University of Mumbai

SHIVAJIRAO S. JONDHALE INSTITUTE OF MANAGEMENT SCIENCE

AND RESEARCH, ASANGAON

Topic Compensation, Incentives & Rewards

SR. NO. NAME OF THE STUDENTS ROLL NO

1 Pravin Pawar 19
2 Rahul Parekh 17
Compensation:
Compensation is the total amount of the monetary and non-monetary
pay provided to an employee by an employer in return for work
performed as required.
Its an integral part of Human Resource Management which helps in
motivating the employees and improving organizational effectiveness.

Aims Of Employee Compensation:

Aims of Employee Compensation Attract capable employees to the
organization, Motivate them toward superior performance.
Retainment of their services over an extended period of time
The Objectives:
Evaluate jobs consistently and fairly.

Place University staff positions in the appropriate pay grade with salary
ranges that are competitive with the marketplace for comparable jobs.

Create and support a system which will provide flexibility to managers

in pay administration and to staff in career development.

Components Of Compensation:
Direct - Base Pay, Wages, Salaries, Commissions, Bonuses, Overtime Pay, Allowances

Indirect - Insurance plans, Social Assistance, Stock Options, Educational Assistance,

Benefits including -- medical, vacation, Paid Absences
 Incentives:

A factor that motivates a particular course of action; an expectation that

encourages people to behave in a certain way
In short, the aim of incentives is to provide value for money and contribute
to organizational success.
Types Of Incentives:
Straight piece rate

Straight piece rate with a guaranteed base wage

Halsey Plan: W = R.T + (P/100) (S-T).R where W: wage of worker, R: wage

rate, T: actual time taken to complete job, P: percentage of profit shared with
worker, S: std. time allowed.
 Types Of Incentives: (Cont)

Rowan Plan: W=R.T + ((S-T)/S).R.T Unlike Halsey Plan gives bonus on (S-T)/S, thus it
can be employed even if the output standard is not very accurate.

Incentive Problems:
Incentive structures, however, are notoriously trickier than they might appear to
people who set them up. Human beings are both finite and creative; that means
that the people offering incentives are often unable to predict all of the ways
that people will respond to them.
Thus, imperfect knowledge and unintended consequences can often make
incentives much more complex than the people offering them originally
expected, and can lead to unexpected issues.
Rewards:
Something given or received in recompense for worthy behavior
or in retribution for desirable acts

A satisfying return or result; profit

Psychologically The return for performance of a desired

behavior; positive reinforcement.

Types Of Rewards:
Monetary Rewards
Cash
Non-cash rewards
Gift cards/certificates
Merchandise
Travel Experiential
Non-Monetary Rewards

Non-monetary incentives are used to reward participants for excellent

behavior through opportunities. Non-monetary incentives may include
flexible work hours, payroll or premium contributions, training, health
savings or reimbursement accounts, or even paid sabbaticals. If it comes to
environmental behavior, often labeling and recognition certificates are
used.
Keys To Selecting The Right Reward:
Knowing what your employees will find rewarding.

At times, employees performance, morale or motivation has not been

influenced by a reward -- WHY???

Ways to find out what your employees would find rewarding:

Watch what they do - Pay attention to how they spend their free time or
what they might have as hobbies.

Listen to them - By listening, you can learn about their interests or work
place concerns.
(i.e. the desire for advanced training)

One of the best ----- Ask them - If youre unsure, ask them!
Thank You!
Regards,

Pravin Pawar Rahul Parekh