Compensation and Benefits

• “Total Cost to Company” provides employers with the vehicle to monitor and manage total employment cost.
• “Total Cost to Company” tries to quantify the direct and indirect cost of employing each individual employee.
• Salary structuring refers to the art of structuring payments made to employees for services rendered in such a
manner as to best satisfy the employee. This includes being tax efficient and moreover includes other equally
important motivational factors, such as keeping the employee as happy as possible and retain him as long as
possible.
• The apparent & the actual aspects of Cost to company are : Base salary , Commissions & allowances.
• Compensation is usually provided as base pay and/or variable pay. Base pay is based on the role in the
organization and the market for the expertise required to conduct that role. Variable pay is based on the
performance of the person in that role, for example, for how well that person achieved his or her goals for the
year. Incentive plans, for example, bonus plans, are a form of variable pay
• Hidden Aspects include :  Pensions contributions  Housing needs  Car allowances  Children education 
Medical Benefits
Internal & External aspects
of CTC
• Concept of CTC
Internal Factors: • External Factors:
• As an Employer :
Compensation strategy of • Conditions of Labor market
• Aware of bottom line cost
organization • Area wage rates
• Assists in compensation across grades
• Worth of the job • Cost of living
• Linear and Matrix compensation
• Employees relative worth • Collective bargaining
• As an Employee :
Employers ability to pay • Legal requirements
• Aware of total being spent on him/her
• Competitor salary levels
• Can modify package to suit individual tastes at
various time frames
• Role of CTC in Compensation strategy • Total visibility to all income streams
• Recruitment
• Selection
• Training & development
• Compensation management
• Labour relations
 • Structure of Human
Capital across Industries:
• Across grades
• Across Sectors

• Perception of CTC
• As an Employer:
• Total visibility to all elements of cost
• Negotiation tool for high caliber professionals.
• Reasons For Different CTC’s Across Various Grades
• As an Employee:
• Underlying assumption to meet the human
• Increasing acceptance to concept.
resource demand and attribute value in
• Bench mark establishment
• line with job design/valuation
• Up gradation viewed
• CTC used as cost determinant tool at lower levels
• Motivation / Job satisfaction on higher CTC
• CTC used as motivational factor at middle
• From a Social Perspective:
management level
• Assists in identifying elements for widening tax bracket
• CTC used as negotiating instrument at senior levels
• Reduces ambiguity on terms with regard to tax
• Professionals use CTC to negotiate service terms.
applicability
• Index computation and impacts.