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UNIT IV – MANAGING COMPENHSATION & CAREER

4.1 COMPENSATION MANAGEMENHT – TERMS &
OBJECTIVES

I II

20 MBT 202
HUMAN RESOURCE MANAGEMENT
 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

WHAT IS COMPENSATION?

Compensation means the reward that is received by an employee for the work performed
in an organization. It is an important function of human resource ...
 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

WHAT IS COMPENSATION?
 
Compensation means the reward that is received by an employee for the work performed
in an organization.

WAGE

A wage is compensation paid to workers for work during a period of time. Wages are
always paid based on a certain amount of time. This is usually an hourly basis or weekly
basis

SALARY

It is compensation to an employee for services rendered to an organization. In other

words a fixed regular payment, typically paid on a monthly basis but often expressed as
an annual sum, made by an employer to an employee, especially a professional or white-
collar worker
 
 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

BASE COMPENSATION

Base Compensation involves monetary benefits (in cash) to employees in the form of

wages and salaries. ... Basically, Base or primary compensation means the wage
or salary, allowances and other benefits paid in cash to employees

SUPPLEMENTARY COMPENSATION

Supplemental wages are types of compensation that are paid in addition to the
employee’s regular wages. Supplementary compensation includes' fringe benefits'
offered through several employee services and benefits such as housing, subsidized food,
medical aid, etc.
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HUMAN RESOURCES MANAGEMENT

COMPENSATION MANAGEMENT/WAGE & SALARY ADMINISTRATION

Administration of employee compensation is called compensation management or wage

and salary administration. It involves formulation and implementation policies and
programmes relating to wages and other forms of compensation

What is CTC?

Cost to the Company can also be used to refer to the total cost that an organization is
spending towards their employee including the Salary, Perks, Cost related to benefits,
Cost related to hiring, Training, Recruitments. etc.

Cost to Company (CTC) is the yearly expenditure that a company spends on an employee
 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

OBJECTIVES OF WGAGE AND SALARY ADMINISTRATION

 To establish equitable remuneration

 To attract competent personnel

 To retain the present employees

 To improve the productivity

 To Control costs

 To Improve the union management relations

 To improve the public image of the company

 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

 
PRINCIPLES OF WAGE AND SALARY ADMINISTRATION

 Wage policy should be developed keeping in view of the interests of the

employer, the employees, the consumers and the community

 Wage policy should be stated clearly in writing to ensure uniform and

consistent application

 Wage and Salary plans should be consistent with the overall plans of the
company. Compensation plan should be an integral part of financial planning
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HUMAN RESOURCES MANAGEMENT

Continuation………

 Wage and policies should be sufficiently flexible or responsive to changes in

internal and external conditions of the organization
 
 Management should ensure that employees know and understand the wage
policy of the company.

 Wage and salary plan should simplify and expedite administrative process

 Wage policy and program should be reviewed and revised periodically in

conformity
 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

COMPONENTS OF COMPENSATION

Basic Pay: Basic salary refers to the amount of money that an employee receives prior to
any extras being added or payments deducted. It excludes bonuses, overtime pay or any
other potential compensation from an employer.

Allowances : Allowances are given to protect the real income against inflation

Dearness Allowance

HRA (House Rent Allowance)

CCA (City Compensatory Allowance)

TA/CA (Travelling/ Conveyance Allowance)

Incentives

Fringe benefits
 BUSINESS ADMINISTRATION 20MBT 202
HUMAN RESOURCES MANAGEMENT

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