Low Compensation, Low Commitment purpose is a matter of choice; existence is the driver for such people. A shop owner of a local store can be mapped to such a category. There is nothing wrong with people in this category as long as they don’t compare themselves to people from other categories. Low Compensation, High Commitment people are path creators and have high altruistic attitude. People in NGOs or start ups can be mapped to this category. Such people have low opinion about scaling and do not like working in large organizations. If you are in this category, then don’t grudge about skills. High Compensation, Low Commitment people are those who are driven by consumption. These are professionally competent people but the purpose is limited to them. They are path dependent people, who when showed the path, walk efficiently and brilliantly on it. High Compensation, High Commitment people have a sense of legacy. Narayan Murthy, Azim Premji and Manmohan Singh are the people who can be mapped to this quadrant. They are responsible for the future in which they will not exist. They have a long view of time since it takes a lifetime to make a difference. Dalai Lama has not been able to make Tibet a reality but that doesn’t deter him from his purpose and his efforts which are for a future Tibet which he may not even live to see. These people are not fazed by failures, they are deeply self aware but they have to pay an emotional price to stay in this quadrant because of its high demand
Job analysis is a systematic process of analyzing a job for identifying job contents, leading to job description, job specification, and job evaluation A job description is defined as a written outline of the main tasks of a job To scientifically determine the optmimal way to perform the job, Taylor performed experiments that he called time and motion study
Agenda What is compensation? Different parts of compensation Extrinsic compensation and Intrinsic Compensation Purpose of compensation Its Importance Factors affecting compensation Constituents of Compensation Law governing and affecting pay structure A Hierarchical Focus on Compensation Compensation professional’s Goal Compensation department main goal
Objectives Able to define compensation Understand different types of Extrinsic compensation Why it is importance from different perspective Mandatory laws to be take care in compensation Factors to be consider for Compensation Pay Model Compensation professional’s Goal Understand main goal of compensation department
What is Compensation & Benefits ? Compensation is payment to an employee in return for their contribution to the organization, that is, for doing their job. The most common forms of compensation are wages, salaries and tips. Benefits are forms of value, other than payment, that are provided to the employee in return for their contribution to the organization, that is, for doing their job.
Purpose of Compensation For Employer Brand image (employer of choice) for attracting candidates Motivating employees for higher productivity and performance Retaining talent Consistency in compensation Provoking healthy internal competition For Employee Work-life Balance Recognition as tool to self esteem Planning for better quality of life
Its Importance High Compensation-Low Commitment High Compensation-High Commitment Hired Guns Professionals High Compensation-High Commitment Low Compensation-Low Commitment Low Compensation- High Commitment Workers as commodity Family oriented organization
Its Importance Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness Effectiveness in terms of: Attracting & Retaining Talent Motivating talent for better performance Cost effectiveness
Factors affecting compensation Mental Requirement Physical requirements Skill requirements, Responsibility level Working conditions (risk, time, hazards) Organizational Affordability Man power planning Sales – salary ratio Market Rate for Talent Economic Conditions
Constituents of Compensation Fringe Benefits Fringe benefits include such benefits which are provided to the employees either having long-term impact like provident fund, gratuity, pension; or occurrence of certain events like medical benefits, accident relief, health and life insurance; or facilitation in performance of job like uniforms, Canteens, recreation, etc. Perquisites: These are normally provided to managerial personnel either to facilitate their job performance or to retain them in the organization. Such perquisites include company car, club membership, free residential accommodation, paid holiday trips, stock options, etc.
Law Governing and Affecting Pay Structure Minimum Wages Act, 1948 Payment of Wages Act, 1936 Payment of Bonus Act, 1965 Income Tax Act, 1961 Equal Remuneration Act, 1976 Acts on social securities (PF, Bonus, Gratuity, Employee Compensation)
A Hierarchical Focus on Compensation Business Goals Compensation activities serveCEO Business Objectives Business Strategy Compensation strategy is periodically reevaluated and the Compensation planHR Head Compensation periodically developed Strategy Org.Structure Non-Financial Rewards Compensation PlanC & B/S M Performance Job Evaluation Market Surveys Management Unit Inputs Pay levels / Compensation structures Manager, along with Contribution team is responsible forEmployee /outputs carrying out Total compensation related remuneration activities Performance linked Pay Individual Pay Internal Equity External Equity
Compensation Professional’s Goal How HR professional fit into the corporate hierarchy. (Line employees and Staff employees)