COMPENSATION

What???

Compensation of employees is the total remuneration, in

cash or in kind, payable by an enterprise to an employee in

return for work done during the accounting period.

Compensation has two main components:

(a) Wages and salaries payable in cash or in kind. (direct

and Indirect payments)

(b) The value of the social contributions payable by

employers: Like- Insurance, Group Insurance, Provident

Fund, Gratuity, Accident relief, ESI and other fringe benefits

(sodexho)

(b1) Job Context are the mostly non-monetary benefits

made available to any employee by employer. This too shall

paly a pat in employee motivation & morale. (Challenges,

responsibilities, recognition, CDP’s)

Compensation/Remuneration

Financial Non-

Financial

Monthly

/Hourly

Wages

Salaries

Incentives

Bonus

Ex-gratia

Fringe

Benefits

PF

Gratuity

Insurance

Accident

Relief

Perquisites

Club

membershi

p

Stock

options

Company

Car

Job Context

Challenges

Responsibility

Growth

Prospects

Work

Condition

DIRECT INDIRECT

ECONOMY / ENVIRONMENT/ MARKET

Factors affecting pay rates

Business

Strategy &

Policies

Job

Evaluation

& PMS

Union

Influence

Employee

Legal

Considerations

Labour

MarketsEconomy

Globaliza

tion

Cost of Living

External

Internal

Salary

Compression

Legal considerations as per ILO

Employee

Compensation

Davis Bacon

(1931)

Walsh – Healey

Public Contract

Act (1936)

Title VII Civil

Rights Act (1964)

Fair Labour

Standards Act

(1938)

Family and

Medical Leave Act

Social Security Act

(1935)

Americans with

Disabilities Act

Age Discrimination

Employment Act

Employee Retirement

Income Security Act

(ERISA)

Equal Pay (1963)

Workers

Compensation Act

Theories of Remuneration

Theories of Remuneration

Theories of Remuneration

Theories of Remuneration

Perception of Pay

Strategic Compensation

This looks

beyond the

usual pay and

employment

cost , the

main objective

being –

motivating

people/employ

ee to perform

better

Strategic Comp Factors

External

Determinants

Internal

Determinants

Talent Availability

Demand & Supply

Internal Equity

Roles & Skills

Balanced Pay Mix

Cash & Benefits

Rewards

Industry Trend

Pay ranges

Overall Growth

Global Scnario

Strategic Comp Process

Job Evaluation

• Job evaluation – a

systematic way of

determining the

value/worth of a

job in relation to

other jobs in an

organisation.

• It tries to make a

systematic

comparison

between jobs to

assess their relative

worth for the

purpose of

establishing a

rational pay

structure.

Job Analysis & Job Evaluation

• Job analysis is a systematic way of gathering information

about a job.

• Every job evaluation method requires at least some basic job

analysis

• Job evaluation begins with job analysis and ends at that

point where the worth of a job is ascertained for achieving

pay equity between jobs.

Job

Evaluation

Point

Method

Factor

Comparison

Job

Classification

Ranking

Components of Pay structure

Basic Salary

Commissions/Incentives

Bonus

Dearness allowance

Child Education Allowance (taxed)

City Compensatory Allowance

Conveyance Allowance

House Rent Allowance

Leave Travel Allowance (taxed)

Lunch Allowance

Medical reimbursement (taxed)

Newspaper allowance (taxed)

Special Allowance

Gift voucher

Club membership (save tax)