COMPENSATION MANAGEMENT

Presented by Mohammad Kazim

WHAT IS EMPLOYEE COMPENSATION

All forms of pay or rewards going to employees and arising from their employment. Gary Dessler Two main components of compensation are :

1. Direct Financial Payments: Pay in form of wages salaries, incentives, commission and bonuses. 2. 3. Indirect Financial Payments: Pay in form employer paid insurance, vacations, etc.

TYPES OF COMPENSATION

SKILL BASED PAY

COMPETENCY/SKILL BASED PAY

Competency/skill based : Pay where the company pays for the employees range, depth, and types of skills and knowledge, rather than for the job title he or she holds. Competencies: Demonstrable characteristics of a person, including knowledge, skills, and behaviors, that enable performance.

CONTENT OF SKILL BASED PAY

Four main elements of such programs are: 1. 2.A system for defining specific skills. 3.A training system that lets employees seek and acquire skills. 4.A formal competency testing system 5.A work design that lets employees move among jobs to permit work assignment flexibility.

INCENTIVES

INCENTIVES

Financial Incentives: Financial rewards paid to workers whose production exceeds some predetermined standards. Frederick Taylor

It is also called payment by results, and is paid in addition to wages and salaries depending upon the productivity, sales, profit, or cost reduction efforts.

Type of incentive Schemes: 1. Individual incentive Schemes 2. Group incentive Schemes

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IMPORTANCE OF INCENTIVES

Motivation to the workers Enhancement in employees earnings Reduction in total and unit cost of production Reduced supervision Better utilization of equipments Reduced scrap, lost time, absenteeism.

PREREQUISITES OF EFFECTIVE INCENTIVE SYSTEM

The co-operation of workers in the implementation of an incentive plans. The scheme must be based on scientific work measurement (realistic, necessary equipments, motivate for performance) Incentive plan should cover indirect workers also. Like : supervisor, foremen, helpers, canteen staffs, store keeper, clerical staffs, etc. Proper planning for incentive schemes, or will create problems.
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FRINGE BENEFITS

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WHAT IS BENEFITS

Includes any benefits that the employees receive in addition to direct remuneration. The synonyms used are fringes, services programmes, employees benefits and hidden payroll.

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FRINGE BENEFITS
These include employee benefits such as provident fund, gratuity, medical care, hospitalization, accidents They help build up a good corporate image. they have wider dimensions than immediate gains to the employees. An organization with fringe benefits enhances employees morale, is cost effective and introduces changes with resistance.
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PRINCIPLES OF FRINGES
It must be provided for genuine interest rather than charity. Must satisfy a real need. Must be cost effective. As Broad based as possible. Administration should be preceded by sound planning Wishes through union must be considered. Employees education to make use of fringe benefits.

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NON FINANCIAL BENEFITS

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NON FINANCIAL BENEFITS

Challenging jobs Responsibilities Recognition Growth prospects Supervision Working Conditions Flexible Timings

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OTHER TRENDS OF PAY

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OTHER TRENDS OF PAY

Broad banding: Consolidating salary grades and ranges into just a few wide levels or brands each of which contains a relatively wide range of jobs and salary levels. E.g. U.S. government pay plan consists of 18 main grades (GS-1 to GS-2). Comparable Worth: The concept by which women who are usually paid less than men can claim that men in comparable rather than in strictly equal jobs are paid more.

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THANK YOU

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