COMPENSATION PLANSCOMPENSATION PLANS

PROBLEM AREASPROBLEM AREAS

► Responsibility For Salary DecisionResponsibility For Salary Decision

► What Other Employers Are Paying?What Other Employers Are Paying?

► Activity And Reward SystemActivity And Reward System

► Salary Determining CriteriaSalary Determining Criteria

► Special TreatmentSpecial Treatment

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► TOTAL COMPENSATION : The package TOTAL COMPENSATION : The package of quantifiable rewards an employee of quantifiable rewards an employee receives for his/her labors.receives for his/her labors.

This includes 3 components : This includes 3 components : 1.1. Base Compensation Base Compensation 2.2. Pay IncentivesPay Incentives3.3. BenefitsBenefits4.4. RewardsRewards

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►BASE COMPENSATION : The fixed pay an BASE COMPENSATION : The fixed pay an employee receives on a regular basis, employee receives on a regular basis, either in the form of a salary or as an either in the form of a salary or as an hourly wage.hourly wage.

►PAY INCENTIVES : A program designed to PAY INCENTIVES : A program designed to reward employee for good performance.reward employee for good performance.

►BENEFITS : They are also known as BENEFITS : They are also known as indirect compensation available only to indirect compensation available only to employees with some special status in employees with some special status in organization.organization.

CRITERIA FOR ACRITERIA FOR A COMPENSATION PLANCOMPENSATION PLAN

► Internal Versus External EquityInternal Versus External Equity► Egalitarianism VERSUS ELITISMEgalitarianism VERSUS ELITISM► Job Versus Individual PayJob Versus Individual Pay► Monetary Versus Non-monetary Monetary Versus Non-monetary

Awards Awards

GLOBAL CONVERGENCEGLOBAL CONVERGENCE

►Employees paid differently in different Employees paid differently in different countries.countries.

►These differences are disappearing These differences are disappearing altogether as leading companies take altogether as leading companies take a similar global approach.a similar global approach.

►However, CONVERGENCE does not However, CONVERGENCE does not mean CONFORMITY.mean CONFORMITY.

COMPENSATION TOOLSCOMPENSATION TOOLS

► JOB BASED COMPENSATION PLANJOB BASED COMPENSATION PLAN

►SKILL BASED COMPENSATION PLANSKILL BASED COMPENSATION PLAN

EMPLOYEE BENEFITSEMPLOYEE BENEFITS

►ContributionContribution►CoinsuranceCoinsurance►Co-paymentCo-payment►DeductiblesDeductibles►Flexible Cafeteria Benefit ProgramFlexible Cafeteria Benefit Program

TYPES OF BENEFITSTYPES OF BENEFITS

►Legally Required BenefitsLegally Required Benefits► InsuranceInsurance►Health Insurance BenefitsHealth Insurance Benefits►Retirement BenefitsRetirement Benefits►Paid Time OffPaid Time Off►Employee ServicesEmployee Services

FRINGE BENEFIT TAXFRINGE BENEFIT TAX A Fringe benefit is generally payable where:A Fringe benefit is generally payable where:

► A benefit is providedA benefit is provided

► The benefit is provided in respect of the The benefit is provided in respect of the employment of the employeeemployment of the employee

► The benefit is provided by the employer (or The benefit is provided by the employer (or an associate of an employer or a third party an associate of an employer or a third party under an arrangement)under an arrangement)

► The benefit is provided to an employee or an The benefit is provided to an employee or an associate (family member) of the employeeassociate (family member) of the employee