Professional Documents
Culture Documents
relationship.
Compensation Management
Compensation refers to a wide range of financial & non-financial rewards to employees for their service rendered to the organisation.
Compensation may be defined as money received in the performance of work, plus the many kinds of benefits & services that organisations provide their employees. Compensation includes direct compensation (gross pay) & indirect compensation life, health, accident insurance, employers contribution to retirement, pay for vacation or illness, payments for welfare as social security.
Society s Views
Stockholders Views
Employees Views
Managers Views
Stakeholders
Society -pay as a measure of justice e.g. comparison of earnings of women with men Voters pensions & health care for public/government employees cause for increased taxes Consumers - sometimes see compensation as the cause of price increases Managers major expense used to influence employee behaviour & improve organisational performance
Employees return in exchange of labour an entitlement for being employee a reward for job well done return on their investments in education & training etc. & contribution of time & energy at workplace
Objectives of Compensation
attract & acquire qualified & competent personnel retain employees motivate employees for better performance reward desired behaviour ensure equity: internal & external control costs comply with legal regulations facilitate easy understanding by all easy administration of the compensation system
Dimensions of Reward
Compensation System
Non-Compensation Rewards
Salary
Perquisites
Participation in decisionmaking
More responsibility
Diversity of activities
Forms of Pay
The variety of returns people may receive from work may be categorized as: total compensation & relational return.
base cost of living adjustments incentives pensions medical insurance programs to help balance work & life demands development opportunities status challenging work
Employment Security
Challenging Work
Learning Opportunities
NonCompensation System
DIRECT (Financial)
BASIC PAY DA OVERTIME PAY SHIFT ALLOWANCE INCENTIVE BONUS PROFIT SHARING BONUS COMMISSIONS -
(vii) Qualifications & relevant experience. (viii) Stability of employment & advancement opportunities. (e.g. govt service)
INTERNAL STRUCTURE
EFFICIENCY
Performance Quality Customers & Stockholders Costs
PAY STRUCTURE
FAIRNESS
Seniority Merit CONTRIBUTO Based Performance Guidelines Based RS INCENTIVE PROGRAMS
COMPLIANC E
Compensation Objectives
Efficiency
Fairness
Compliance
alignment
Comparisons among jobs or skill levels inside a single organization (e.g. data entry operator vs. accts clerk)
External
competitiveness
Employee
contributions
Relative emphasis placed on employee performance Policies related to managing the pay system
Management