COMPENSATION

MANAGEMENT
Team Members:
1. Siddhant Kochar (0038)
2. Sakshi Vinayak (0043)
3. Rishabh Agarwal (0044)
 PERFORMANCE BASED
• Performance-based compensation (PBC) is a system for rewarding employees financially,
outside of their regular salaries. Performance-based compensation also refers to additional
compensation paid out to employees that have performed above and beyond their job
requirements at an extreme high quality.
• Employees are given performance-based compensation most commonly in the form of
bonuses and stock options.
PROS CONS
Increased
High stress level
productivity

Attracting the
best talent Disruption
within teams

Employee Affects
retention teamwork
 CASE
• Arjun was a hard working employee in the sales department of Doll House, a
company engaged in manufacturing stuffed toys. He was given the target of selling
10,000 stuffed toys in a month, for which his base salary was fixed at Rs. 30,000/-
For every 500 extra toys he sold, his manager would award him Rs. 2000/- over and
above his base salary.
 CONTINGENCY
BASED
• Contingent pay provides an answer to the two fundamental reward management questions:
what do we value, and what are we prepared to pay for?
• Individual contingent pay relates financial rewards to the performance, competence,
contribution or skill of individual employees. Contingent pay may also be provided for
teams and for organizational performance
PROS CONS
Larger talent Counterparty
pool risk

Bridging skill Non-

gaps Compliance

Decrease in Co-
time to hire employment
 CASE
Mr Binay is well established industrialist who had multiple patents under his company relating
to latest cricket bats. ‘Smash’ a new cricket bat manufacturer copied his designs and launched
it’s bat in the market. Mr. Binay hired Jolly, a reputed lawyer to fight his case in the court.
It was agreed that if:
a) Jolly wins the case, he will be entitled to receive his base compensation plus 200% extra
of his consulting fee.
b) Jolly loses the case, he will once get his consulting fee.
 COMPETENCE BASED PAY
Competence based pay is a pay structure that compensates employees based on their skill set,
knowledge, and experience rather than their job title or position. A competency-based pay plan
encourages employees to reach the pay rate that they want by taking charge of improving their
skills and work.
PROS CONS
Individual self- Vulnerability to
motivation favouritism

Inaccurate
Increased
measurement of
transparency
company needs

Fear of missing
Reduced turnover
out
 CASE
Two employees Muskaan and Palak are working in Nestle. Palak has been working in
Nestle for the past 10 years as a Senior Market Analyst and is receiving a
compensation of Rs. 50,000 per month. While Muskaan working as a Junior Market
Analyst has been working in Nestle for 4 years. Muskaan is very efficient in her task
and has all the necessary skill set required to complete the tasks effectively and
efficiently.  Palak on the other hand even after more experience ends up missing her
deadlines and submits the task with a lot of faults and ambiguity.

Hence, Muskaan gets a higher compensation as compared to Palak even with a

difference in their position and experience.
THANK YOU