Compensation Dimensions

Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)

Professor
Al-Qurmoshi Institute of Business Management
Hyderabad
Compensation Dimensions
 Payment for Work and
Performance
Payment for work and performance includes the
disbursement of money within a short-term period (weekly,
monthly and bonus/annual awards)
The total amount of payment given to the employee
will depend on the following:
- Needs for the specified job.
- Results that meet or exceed the standards of quantity,
quality or time.
- Innovations that lead to the increase in productivity,
loyalty, trustworthiness and a combination of some or all
of these features.
The components that are usually included in the payment
for work and performance are basic pay, premium and
premium differences, short-term bonus, merit payment and
certain allowances.
 Payment for Non-working Days
The past few years have seen a reduction in
working hours.
In addition, employees today enjoy more official
non- working days and longer paid leave.
Components of payment for non-working days raise
labour costs.
On the other hand, such payment allows for
lifestyle change and enhancement of the quality of
life.
Loss of Job Income Continuation Benefit
Job security has always been an important aspect
of employment.
Employees need to be assured of their job and
economic
security.
Accidents, personal problems, work performances are some
of the reasons that will cause a temporary cessation of
employment or a permanent termination.
The change in the current technological and
economic climate will limit, and at times eliminate,
the need and demand for certain products and
services.
This will lead to the reduction or disintegration of
an organisation.
Various components, like unemployment insurance,
unemployment added-benefits and salary during the
severance period, have been generated to assist affected
employees who have neither been offered any alternative
 Disability Income Continuation
Benefit
When an employee suffers from a disability due to
an illness or accident, he is unable to execute his
tasks effectively.
In addition to paying for daily living expenses,
the employee also has to pay for the hospital
bills.
Employee compensation, in the form of medical leave
and short-term and long-term disability plans, exists
to assist an employee who is incapable of working
due to poor health.
 Deferred Income
Most employees depend on programmes provided by their
employers to ensure a continuous income after
retirement.
There are two main reasons why such programmes exist.
First, most people do not have enough savings upon
retirement to enable them to continue enjoying the
comfortable lifestyle they were accustomed to when they
were working.
Therefore, programmes like the retirement allocation
planning programme, savings and thrifty plans, annuities
and additional income plans are drawn up by
organisations to provide employees an ongoing income
after their retirement.
Secondly, the laws and tax regulations make the deferred
income plans more attractive to the employees.
 Spouse/Family Income
Continuation Benefit
Employees with families worry that they will not
be able to provide and care for and support their
dependants in the event of their death or disability.
To this end, certain plans have been created to
provide the dependants with the financial means to
go on if an employee dies or is incapacitated due to
temporary or permanent disability.
 Health, Accident and Liability
Protection
Apart from income to sustain a comfortable
lifestyle, income for products and services to heal
an illness or disability is also of great concern to
employees.
Therefore, an organisation offers various insurance
plans to assist employees in paying for their
medical care and treatment.
 Income Equivalent Payments
Income equivalent payments are also known
as perquisites or perks.
Some of these special benefits are exempted from tax,
and this is advantageous for employers and
employees.
Examples of special benefits are provision of credit
cards, allowance to attend official meetings, subsidised
food and childcare services.