COMPENSATIO N MANAGEMENT

GROUP MEMBERS
DEEPAK ARORA (16) RADHIKA SINGH (40) RAMAN ROY (44) SNEHA DUBEY (52)

INTRODUCTION
Compensation Management is an integral part of the management of the organization. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. It is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves

 The increasing competitiveness of the labour market and turnover of employees had resulted in nightmare in compensation planning. Human Resource is the most vital resource for any organization. It is responsible for each and every decision

NATURE OF COMPENSATION
BASE PAY VARIABLE PAY BENEFITS

WAGE AND SALARY ADMINISTRATION

It denotes the process of managing a companys compensation programme. The goals of compensation administration are to design a cost effective pay structure that will attract, motivate and retain competent employees.

 OBJECTIVES
To establish a fair and equitable remuneration offering similar pay for similar jobs. To attract qualified and competent personnel. To retain the present employees by keeping wage levels in tone with competing units. To control labour and administrative costs in line with the ability of the organisation to pay. To project a good image of the company and to comply with legal needs relating to wages and salaries.

ELEMENTS OF WAGE AND SALARY SYSTEM

Identifying the available salary opportunities, their costs, estimating the worth of its members, of their salary opportunities and communicating them to employees. Relating salary to needs and goals. Developing quality, quantity and the time standards related to work and goals. Determining the effort necessary to achieve standards.

 Measuring the actual performance. Measuring the job satisfaction of the employees. Evaluating the unsatisfied wants and unrealised goals aspirations of the employees. Finding out the dissatisfaction arising from unfulfilled needs and unattained goals. Adjusting the salary levels accordingly with a view to enabling the employees to reach unreached goals and fulfil the unfulfilled needs and aspirations

WAGE POLICY IN INDIA

MINIMUM WAGE FAIR WAGE LIVING WAGE

WHY WAGE DIFFERENTIALS?

o Interpersonal differences- differentials in sex, skills, age, knowledge, experience. o Inter-occupational differentials- varying requirements of skill, knowledge, demand-supply situation. o Inter-area differentials- cost of living, ability of employers to pay, demand and supply situation, and extent of unionisation. o Inter- firm differentials- ability of employer to pay, employees bargaining power, degree of

CHOICES IN DESIGNING A COMEPNSATION SYSTEM

External and internal pay Fixed vs. Variable pay Performance vs. membership Job vs. individual pay Below market vs. above market compensation Open vs. secret pay

COMPONENTS OF COMPENSATION MANAGEMENT

 Job analysis is a systematic approach to defining the job role, description, requirements, responsibilities, evaluation, etc. It helps in finding out required level of education, skills, knowledge, training, etc for the

COMPONENTS OF JOB ANALYSIS

PAY STRUCTURES
Pay structure refers to the process of setting up the pay for a job in an organization. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity, External equity and

 The internal equity method undertakes the job position in the organizational hierarchy. The process aims at balancing the compensation provided to a job profile in comparison to the compensation provided to its senior and junior level in the

INTERNAL EQUITY

EXTERNAL EQUITY
Organizations formulate their compensation strategies by assessing the competitors or industry standards. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market.

 INDIVIDUAL EQUITY Individual equity exists when an employer compensates individuals who are in similar jobs on the basis of variations in individual performance. PERSONAL EQUITY Personal equity exists when an employer pays a wage rate that satisfies an employee's own perception of his or her worth.

SALARY SURVEYS
The Salary survey is the research done to analyze the industry standards to set up the compensation strategy for the organization. Organizations can either conduct the survey themselves or they can purchase the survey reports from a reputed research organization.

 To gather information regarding the industry standards To know more about the market rate i.e. compensation offered by the competitors To design a fair compensation system To design and implement most competitive reward

Types of compensation surveys

Standard: Standard surveys are undertaken by organizations on a regular basis. These surveys are conducted annually based on the organizational objectives. Custom: A few organizations need to know some specific information. The surveys which cater this need are known as custom surveys. The organizations either higher research organizations to conduct theses surveys for them or they themselves conduct the survey.

NEED FOR COMPENSATION MANAGEMENT

A good compensation package is important to motivate the employees to increase the organizational productivity. Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals. Salary is just a part of the compensation system, the employees have other psychological and selfactualization needs to fulfil. Thus, compensation serves the purpose. The most competitive compensation will help the organization to attract and sustain the best talent. The

TYPES OF COMPENSATION
DIRECT COMPENSATION INDIRECT COMPENSATION

ARTICLE

5 SIMPLE STEPS TO THE TOP OF YOUR COMPENSATION PLAN

By- Yvonne Chihak

You want to get to the top of your company's compensation plan? Here are 5 simple steps that will get you there.

CANT PAY YOUR EMPLOYEES WHAT YOUD LIKE?? PRAISE THEM INSTEAD
By- Kevin Gray

 The economy may be showing signs of life, but that doesnt mean managers and employers are starting to shower their people with cash. Instead, theyre turning to an old-timey, feel-good technique to motivate their overburdened workers: praise. As a motivational tool, of course, praise has been around forever, long before the self-styled experts began teaching us how to practice it. All employees and their managers are more stressed than ever, working faster and

CASE STUDY:
THE SUPERVISORS DILEMMA

CASE
Case - soap factory situated in Ghaziabad, UP Production - low Top management never satisfied Factory workers take things easy because they are also farmers so they do not have shortage of food

 Factory wage only provide them liquid cash Absenteeism is also a problem for the management Six years ago, within the same factory compound, a fruit processing unit was

 Jobs in this unit are seasonal The unit employs 22 workers All of them are given semi skilled grade E jobs Jobs done in the unit are peeling fruits extracting juice bottling,capping,labeling, storing and keeping the premises clean.

 During the lean period , part of the workforce is transferred to the soap plant A small portion of workers who remain in the fruit processing plant are given light jobs, such as keeping the premises clean, rolling the barrels, and so on The only exceptions are the two workers who are engaged in filling and

 When these two see others having an easy time they become disgruntled and demand higher wages or that other do the filling and capping job as well. They cannot be given higher grades The bottle filler and cappers have done the job for years and have

What is the problem??

1. Absenteeism of factory workers at the soap plant 2. At the food processing plant when two workers i.e. Bottle filler and capper, see others having an easy time they become disgruntled and demand higher wages or that other do the filling and capping job as well

Possible measures to solve the problem

Job rotation? Change their designation? Acknowledge their performance? Compensation to employees

CONCLUSION
A fair compensation package is important to motivate the employees to increase the organizational productivity To get the best talent a company should look for the best compensation payment method

Compensation management of

SALARY AND ALLOWANCES

Salary and allowances are paid as per the terms of employment. DA is based on the CPI number issued by the BOMBAY CHAMBER OF COMMERCE. It Is paid @ Rs.2.50 for every 10 points increase over index number 8067. If the BASIC + DA adds to Rs 5000/-pm or more, DA will merge with the basic salary . DA is not applicable on salary above Rs 500/- . DA is not applicable to grade 100 and above. Employee drawing salary between Rs 3,501 /- and 50,000 /- pm (basic + DA) may opt for bonus or superannuation. The communication regarding the option should be received with in 15 days from HRD from the date of joining . However , employees whose salary is Rs. 50,001/- or more will be compulsorily enrolled under the superannuation scheme.

Salary and allowances are subject to deductions as per income tax act. Previous employers TDS certificate along with investment plans must be submitted to HRD within 15 days of joining so as to enable salary department to calculate tax liability.

PROVIDEND FUND
Company contributes 12% of salary to the PF account of a new employee. In the event of the employee being a member of the provident fund. He / She is advised to communicate his / her PF number immediately to salary department.

MEDICAL AID SCHEME

1) ALL EMPLOYEES. 2) PROCEDURE The amount as per employees eligibility will be paid through the monthly salary on pro rata basis. For eg: if yearly salary eligibility is Rs. 15000/- then 1/12th ie.1250/- will be paid through monthly salary Employees will need submiy relevant proof (medical bills) for the current financial year and to the tune of max. Rs 15000/- only once a year from jan 1st until february 15 every year to the concerned HR operations representative( currently Ms sadhana kochrekar) if the bill not received by 15th february then the appropriate tax , if any , wil be computed & deducted from the salary during of the month of february.

HEALTH / INSURANCE
SPECIAL MEDICAL BENEFIT SCHEME EMPLOYEES & DEPENDENTS
ELIGIBILITY ALL employee who are not covered under ESIS will be covered under the GROUP MEDICLAIM POLICY . The following reimbursement towards medical expenses will be made by the company under the COMPANYS SPECIAL MEDICAL BENEFITS SCHEME. -Reimbursement of expenses for dependent parent. -Diagnostic tests for employees & dependents.

REIMBURSEMENT OF EXPENCES FOR DEPENDENT PARENTS

Years of service of employee with the company(all level) Total remarks reimbursements for hospitalisation per parent during the tenure of service of the employee will be subject to the upper limit given below:

Less than 5 years seviceNil 5 to 10 years Rs 50,000 Reimbursement towards a single claim must not exceed 30% of the upper limit

More than 10 years

Rs 1,00,000

Reimbursement of medical expences under the scheme is given with the intention to help employees who are associated for long period of time with the organisation. As such when an employee resign from the services of the company, special medical benefits 9self and dependents) claimed during the preceding 6 months from the date of resignation , will be recovered from the employee as given below

Years of the service with To be recovered from the the company employee Less than 5 years service More than 5 years service but less than 10 years service 100% 50%

More than 10 years service NO RECOVERY

DIAGNOSTIC TESTS FOR EMPLOYEES AND DEPENDENTS

Claim for expensive diagnostic test will be considered under special medical benefits even when there is no hospitalisation subject to following . i)The test should have been conducted on the recommendation of a specialist. ii) Test will include the following: TESTS Sonography Endoscopy C.T. scan MRI scan Angiography Stress 2 D Echo Mammography Colour Doppler

DISALLOWABLE ITEMS
Baby feeding bottles

Baby food like nestle lectogen , farex

Tooth paste

Tooth powder

Talc powder

Health drinks like bournvita , horlicks , boost etc

REIMBURSEMENT OF CONSULTATIONS & DIAGNOSIS EXPENSES

Domicillary treatment of specialized nature is included in our special medical scheme.This to obviate the heavy expenses of which employees incur in consulting specialists. The grade wise eligibility is given in the following table.

GRADES

A CLASS CITIES (Rs.) 4,200

B CLASS CITIES (Rs) 3,750

C CLASS CITIES (Rs0TIES 3,300

STAFF UPTO GRADE 175 (NON ESIS) 200/225 250/275 300/325/350 375 TO 500 550 & ABOVE

6,000 9,000 12000 15000 18000

5,500 8,550 11,550 14,550 17,550

5,100 8,100 11,100 14,100 nil

The reimbursement of consultation & diagnosis expenses wil be subject to the following: 1.The reimbursement will be available for major diseases / medical conditions certified as requiring specialised consultation and diagnosis by the companys medical consultant. 2.The disease or medical abnormality mentioned as above should have been registered by the company appointed doctor or during the annual medical check up organised by the company prior to incurring consultation and diagnosis expenses. 3.The reimbursement will be limited only toward the consultation / diagnosis charges, subject to overall list mentioned above .the consultation / test must have been recommended by a specialist (referred to by company doctor ). 4.Expenses toward treatment and medicine will not form part of this reimbursment scheme. 5.The company shall not make any payment under the scheme in respect of any expenses wheresoever incurred by the employee in connection with or incurred by the in connection with or in respsect of such diseases which are listed in the EXCLUTION LIST ,given below

EXCLUSION LIST FOR CONSULTATION & DIAGNOSIS

1.Expenses incurred for pre and post hospitalisation treatment. 2.Asthma ,bronchitis, cough & cold. 3.arthritis, Gout & Rheumastism . 4.Medical expenses arising from or traceable to pregnancy. 5.Routine eye check up ,cost of spectacles , contact lenses and hearing aids . 6.Dental treatment , dental surgery of any kind ,unless requiring hospitalization. 7.Expence on vitamins and tonic 8.Any chronic illness 9.Any illness existing prior to joining pidilite

LEAVE TRAVEL ALLOWANCE (LTA)

(1) ELIGIBILITY :- All employee who have completed one year of service. (2) PROCEDURE :2.1 The employee must avail of privilege leave for a period of not less than 6 days in order to claim LTA 2.2 The employee can make his first LTA claim after completion of one year of service. 2.3 Second LTA can be availed after completion of 6 months of availing the first LTA . 2.4 After the first LTA has been availed, LTA amount for subsequent LTA will be the same as BASIC + DA of the employee as on 1st April of the financial year in which be carried forward and 2.5 LTA can LTA is being availed. claimed together with the next entitlement ie. Once in two years. 2.6 LTA is payable in advance if PL for 6 days or more is sanctioned at least 15 days prior to the date of proceeding on leave provided the prescribed LTA application form complete in all respect s is submitted and the application for PL.

2.7 LTA entitlement for every completed year of service . However for any shortfall / excess claimed, the same will be paid / recovered on prorata basis at the time of leaving service. 2.8 LTA claim should be made in the prescribed form. 2.9 LTA will be taxable as per I.T. act 1961. 2.10 In case PL applied in advance as per rules has been refused, the employee can avail LTA . However in such cases if he does not provide a suitable declaration in the prescribed format after availing leave, before end of the financial year , the LTA amount will be treated as an allowance and fully taxed in the hands of the employee.

LEAVES

LOCATIO CASUAL SICK N LEAVE LEAVE (MUMBAI ) MAX. NO. 7 OF DAYS 8

PRIVILEG TOTAL E LEAVE

24

39

Only working days will be counted as leave. Intervening weekly off / paid holidays will not be considered as leave. The leave rules w.r.t. no. of days of leave / encashment will differ as branches

OTHER BENEFITS
EMPLOYEE REFERRAL PROGRAMME- BRING A FRIEND SCHEME THE SCHEME: BRING A FRIEND SCHEME is an opportunity for employees to refer quality applicants for vacant positions within the organisation and thereby enabling employees to earn some extra incentives. THE SALIENT FEATURES OF SCHEME: The scheme was in effect from 1.9.2008. Employees can recommend their friends / relatives for any vacant position based on the position specific requirements. The recommendation received will be classified into : CATEGORY A CATEGORY B

The employee must know the candidate The employee can be known to the personally / must be in close contact with candidate through his close friends/relatives or the candidate can the candidate for more than two years. be referred to the to the employee by a close friend.

Grade of the selected candidate Amount/ gift voucher to be given in category A as incentive to the employee who has referred the hired candidate

Upto grade200 Grade 225 to 325 Grade 350 to 450 Grade 500 & above

Rs 5,000 Rs 15,000 Rs 25000 Rs 50,000

Grade of the selected candidate Amount/ gift voucher to be given in category B as incentive to the employee who has referred the hired candidate Upto grade 200 Grade 250 to 325 Grade 350 to 450 Grade 500 & above Rs 2,500 Rs7,500 Rs 12,500 Rs 25000

OTHER BENEFITS.
WEDDING GIFT
On the occasion of the wedding of an employee a token gift of Rs 1001/- is presented by the management as a symbol of affection. On the occasion of employees childs marriage a gift of Rs 501/- shall be given to the son/daughter. In addition to the above , a bouquet of flower on behalf of Sri M.B. PAREKH and all of the employees of PIL will be sent on the above occasion by the concerned department .the budget for the bouquet is 150/-.

OTHER BENEFITS.
ANNIVERSARY AWARDS The anniversary awards provide recognition to employee on their fifth, tenth, fifteenth, twentieth and twenty fifth aniversaries with the company. To honour employees on their completion of: 5 yrs service : An additional incremental of Rs.100/- per month. 10 yrs service : An additional incremental of Rs.100/-per month. 15yrs services: An additional increment of Rs.100/-per month and a wrist watch worth Rs.1000/20yrs service :An additional increment of Rs.100/-per month and one silver coin of 100 gms This award is in recognition of their loyalty to the company. However it will be subject to the employee consistently displaying reasonably good level of performance.

OTHERS BENEFITS
UMBRELLA ALLOWANCE Confirmed staff members as on 15th june will be given fixed allowance in lieu of an umbrella and an increase of Rs.20/- will be allowed once in three years from the base price. Consequently confirmed staff members will get a fixed allowance in lieu of an umbrella as under.

Years 2000 Rs 160

2001

2002

2003 nil

2004 200

2005 nil

2006 220

2007 nil

nil 180

MONSOON WEAR OF FIELD STAFF UP TO GRADE 175

During the block period of two years starting from the date of joining field staff may purchase: (a)Pair of gum boots / ankle shoes. (b)Standard quality raincoat.

ELIGIBILITY for monsoon wear given below: MONSOON WEAR RAIN WEAR ( RAIN COAT /RAIN SUITS/RAIN JACKETS) RS. 300

RAIN SHOES/GUM BOOTS 200