to a wide range of individuals, depending on the context and goals
of the training program. Here are some common groups to whom training is often given:
• Employees: Employee training is one of the most common forms of training. It is provided
to enhance skills, improve performance, and ensure that employees are equipped to handle
their roles effectively. This includes training for new hires as well as ongoing professional
development for existing employees.
• Managers and Leaders: Training for managers and leaders focuses on leadership skills,
team management, decision-making, conflict resolution, and other skills necessary for
effective leadership.
 • New Hires: New employees often go through an onboarding process that includes training
to help them understand the organization's culture, policies, procedures, and job
responsibilities.
• Sales and Customer Service Teams: Training for sales and customer service teams equips
them with the skills needed to effectively interact with customers, handle inquiries, and
close sales.
• Technical and IT Staff: Technical training is provided to individuals working in technical
roles, such as IT professionals, engineers, and technicians. It helps them stay updated on the
latest technologies and tools.
• Healthcare Professionals: Doctors, nurses, and other healthcare professionals receive
training to stay current with medical advancements, patient care practices, and compliance
with healthcare regulations.
• Manufacturing and Production Workers: Training for manufacturing and production
workers focuses on safety protocols, equipment operation, quality control, and process
efficiency.
• Customer-Facing Staff: Training for employees who interact directly with customers, such
as receptionists and front desk staff, ensures they provide a positive and professional
customer experience.
• Remote or Virtual Teams: Training for remote or virtual teams focuses on effective
communication, collaboration tools, time management, and maintaining productivity in a
remote work environment.
• Compliance and Regulatory Training: Certain industries, such as finance and healthcare,
require employees to undergo compliance training to ensure adherence to industry
regulations and legal requirements.
• Diversity and Inclusion Training: Organizations may provide training on diversity, equity,
and inclusion to create a more inclusive workplace and promote cultural sensitivity.
• Cross-Functional Teams: Training might be provided to groups of employees from different
departments who need to collaborate on specific projects or initiatives.
• Entrepreneurs and Small Business Owners: Individuals running their own businesses might
seek training to improve their entrepreneurial skills, marketing strategies, financial
management, and more.
• Professional Development for Individuals: Some training programs are open to individuals
who want to enhance their skills or pursue personal interests, even if they are not employed
by a specific organization.

The specific audience for training depends on the goals of the training program, the industry, and
the needs of the organization or individuals involved. Training can be customized to address the
unique requirements of different groups.
Feedback coaching is a process that involves providing constructive feedback and guidance to
individuals or teams to help them improve their performance, skills, and overall effectiveness.
This coaching approach focuses on giving feedback in a supportive and developmental manner,
with the goal of helping the recipient enhance their capabilities and achieve their professional or
personal objectives.

Key aspects of feedback coaching include:

Observation: The coach observes the individual's or team's performance, behavior, or actions in
a specific context. This may involve watching them in action, reviewing work outputs, or
assessing their interactions with others.

Feedback: The coach provides feedback based on their observations. This feedback is typically
specific, actionable, and focused on both strengths and areas for improvement. It is often
framed in a constructive and nonjudgmental manner.

Goal Setting: Feedback coaching often involves setting clear and achievable goals or
objectives. These goals should be aligned with the individual's or team's aspirations and should
address the areas identified for improvement.

Action Planning: Coaches and individuals work together to develop action plans that outline the
steps needed to reach the agreed-upon goals. These action plans may include training, skill
development, or behavior modification.

Regular Check-Ins: Feedback coaching is an ongoing process that includes regular check-in
meetings or sessions. These meetings allow the coach and individual to track progress, discuss
challenges, and make adjustments to the action plan as needed.

Support and Encouragement: Coaches provide support and encouragement to individuals as

they work toward their goals. This support can come in the form of guidance, resources, and
motivation to stay on track.

Reflection and Review: Feedback coaching often includes opportunities for individuals to reflect
on their progress and the impact of the changes they are making. It may also involve periodic
reviews of their performance and development.

Feedback is highly valued in organizations for several reasons, and it plays a crucial role in
promoting continuous improvement, employee development, and overall organizational
success.

Here are some key ways in which feedback is valued in organizations:

Performance Improvement: Feedback provides employees with insights into their strengths and
areas for improvement. By addressing these areas, individuals can enhance their performance
and contribute more effectively to the organization's goals.
Enhanced Communication: Feedback promotes open and transparent communication within the
organization. It allows employees to express their ideas, concerns, and suggestions, fostering a
culture of collaboration and idea-sharing.

Employee Development: Organizations value feedback as a means to support employee

development and growth. Constructive feedback helps employees identify skill gaps and
opportunities for skill development, which can lead to career advancement.

Goal Alignment: Feedback ensures that employees' efforts are aligned with the organization's
strategic goals and objectives. When feedback is tied to performance expectations, it helps
employees understand how their work contributes to the bigger picture.

Conflict Resolution: Constructive feedback can be a tool for resolving conflicts and addressing
issues within the workplace. It provides a structured way to address concerns and find solutions
to problems.

Employee Engagement: Regular feedback and recognition make employees feel valued and
engaged. When employees receive acknowledgment for their contributions and know that their
voices are heard, they are more likely to be motivated and committed to their work.

Innovation and Creativity: Feedback can stimulate innovation and creativity within an
organization. Employees who receive feedback are more likely to think critically about their
work, explore new ideas, and suggest improvements.

Customer Satisfaction: In customer-facing roles, feedback from customers is invaluable for

improving products and services. Organizations that collect and act on customer feedback can
enhance customer satisfaction and loyalty.

Organizational Learning: Feedback is a source of valuable information for the organization as a

whole. It helps leaders and decision-makers understand what is working well and what needs
improvement, enabling data-driven decision-making.

Employee Retention: A culture of feedback and growth can contribute to employee retention.
When employees feel that they are growing, learning, and being recognized for their
contributions, they are more likely to stay with the organization.

Adaptation to Change: Feedback can highlight areas where an organization needs to adapt to
changing market conditions, customer preferences, or industry trends. This adaptability is
crucial for long-term sustainability.

Compliance and Quality Assurance: In regulated industries, feedback is essential for ensuring
compliance with regulations and maintaining high-quality standards. Feedback mechanisms
help identify and rectify compliance and quality issues.

To maximize the value of feedback in organizations, it's important to establish a

feedback-rich culture where feedback is both given and received effectively. This includes
training leaders and employees in providing constructive feedback, implementing regular
feedback processes, and using technology and tools to streamline feedback collection and
analysis. Additionally, organizations should create an environment where feedback is seen as a
learning opportunity and not a source of fear or punishment, fostering a growth mindset among
employees.

How coaching is valued by organization?

Coaching is highly valued by organizations for its potential to enhance employee development,
performance, and overall effectiveness.

Here are some key reasons why coaching is valued in organizational settings:

Professional Development: Coaching provides employees with personalized guidance and

support to help them develop their skills, knowledge, and competencies. This investment in
professional development is seen as a valuable way to upskill the workforce and improves the
organization's overall capabilities.

Leadership Development: Coaching is often used to groom future leaders within the
organization. Leadership coaching helps individuals at various levels of leadership develop the
skills and qualities needed to lead effectively.

Improved Performance: Coaching can lead to enhanced job performance. By addressing

specific challenges, setting goals, and providing ongoing feedback and support, coaches help
employees perform at their best, which benefits both the individual and the organization.

Retention and Engagement: Organizations value coaching as a tool to retain and engage their
employees. When employees receive coaching and see that their development is a priority for
the organization, they are more likely to feel valued and committed to their jobs.

Conflict Resolution: Coaching can be an effective way to address interpersonal conflicts and
workplace issues. Coach’s help employees navigate difficult situations and find solutions that
promote a harmonious work environment.

Goal Alignment: Coaching ensures that employees' goals and objectives are aligned with the
organization's mission and strategic priorities. This alignment helps the organization achieve its
goals more effectively.

Innovation and Creativity: Coaching can stimulate innovation and creativity by encouraging
individuals to think critically, explore new ideas, and take calculated risks. This can lead to
improved products, services, and processes.

Succession Planning: Coaching is a valuable tool for succession planning. It helps identify high-
potential employees and prepares them for leadership roles within the organization, ensuring
continuity and leadership stability.

Cultural Alignment: Coaching can reinforce the organization's culture and values by helping
employees understand and embody these principles in their work and interactions. Improved
Communication: Effective coaching often involves improving communication skills, which can
enhance teamwork, collaboration, and the overall flow of information within the organization.

Adaptation to Change: In a rapidly changing business environment, coaching can help

employees and leaders adapt to new challenges and market conditions, fostering agility and
resilience.

Customized Solutions: Coaching provides customized solutions tailored to an individual's or

teams unique needs and circumstances, making it a flexible and adaptive approach to
development.

Employee Well-Being: Coaching can contribute to employee well-being by addressing stress,

work-life balance, and personal development issues. A focus on employee well-being can lead
to higher job satisfaction and lower turnover rates.

When it comes to fostering solidarity, socializing, camaraderie, affection, and passion within an
organization, these points are often integral to creating a positive and engaging work
environment.

Here's a focus on each of these aspects:

Solidarity: Team Building: Organize team-building activities and exercises to strengthen bonds
among employees. This can include group challenges, off-site retreats, or collaborative projects.

Inclusive Culture: Promote inclusivity and diversity within the organization, ensuring that all
employees feel valued and included, regardless of their backgrounds.

Shared Goals: Emphasize shared organizational goals and values to create a sense of purpose
and unity among employees.

Socializing: Social Spaces: Create informal social spaces within the workplace where
employees can gather, relax, and interact casually. This can include break rooms, lounge areas,
or even virtual hangout spaces for remote teams.

Events and Celebrations: Organize social events and celebrations, such as holiday parties,
team lunches, or milestone achievements, to encourage socializing outside of regular work
tasks.

Social Activities: Encourage employees to participate in social activities or interest groups

within the organization, such as sports teams, book clubs, or volunteering initiatives.

Camaraderie: Shared Experiences: Encourage employees to share experiences, both

professional and personal, to build rapport and camaraderie. This can include sharing success
stories, challenges, or even personal interests.

Cross-Functional Teams: Create opportunities for employees from different departments or

teams to collaborate on projects, fostering a sense of unity and camaraderie across the
organization.
Recognition and Appreciation: Acknowledge and appreciate employees' efforts and
contributions regularly. Publicly recognize team achievements to strengthen the sense of
camaraderie.

Affection: Open Communication: Promote open and honest communication among team
members. Encourage them to express appreciation and gratitude for each other's work.

Mentoring and Support: Implement mentoring programs where experienced employees provide
guidance and support to newcomers, fostering a sense of care and affection within the
organization.

Wellness Initiatives: Support employees' well-being through wellness programs and initiatives
that show the organization's concern for their physical and mental health.

Passion: Alignment with Values: Ensure that employees' work aligns with the organization's
values and mission. When individuals believe in the mission, they are more likely to be
passionate about their work.

Challenging Work: Provide opportunities for employees to tackle challenging and meaningful
projects that ignite their passion and enthusiasm.

Continuous Learning: Support continuous learning and professional development, allowing

employees to pursue their interests and passions within their roles

By focusing on these points, organizations can create a workplace culture that promotes
solidarity, socializing, camaraderie, affection, and passion among employees. This, in turn, can
lead to improved morale, higher employee engagement, and a more vibrant and productive
work environment.
Unit 5

Organizational motivation refers to the factors and strategies that drive employees and teams
within an organization to perform at their best and achieve their goals. Incentives play a crucial
role in motivating individuals and teams within an organization.

Common incentives used to motivate employees and foster organizational motivation:

Financial Incentives:

Salary and Bonuses: Competitive base salaries and performance-based bonuses are common
financial incentives. They reward employees for their hard work and contributions.

Profit Sharing: Some organizations offer profit-sharing programs, where employees receive a
percentage of the company's profits as a bonus.

Stock Options and Equity: Providing employees with stock options or equity in the company can
align their interests with the company's long-term success.

Non-Financial Incentives:

Recognition and Awards: Acknowledging and rewarding employees for their achievements
through awards, certificates, or public recognition can boost motivation.

Promotions and Career Advancement: Offering opportunities for career growth and
advancement within the organization can motivate employees to excel.

Flexible Work Arrangements: Providing flexible work schedules or remote work options can be
an incentive, as it enhances work-life balance.

Training and Development: Investing in employee development through training and educational
opportunities can motivate individuals to improve their skills and grow within the organization.

Work-Life Balance: Encouraging a healthy work-life balance by promoting vacations, paid time
off, and manageable workloads can motivate employees to remain engaged and productive.

Employee Wellness Programs: Offering wellness programs, health benefits, and gym
memberships can improve employees' overall well-being and motivation.

Team-Based Incentives:

Team Bonuses: Rewarding entire teams for achieving specific goals or milestones can foster
collaboration and a sense of collective achievement.

Team Building Activities: Organizing team-building events and activities can help build
camaraderie and boost team motivation.
Social Incentives:

Peer Recognition: Creating opportunities for colleagues to recognize each other's

accomplishments can provide a sense of belonging and motivation.

Mentorship and Coaching: Offering mentorship and coaching programs can motivate employees
by providing them with guidance and opportunities for skill development.

Job Enrichment and Autonomy:

Empowerment: Allowing employees more control over their work, decision-making, and the
opportunity to take on challenging tasks can be motivating.

Task Variety: Providing diverse and interesting tasks can prevent monotony and boost
motivation.

Corporate Culture and Values: Alignment with Values: A strong organizational culture that aligns
with an employee's values can be a powerful motivator.

Purpose-Driven Work: Connecting employees to the larger purpose and mission of the
organization can inspire them to give their best effort.

Performance Feedback:

Regular Feedback: Providing constructive feedback and performance evaluations helps

employees understand their strengths and areas for improvement, which can motivate them to
excel.

Non-materialistic incentives, also known as intrinsic or non-monetary incentives, focus on

motivating employees through intangible rewards that are not tied to financial compensation.

These incentives tap into employees' internal motivations, values, and psychological needs,
fostering a sense of satisfaction and fulfillment in their work.

Some examples of non-materialistic incentives:

Recognition and Appreciation:

Praise and Thanks: Regularly expressing appreciation for an employee's efforts and
achievements can boost morale and motivation.

Personal Growth and Development:

Learning Opportunities: Providing access to training, workshops, seminars, and educational

resources encourages personal and professional development.

Skill Enhancement: Allowing employees to acquire new skills, take on challenging projects, and
gain expertise can be highly motivating.

Autonomy and Empowerment:

Decision-Making Authority: Giving employees more control over their work, allowing them to
make decisions, and trusting their judgment can enhance motivation.

Freedom to Innovate: Encouraging employees to propose and implement innovative ideas can
make them feel valued and motivated to contribute more.

Meaningful Work:

Purposeful Projects: Assigning tasks and projects that align with an employee's passions and
values can enhance job satisfaction.

Contributing to a Greater Cause: Connecting employees to the organization's mission and

emphasizing how their work makes a positive impact on society or the community can be highly
motivating.

Flexible Work Arrangements:

Work-Life Balance: Offering flexible schedules, remote work options, and family-friendly policies
helps employees balance their personal and professional lives, leading to greater job
satisfaction.

Opportunities for Advancement:

Career Pathing: Providing a clear path for career growth and advancement within the
organization can motivate employees to excel and stay committed.

A Positive Work Environment:

Supportive Culture: Fostering a culture of respect, trust, and open communication can create a
positive atmosphere that motivates employees to thrive.

Workplace Wellness: Promoting well-being through initiatives like stress management

programs, mental health support, and physical fitness can enhance motivation and overall
satisfaction.

Peer and Team Recognition:

Peer Acknowledgment: Encouraging employees to recognize and celebrate each other's

achievements can create a sense of camaraderie and motivation.

Challenging Assignments:

Stretch Projects: Assigning tasks that require employees to step out of their comfort zones and
take on new challenges can stimulate motivation and personal growth.

Feedback and Communication:

Regular Feedback: Providing constructive feedback and opportunities for dialogue can help
employees understand their progress and areas for improvement, which can be motivating.
Workplace Flexibility:

Job Rotation: Allowing employees to rotate through different roles within the organization can
keep their work fresh and exciting.

Societal Impact:

Social Responsibility: Supporting and participating in community service or philanthropic

activities can give employees a sense of purpose and motivation.

Moral Motivation

Moral motivation refers to the internal, ethical, or moral principles and values that drive an
individual's decisions, actions, and behaviors. It is the motivation to do what one believes is
morally right or ethical, even when it may not provide personal gain or benefit. Moral motivation
is often rooted in a person's sense of right and wrong, their moral compass, and their
commitment to adhering to ethical principles and standards.

Key characteristics of moral motivation include:

Alignment with Values: Moral motivation is closely tied to an individual's core values and beliefs
about what is right and just. It is driven by a desire to act in accordance with these deeply held
principles.

Internal Drive: It is an internal form of motivation, meaning that individuals are motivated to do
what they believe is morally right because it aligns with their personal convictions, rather than
being driven by external rewards or punishments.

Ethical Considerations: Moral motivation often involves considering the ethical implications of
one's actions and making choices that are consistent with ethical norms and standards.

Altruism: It can involve a sense of altruism, where individuals are motivated to help others,
promote fairness, or contribute to the greater good, even when it may not directly benefit them.

Resisting Temptation: Moral motivation can also involve the ability to resist temptations or
pressures to engage in unethical or immoral behavior, even when it might be personally
advantageous to do so.

Consequences of Actions: Individuals who are morally motivated tend to weigh the potential
consequences of their actions on others and society as a whole, making choices that prioritize
ethical considerations.

Public service motivation (PSM):

Public service motivation (PSM) is a concept that describes the intrinsic motivation and desire
that individuals have to work in the public sector or engage in activities that serve the public
interest. It is a set of values, attitudes, and beliefs that drive individuals to contribute to the
betterment of society, often through government or non-profit organizations. Public service
motivation is a key factor in attracting and retaining individuals in public service careers and
promoting effective and ethical governance.

Here are some key aspects of public service motivation:

Altruism: Individuals with a strong PSM are motivated by a genuine desire to help others and
make a positive impact on society. They are often driven by a sense of social responsibility and
a commitment to the common good.

Commitment to Public Interest: PSM emphasizes a commitment to the public interest and the
well-being of the community or society as a whole. Those with strong PSM prioritize the needs
of the public over personal or private interests.

Sense of Duty: Individuals with PSM often view public service as a duty or calling. They feel a
moral or ethical obligation to contribute to the public sector and address societal challenges.

Accountability and Transparency: PSM encourages accountability and transparency in

government and public organizations. Those with PSM are more likely to advocate for
openness, ethical conduct, and responsible use of public resources.

Job Satisfaction: People with high PSM tend to find fulfillment and job satisfaction in public
service roles, even if they may face challenges such as lower salaries compared to the private
sector.

Long-Term Commitment: Public servants with strong PSM are more likely to remain in their
roles for the long term, contributing to the stability and effectiveness of public institutions.

Public Engagement: PSM often leads individuals to engage with the public, seek public input,
and involve stakeholders in decision-making processes to ensure policies and services are
responsive to community needs.

Innovation and Problem Solving: Those with PSM are often driven to find innovative solutions to
public problems and address complex societal issues.

Civic Values: PSM is closely aligned with civic values such as integrity, fairness, and a
commitment to democratic principles. Public servants with strong PSM uphold these values in
their work.

Professionalism: PSM encourages professionalism and a commitment to high standards of

performance in public service roles.

Challenges:
Burnout: Public servants with strong PSM may be more likely to experience burnout due to their
high levels of commitment and the often challenging nature of public service work. The pressure
to continually prioritize the public interest can lead to emotional exhaustion.

Resource Constraints: Public sector organizations, particularly in government, often operate

with limited resources. Employees with PSM may become frustrated when they are unable to
implement their ideas or provide services effectively due to budgetary constraints or
bureaucratic red tape.

Bureaucratic Hurdles: Public servants with PSM may encounter bureaucratic obstacles that
hinder their ability to innovate, make decisions efficiently, or respond promptly to emerging
issues. This can be frustrating and demotivating.

Political Interference: In government roles, public servants may face political interference that
undermines their ability to act in the best interest of the public. This can create ethical dilemmas
and compromise their PSM.

Competing Values: Public service organizations often have multiple stakeholders with differing
interests and values. Employees with strong PSM may struggle to balance conflicting values
and priorities, leading to moral and ethical dilemmas.

Inequitable Compensation: Public service roles, especially in the government, may offer lower
salaries compared to equivalent positions in the private sector. While individuals with PSM may
be willing to accept lower pay for the opportunity to serve the public, financial constraints can
still be a challenge.

Resistance to Change: PSM may drive public servants to seek innovative solutions and
reforms. However, resistance to change within bureaucratic structures can be significant,
making it difficult to implement necessary reforms.

Public Scrutiny and Criticism: Public servants with PSM often work in the public eye and can be
subject to intense scrutiny and criticism. Negative public perception or backlash can be
demoralizing

Complexity of Issues: Many public service challenges are complex and multifaceted, requiring
nuanced solutions. Individuals with PSM may find it challenging to address these issues
comprehensively, leading to frustration.

Lack of Recognition: While public servants with PSM may be intrinsically motivated, they may
feel undervalued or underappreciated, particularly when their contributions go unnoticed or
unacknowledged.

Moral Dilemmas: PSM can create moral dilemmas when public servants face conflicting ethical
choices or are asked to implement policies that contradict their personal values or the public
interest.
Work-Life Balance: The strong commitment associated with PSM can sometimes lead to an
imbalance between work and personal life, affecting the well-being and satisfaction of public
servants.