compensation
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CompensationAnd
Benefits Presented By: Apurv Kumar
Aradhya Srivastava
Aditi Singh
Deepak Kapoor
Deepika Gupta
Dipannita Banerjee
IntroductionHuman Resource is the most vital resource for any
organization.It is responsible for each and every decision taken, each
and every work done and each and every result. Employees should be managed properly and motivated
by providing best remuneration and compensation as per the industry standards.
The good compensation will also serve the need for attracting and retaining the best employees.
CompensationCompensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees.
Needs For CompensationWhen managed correctly, it helps the organization achieve
its objectives and obtain, maintain, and retain a productive workforce.
Compensation is a key factor in attracting and keeping the best employees and ensuring that your organization has the competitive edge in an increasingly competitive world.
Without adequate compensation, current employees are likely to leave and replacements will be difficult to recruit.
The outcomes of pay dissatisfaction harm productivity and affect the quality of work life.
Compensation System
IndirectProtection Programs
Medical InsuranceLife InsuranceDisability IncomePensionSocial security
DirectBase Pay
SalaryWage
Merit Pay
Cont..Indirect
Pay For Time Not WorkedVacationsHolidaysSick LeaveJury Duty
DirectIncentive Pay
BonusCommissionPiece RateProfit SharingStock OptionShift Differential
Cont..Indirect
Services And PerquisitesRecreationalFacilitiesCarFinancial PlanningLow-Cost or Free
Meals
DirectDeferred Pay
Savings PlanStock PurchaseAnnuity
Employee Satisfaction And Motivation Issues In Compensation DesignPeople have no basic or Instinctive need for money, A
commodity that is important only if it can satisfy others needs.
Organization frequently overestimate the value workers place on monetary reward.For example : If money were the primary motivation for
working why would hourly employees object to over time, given the premium rate of pay associated with it???
The EQUITY and EXPECTANCY theories can help explain employees reaction to compensation systems
Equity TheoryEquity is balance between the inputs an individual brings
to a job & the outcomes he or she receives from it.Employees inputs includes experience, education, special
skills, efforts and time worked.Outcomes includes pay, benefits, achievement,
recognitions, and any other rewards.Inputs and outcomes are in different units, and are hard to
compare to each other directly.Equity theory suggest that individuals determine whether
they are being fairly treated by comparing their own inputs/outcomes ratio to the input/outcome ratio of others.
Cont…Person Comparison Others
My Rewards(outcomes) Other’s Rewards Equity
My Contributions(inputs) Other’s Contribution
My Rewards(outcomes) Other’s Rewards Inequity
My Contributions(inputs) Other’s Contribution (under reward)
Action to restore equity from Under – reward InequityPerson could ask for a raise in salary.Person could reduce contributions (work less hard)Person could try to get others to increase contribution(work harder)Last resorts : quit or choose another comparison other.
Cont..My Rewards(outcomes) Other’s Rewards
My Contributions(inputs) Other’s Contribution
Inequity(over reward)
Action to restore equity from Over –Reward EquityPerson could increase contributionPerson could ask for a pay cutPerson could attempt to get other a raise Person could attempt to get other to reduce his or her
contributionLast restore quit the job or choose another comparison
Designing equitable compensation system
Three element of equity can be distinguished as external, internal and individual.External equity refers to comparison of similar jobs in
different organizations. Internal equity refers to the relationship among the jobs
within a single organization.Individual equity refers to comparison among the individual
in the same job with the same organization
Internal equity
To measure the value of jobs in relation to organizational objectives rewards are usually based on important components to make one job worth more than other these aspects called compensable factors.
The five most frequently used job evaluation methods are: Job ranking Job grading The points method and Factor comparison
Job evaluation methods..The major purpose of job evaluation is to determine relative worth of the
jobs within an organization.
Basis for job hierarchy
Non quantitative Quantitative
Job v/s job Job ranking Factor comparison
Job v/s scale Job grading Point method
External equityThere is no absolute way to rate pay for a jobSetting pay rates, organization seek to integrate the
external information with what they have learnt through internal evaluation of jobs this process is called pricing the wage structure.Wage and salary surveys Identifying key jobsSelecting organization to survey Collecting dataPay level policy
Individual equityWage grades are established and all the jobs within the
grade are paid identically.Designing pay ranges
Establishing pay rangesBroad brandingAbove and below range employees
Setting individual paySeniorityMerit paySkilled based pay
Linking pay to performance “Employers believes that reward in general and incentives in
particular influence performance.”Reason to link pay to performance
Motivation Expectancy Instrumentality Valence
RetentionProductivityCost savingsOrganizational objectives
Benefits The major reason for the increased attention in benefits is
costs.Role of benefits:
To attract new employeesTo retain the customers
Types of benefits:Mandatory protection programs
Social security Unemployment compensation Workers compensation
Cont..Types of benefits
Compensation for time not work Holidays Vacations Sick leave Personal days Other leave
Other benefitsChild care assistanceWellness programEducational assistanceInsurance benefits
Workers Retirement benefits
Social securityPension planCash balance pension planEarly retirement plan
Examples of different organizations compensation and benefits planGoogleProcter & GambleApollo Wipro
Google Health care , plus on-site physician and dental careVacation days and holidays, and flexible work hoursMaternity and parental leaveAdoption assistanceGoogle Child Care CenterFuel Efficiency Vehicle Incentive ProgramEmployee discountsOnsite dry cleaning
Procter & GambleFinancial Benefits & CompensationHealth & Family-Friendly BenefitsVacation & Personal Time-OffEmployee Engagement. Community Involvement
Apollo HospitalsBenefits include the traditional medical and dental.401k, company-paid life insurance.Child care subsidiesFlex timeEducational assistance and Professional development programs.
WiproFlexible Benefits.Medical Assistance Plan and Medical claim benefits.Group Life Insurance Program and Employee Deposit
Linked Insurance (EDLI) Program.Wipro Cares “Mitr”Kids @ Wipro (fun way of learning)Fit for Life.Eco Eye.