Made By: Imran Khan Saurabh Gupta Shreshtha Jaiswal Subash Kumar
COMPENSATION & BENEFITS
MANAGEMENT
OUR ASSETS WALK OUT OF THE DOOR EACH EVENING. WE HAVE TO MAKE SURE THAT THEY COME BACK THE NEXT MORNING.
--NARAYANA MURTHYExecutive Chairman – INFOSYS
Barter Exchange System
Prior to the introduction of money, trade was carried out by barter i.e. exchange of goods for goods.
Due to the wasteful nature of barter, the amount of trade that could be carried out by this method of exchange was limited.
HISTORY OF COMPENSATION
• SALARY
• WAGES
• COMPENSATION
WHAT IS THE MEANING OF
• Regular money received by an employee from an employer on a weekly, biweekly or monthly basis.
• It includes employee benefits such as health and life insurance, saving plans and Social Security.
SALARY
Payment for a labour or a worker, especially remuneration on an hourly, daily or weekly basis or by the piece rate.
WAGES
COMPENSATIONThe sum of all forms of payments or rewards
provided to employees for performing tasks to achieve organizational objectives.
Compensation is the process of providing adequate, equitable and fair remuneration to the employees.
It is a comprehensive term which includes pay, incentives and benefits offered to the employees.
Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.
Motivate & Retain Staff
Attract Talent Efficient Administration
Effective Compensation
Ensure Equity
PURPOSE OF COMPENSATION
Contribution based Remuneration
Reward Valued Behaviour
Supportive Corporate CultureExecutive Sponsorship
Salary• Pay• Overtime (if in non-
exempt classification – Fair Labor Standards Act)
Benefits• Health Plans• Retirement Plans
• Vacation/ time off
• Paid Training• Working Hours
Employee Satisfaction
TOTAL COMPENSATION
Rewards
• Bonus• Salary Increases• Promotions• Equity Offerings• Awards• Recognition• New job
assignments
COMPENSATION STRATEGY
Business Strategy
Compensation Strategy
Contingent Factors
Defines the intentions of the organization on reward policies, processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve business goals.
Business Strategy:• The direction in which organization is going in
relation to its environment in order to achieve its objectives.
Compensation Strategy:• The intentions of the organization on reward policies,
processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve its business goals.
Contingent Factors:• Legal requirements or Government Policies, Strength
of Trade Union, Labour Market conditions and Capacity to Pay.
(cont.)
COMPONENTS OF COMPENSATION & BENEFITS
C&B
Incentives
Benefits
Perquisites
Basic Pay
Allowances (Taxable)
Reimbursement (Tax Free)
TOTAL COMPENSATION
Financial (Extrinsic Rewards)
Non-Financial (Intrinsic Rewards)
Direct
Indirect
Satisfaction derived from
Job
Praise & Rewards
CLASSIFICATION OF REWARDS
COMPONETS OF FINANCIAL COMPENSATION
COMPONENTS of FINANCIAL COMPENSATION
Direct Indirect
Base Pay• Wages• Salaries
Variable PayIncentives• Individual• Group/Team• Organizational
Benefits
Mandatory• Provident Fund• Gratuity Leave• Health Plans• Medical Leave
Voluntary• Vacations• Breaks• HolidaysSecurity Plans• Pension
The direct financial compensation an individual receives based on the time Worked.
Bases of calculation:• Hourly/wage: payment for the number of hours worked.
• Salaried: receive consistent payments at the end of specific period regardless of number of hours worked Nature.
Generally Market Driven:(Demand > Supply = Increase in Pay)
Job Evaluation:• The formal systematic means used to identify the relative
worth of jobs within an organization.
BASE PAY
Variable Pay/ Incentives
• Any plan that ties pay to productivity or profitability (i.e.) the standard by which managers tie compensation to employee effort and performance.
• It is linked to individual, group, or organizational performance and not to time worked.
• Establish a performance “threshold” to qualify for incentive payments.
• Emphasize a shared focus on organizational objectives.
• Create shared commitment in that every individual contributes to organizational performance and success.
VARIABLE
• Link the incentive with your strategy.
• Make sure effort and rewards are directly related.
• Make the plan easy for employees to understand.
• Get employees’ support for the plan.
• Use good measurement systems.
• Emphasize long-term as well as short-term success.
• Adopt a comprehensive, commitment-oriented approach.
IMPLEMENTING EFFECTIVE INCENTIVE PLAN
Are most effective as motivators when the award is combined with a meaningful employee recognition program.
• Intrinsic motivators are worthwhile as financial package
• Organization reward high performing employees• Psychological rewards that employees receive in
recognition of their skills and contributions
NON FINANCIAL COMPENSATION
Awards• Often used to recognize productivity gains, special contributions or
achievements, and service to the organization.• Employees feel appreciated when employers tie awards to
performance and deliver awards in a timely, sincere and specific way.
Recognition awards• Recognition has a positive impact on performance, either alone or in
conjunction with financial rewards.• Combining financial rewards with nonfinancial ones produces
performance improvement in service firms almost twice the effect of using each reward alone.• Day-to-day recognition from supervisors, peers, and team members
is important.• Best performer of the month awards in Blue Dart, ALACTEL,XANSA
etc., Service awards• Award for the length of service and exactly not on performance• IBM: thanks award• IDEA: appreciation card
TYPES of NON FINANCIAL COMPENSATION
Pay Equity (also Distributive Fairness)
• An employee’s perception that compensation received is equal to the value of the work performed.
• A motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve.
• Individuals form a ratio of their inputs to outcomes in their job and then compare the value of that ratio with the value of the ratio for other individuals in similar jobs.
EQUITY AND MOTIVATION OF EMPLOYEES
RELATIONSHIP BETWEEN PAY EQUITY AND MOTIVATION
DETERMINANTS OF COMPENSATION
PAYSLIPS EXAMPLES
INDIAN ARMY PAY SCALE STRUCTURERANK PAY BANDS/SCALE GRADE PAY MSP
LIEUTENANT PB-3/15600-39100 5400 6000
CAPTAIN PB-3/15600-39100 6100 6000
MAJOR PB-3/15600-39100 6600 6000
LT COLONEL PB-4/37400-67000 8000 6000
COLONEL PB-4/37400-67000 8700 6000
BRIGADIER PB-4/37400-67000 8900 6000
MAJOR GENERAL PB-4/37400-67000 10000 NIL
LT GENERAL / HAG SCALE
67000 - (annual increment @ 3%) -
79000
NIL NIL
HAG + Scale * *Admissible to 1/3rd of total
strength of Lt Gens
75500 - (annual increment @ 3%) -
80000
NIL NIL
VCOAS / Army Cdr / Lt Gen (NFSG)
80000 (fixed) NIL NIL
COAS 90000 (fixed) NIL NIL
Allowances To Whom Applicable Rates
Field Area Allowance Officers Posted to Fd Area Rs. 4200/-PM
High Altitude/ Uncongenial Climate Siachen
Officers Posted in High Attitude/Uncongenial
Climate Officers Posted in Siachen
Rs. 11200
Rs.14000/-PM
Flying Pay Officers Posted as Army Aviators
9000PM
Parachute Pay Officers Posted in Active Parachute BNs/Regt
1200PM
Special Forces Allowance Officers posted in Special Forces 9000PM
Transport Allowance Officers Posted in Peace Stations
Rs3200/-+DA PM in A1/A cities and
Rs 1600+DA PM at other places
House Rent Allowance To officers not provided Govt. Accommodation
10-30% of Basic Pay (Pay Band + Grade Pay + MSP)
Kit Maintenance Allowance All officers 400/-PM
Uniform Allowance (Outfit Allowance)
All officers Initial 14000/- and 3000/- every Three Years
Qualification Pay/ Grant for Service Courses
All officers undergoing specified courses Rs 6000 to 20000/-
Instructional Allowance All Officers Posted as Instructors
1800/-
THANK YOU!!!