Professional Documents
Culture Documents
Compensation
Reward refers to a wide range of financial and non
financial rewards to the employees for the services
rendered to the organisation .
a) Transactional rewards
b) Relational rewards
Compensation
It is a system of rewards
that motivates employees to perform
An organisational tool to foster the
values,culture & the behaviour they require
An instrument that enables organisations to
achieve their objectives
To ensure fairness
To improve union-management relations
To improve the public image of the
company
Comply with legal regulations
Adequate*
A
Compensation
system should
be:
Acceptable to
the employee
Equitable*
Incentiveproviding*
Cost-effective
Secure
Balanced
General Factors
Individual Factors
Labor Market
Economy
Government
Unions
Compensation - Definition
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Supplementary compensation
Employee benefits
Non wage payments
Examples
Fringe benefits
Perquisites or perks
Base compensation Vs
Supplementary compensation
Wage Concepts
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Wage Concepts
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Wage concept
Types of Wages
Types of Wages
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Wage Policy
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Wage Policy
1.
2.
Wage Policy
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Wage Policy
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Wage Determination
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Wage Determination
The ultimate goals of wage determination
process is to establish & maintain an
equitable wage structure that enhances the
employee commitment to the organisation
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Wage Differentials
Wage Differentials
1)Occupational Differentials: This wage
differential arises due to varying levels of
occupational proficiencies.
The jobs vary according to the skills required and
the degree of responsibility attached to it,
This induce the person to undertake more
demanding & more challenging jobs, encourage
workers to develop their skills & motivate
employees for T & D program
Wage Differentials
2)Inter-firm Differentials:This reflects the
relative wage levels of workers in the same
area & occupation.
The factors can be differences in the quality of
labour employed by different firms, differences
in the efficiency of equipment,
supervision,firm size, financial capabilities etc.
Wage Differentials
3) Inter-area or Regional Differentials:-This
arises when workers in different geographical
area, but in the same industry or occupation are
paid different wages.
This is the result of the prevailing working
conditions in different parts of the country,
disparities in the cost of living and availability of
manpower.
Sometimes regional disparities are used to
encourage planned mobility of labour.
Wage Differentials
4)Inter-industry Differentials:- When workers
in the same occupation and same areas but in
different industries are paid different wages.
This is the result of varying skill requirements,
level of unionisation,nature of the product
market,ability to pay ,labour-capital ratio and
the stage of development of the industry.
Wage Differentials
5)Interpersonal Differentials:- This differential
arises between workers in the same occupation
and plant but with different age & other
personal characteristics
Wage diifferential based on sex is another
important wage differential.
The principle of Equal pay for Equal work is
only preached , not practiced
minimum wage
overtime
exempt workers
nonexempt workers
child labor
recordkeeping requirements
Equal Pay Act of 1963
Human capital
Devaluation Theory
Reward Policies
Reward Policies provide guidelines for
implementation of the reward strategies and
aids in designing and managing the reward
processes
It indicates how the management should behave
in various issues related to Reward
management
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Reward Policy
Reward policy addresses a wide range of
issues
1. Levels of Rewards: This indicates the
paying capacity of a company. The pay
policy depends on a number of factors
Policies on the level of rewards also cover
employee benefits like sick pay, holidays,
health care & other perks
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Reward Policy
2.Market rate and Equity:-A policy should
be formulated on the extent to which rewards
are market driven rather than equitable.
It is possible to use market supplements to the
rate of the job as determined by job
evaluation which reflect market rates
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Reward Policy
3.Attraction and Retention -Golden hellos
and golden hand cuffs to attract and retain
high quality people ie having a total
reward policy.
To attract prospective employees, factors
for specific occupations should be
analysed .
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Reward Policy
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Reward Policy
4.Relating rewards to business performance:The rewards can vary according to results.
This policy includes guidelines on how gain
sharing and profit-sharing schemes should
operate in the company
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Reward Policy
5.Total reward Policy:-assesses the importance
of the non-financial rewards and how they
should complement the financial awards.
6.Contingent Reward:- this policy states
whether the company is willing to pay for
contribution, skill, performance ,competence
etc and if so, to what extent and under what
circumstances.
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Reward Policy
7.Assimilation policies:-When new pay
policies are introduced, measures to be
taken to assimilate existing employees into
it. This policy should state, where should
they be placed and what needs to be done if
their present rate is above or below the new
scale.
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Reward Policy
8.Flexibility:- The extent to which the
organisation wants to introduce benefits in
response to the fast changing business
conditions.
9.The role of Line managers:- The policy will
cover the level of decisions, the line manager
can make and the guidance that should be
given to them
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Reward Policy
10.Transpaency:-Employees will be satisfied
only if they know what is the criteria for
rewards and how they are used to determine
their pay and their methods of pay progression.
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Reward Policy
11.Involve employees:- Reward policies are
more likely to be understood and will be
more effective if employees are also given a
voice in the design and management of the
policy.This is very much applicable to job
evaluation and relating pay to the performance
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Reward Policy
12.Communicating to employees:- Reward
processes in an organisation is a powerful
media to convey messages relating to the
organisational goals to the employees. This
will convey to the employees how their
total remuneration package is made up
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Wage - Definition