Introduction strategic compensation management Part Ii

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  • This graphic shows that an employee’s total compensation has three components. The relative proportion of each varies extensively by firm. Generally, the largest element of total compensation is base compensation, the fixed pay an employee receives on a regular basis. Another component of total compensation is pay incentives, which are programs designed to reward employees for good performance. Benefits is the final component, and encompasses a wide variety of programs; including health insurance, vacations, and unemployment compensation.
  • This graphic shows that an employee’s total compensation has three components. The relative proportion of each varies extensively by firm. Generally, the largest element of total compensation is base compensation, the fixed pay an employee receives on a regular basis. Another component of total compensation is pay incentives, which are programs designed to reward employees for good performance. Benefits is the final component, and encompasses a wide variety of programs; including health insurance, vacations, and unemployment compensation.
  • Introduction strategic compensation management Part Ii

    1. 1. Introduction to Strategic Compensation Management: Part IDr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt) Professor
    2. 2. Compensation• Compensation - money and other benefits received for providing services• Cascio defined compensation as “Direct cash payments, indirect payments (employee benefits) and incentives to motivate employees to strive for higher levels of productivity”
    3. 3. Components of Compensation• Wage and Salary• Incentives• Fringe Benefits• Perquisites
    4. 4. Wage and Salary• Wage - remuneration to workers, hourly-rated payment• Salary - remuneration paid to white- collar employees & managerial personnel• Wages and salary - paid on the basis of fixed time period, not associated with productivity of an employee
    5. 5. Incentives• Incentive - any reward of benefit given to employee over and above the wage or salary with a view to motivating him to excel in his work• Incentives include both monetary as well as non-monetary rewards• A scheme of incentive is a plan to motivate individual or group performance
    6. 6. Fringe Benefits• Fringe benefits - Provident fund, gratuity, pension - Medical benefits, accident relief, health and life insurance - Facilitation in performance of job like uniforms, Canteens & recreation
    7. 7. BENEFITS
    8. 8. Perquisites• Perquisites - provided to managerial personnel either to facilitate their job performance or to retain them in the organization• Perquisites include company car, club membership, free residential accommodation, paid holiday trips and stock options
    9. 9. COMPENSATION ANDREWARD MANAGEMENT
    10. 10. Compensation & Reward Management• Beach defined compensation & Reward management as - “Establishment and implementation of sound policies and practices through job evaluation, surveys of wages & salaries, analysis of relevant organizational problems, development and maintenance of wage structure, establishing rules for administering wages, incentives, profit sharing, wage changes and adjustments, supplementary payments, control of compensation costs and other related items"
    11. 11. Remuneration & Rewards Financial Non-FinancialDIRECT INDIRECT JOB ENVIRONMENT(cash) (benefits) • Interesting • Good policies • Insurance work and practices• Salaries • Holidays • Challenge • Competent• Incentives • Medical and • Responsibility supervision• Bonuses health • Recognition • Congenial • Child care • Advancement co-workers • Employee • Safe and assistance healthy work environment • Fair treatment Components of Employee Remuneration
    12. 12. The Elements of Total Compensation Total Compensation Base Pay Indirect Compensation/Compensation Incentives Benefits
    13. 13. Total Compensation/Reward Total Compensation/ Reward Total Total Non-Financial Financial Compensation/Compensation/ Reward Reward
    14. 14. Factors Influencing Pay Market Organisation Forces Policy Work Individual Value Performance
    15. 15. Three Pay PoliciesPay Policy Attract Retain Motivate Control CostsLead + + ? ?Match = = ? =Lag - ? ? +
    16. 16. Govt. regulation for Compensation in India• Minimum Wages Act, 1948• Payment of Wages Act, 1936• Adjudication of Wage Disputes• Wage boards• Pay Commissions• Payment of Bonus Act, 1965
    17. 17. The Compensation Structure Job Evaluation Wage and SalaryIssues InvolvedIssues Involved Surveys in Setting in Setting Compensation Compensation Pay Grades Structures Structures Rate Ranges
    18. 18. Concept of Different Wages• MINIMUM WAGE• FAIR WAGE• LIVING WAGE (HIGHEST IN VALUE)
    19. 19. Concept of Wages• Minimum Wage - For sustenance of life and preservation of efficiency of workers and to provide some measure of education, medical requirements and amenities. 
    20. 20. Concept of Wages• Living Wage – In addition to providing food, clothing and shelter for worker and family, education for children, protection against ill-health, essential social needs and insurance against misfortunes and old age.
    21. 21. Concept of Wages• Fair Wage -above minimum wage but below living wage; fair wage to be paid based on capacity of industry to pay.
    22. 22. Calculation of minimum wages• Worker’s family – 3 members, earnings of women, children & adolescents disregarded• Minimum food requirements - 2,700 calories/adult.• Clothing requirements- 18 yards per annum/person.• Housing - minimum rent charged by Govt for houses under subsidized housing scheme• Fuel, lighting and other miscellaneous items - 20 % total minimum wage.
    23. 23. Thank you

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