issues related to compensation

8/9/2019 Issues Related to Compensation

1/29

Managing Manpower andCompensation (MPC)

Project On

Issues Related To Compensation


2/29

Compensation of employees is the total remuneration, in cash, payable by an

enterprise to an employee in return for work done by the latter during the accounting

period.

Compensation of employees has two main components:

(a) Wages and salaries payable in cash;

(b) The value of the social contributions payable by employers: these may be actual

social contributions payable by employers to Social Security schemes or to privatefunded social insurance schemes to secure social benefits for their employees; or

imputed social contributions by employers providing unfunded social benefits.


3/29

Compensating an employee is not simply a process of

settling upon a mutually agreeable salary. There are a

number of regulations and reporting requirements that

need to be met. Here is some information a variety of

issues surrounding compensation that you need to be

aware of.


4/29

Competitive Wages: When deciding pay rates for skilled workers, it may be helpful to keep tabs on the

going rates for your industry and area.

Minimum Wages Requirements:

The Fair Labor Standards Act (FLSA) establishes current minimum wage

requirements for employees.

Exceptions include lower wages for employees under 20 years of age for a defined

period of time, certain full-time students, apprentices, interns and workers with

disabilities.

Overtime Wages:

The rate for all hours worked over a 48 hour workweek are at least double the

wages.

Wage Garnishment:

Wage garnishment occurs when an employer withholds the earnings of an

individual for the a ment of a debt as the result of a court order or other e uitable


5/29

Large sum of money is invested on the people.

Design rests on what must the company achieve. System therefore needs to attract good employees by

structuring packages that tempt people to do the job.


6/29

Traditional way of paying was done by ignoring the

interaction of organizational members and buying employees

time by the hour.

No incentives, no rewards, etc.

Today the employees are valued.

In a rewarding environment, people work hard.


7/29

Collective Bargaining.

Government Legislation.

Top Managements philosophy regarding pay.

Top managements willingness to recognize effort and ability.


8/29

Basic

Allowances Incentives

Benefits

Reimbursements


9/29

JOB ANALYSIS PAY STRUCTURE

SALARY SURVEY


10/29

Companies need to look at compensation as a value-creating

function.

It creates value for the organisation and employees.

Balances the four major compensation objectives whichinclude:

Sustaining management

Motivating performance

Building employee commitment

Encouraging growth in employees skills


11/29

Pay for Performance.

Links to other levers of organisational change such as

providing recognition when deserved. Match incentives to the company culture

Keep incentives clear and simple

Over-communicate the reward strategy for the best results

The greatest incentive is the work itself as employees want to

be recognised for the work they do and the contributions theymake


12/29

Analyze present compensation structure

Formulate salary policies

Select compensation system

Develop implementation plan

Evaluate and monitor


13/29

Conduct job analysis

Identify compensable factors

Develop a job hierarchy

Construct job grades

Carry out compensation survey

Establish final pay policy


14/29

Compensation provided to employees can direct in the form of

monetary benefits and/or indirect in the form of non-monetary

benefits known as perks, time off, etc.

Compensation does not include only salary but it is the sumtotal of all rewards and allowances provided to the employees in

return for their services. If the compensation offered is

effectively managed, it contributes to high organizational

productivity.


15/29

DIRECT COMPENSATION:

Direct compensation refers to monetary benefits offered and provided to

employees in return of the services they provide to the organization.

The monetary benefits include

basic salary,

house rent allowance,conveyance,

leave travel allowance,

medical reimbursements,

special allowances,

bonus,

Pf/Gratuity, etc.They are given at a regular interval at a definite time.


16/29


17/29

Indirect Compensation:

Indirect compensation refers to non-monetary benefits offered

and provided to employees in lieu of the services provided by

them to the organization.

They include

Leave Policy,

Overtime Policy,

Car policy,

Hospitalization,

Insurance,

Leave travel Assistance Limits,Retirement Benefits,

Holiday Homes.


18/29


19/29

Traditionally people were paid primarily through base salaries

determined by specific job, the need to maintain a certain levelof internal pay equity an the need to pay externally competitive

salaries.

Employees were not encouraged to develop skills.

This had to change


20/29


21/29

With the behavioral science theories and evolution of labour

and trade unions, employees started asking for their rights.

Maslow brought in the need hierarchy for the rights of the

employees. He stated that employees do not work only formoney but there are other needs too which they want to satisfy

from there job,

social needs,

psychological needs,

safety needs,self-actualization, etc.


22/29

Their performance was being measured and appraised basedon the organizational and individual performance.

Competition among employees existed.

Employees were expected to work hard to have the job

security.

The compensation system was designed on the basis of job

work and related proficiency of the employee.


23/29

Today the compensation systems are designed aligned to the business

goals and strategies.

Today the compensation systems are designed aligned to the business

goals and strategies. Employees feel secured and valued in the organization.

Organizations offer monetary and non-monetary benefits to attract and

retain the best talents in the competitive environment.

Some of the benefits are special allowances like

mobile,

companys vehicle;House rent allowances;

statutory leaves, etc.


24/29

Pay for knowledge and skills Pay for competencies

Performance based pay

Incentive pay systems


25/29

Items in the total package offered to employees over and above

salary which increase their wealth or well-being at some cost tothe employer


26/29

Compensation for injuries and diseases


27/29

Most of these benefits have certain legislative minimums.Vacation leavePaid public holidaysTime for personal mattersSick leaveMaternity leaveHealth and life insuranceMedical Aid Schemes

Pension FundsEmployee Services e.g.. Canteens, social and recreationalservices


28/29

This is a brief idea of about the payroll compensation of various organizations.

Barista Coffee Company

This is the salary of a Brew Master- 1(fresher):

Basic salary: Rs 2250per month.

HRA: Rs 1125 per month.Conveyance allowance: Rs800 per month.

Uniform(washing)allowance: Rs 327 per month.

Meal allowance : Rs625 per month.

Companies contribution to P.F 12% of basic salary: Rs270 per month.

Employees contribution to P.F 12% of basic salary: Rs270 per month

Companies contribution to ESI:4.75%(basic+hra+conveyance+spl allowance+meal

allowance):Rs228per month.

Companies contribution to ESI:4.75%(basic+hra+conveyance+spl allowance+meal

allowance):Rs84per month.


29/29

issues related to compensation

Documents