WHAT IS COMPENSATION• Compensation is the remuneration received by an employee in return for his/her contribution to the organization• Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Con…….• 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 sum total of all rewards and allowances provided to the employees in return for their services
Compensation Objectives To reward employees’ past performance fairly, in line with efforts, skills and competencies To attract and retain competitive high performing Employees To remain competitive in the labor market To align employees’ future performance with organizational goals To communicate the employees their worth to the organization To provide employee social status
Compensation Policy IssuesPay for performancePay for senioritySalary increases and promotionsOvertime and shift payProbationary payPaid and unpaid leavesPaid holidaysGeographic costs of living differences
Need for Compensation Management. Motivatio n Compensation Packages Employee Need Retention Satisfactio n Good compensation package will motivate the employees toincrease the organizational productivity.Salary is just a part of the compensation system ,the employees haveother psychological and self-actualization needs to fulfill. It will help the organization to attract and sustain the best talent
Component of Compensation Management• Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities
Goals of Compensation• There are mainly 3 goal of compensation:- Attract Retain Motivate
Factors affecting Salaries and Wages Cost of living Supply and demand of labor Government requirements (minimum wage rates) Competitor wage scales Trade Union influences Labor productivity
Types of Compensation Management• Direct compensation• Indirect compensation• Nonfinancial Compensation
Direct compensation Medical. Reimbursemen Basic t Special Salary Allowances Direct House Compensatio Rent n Bonus Allowances Conveyanc Leave e Travel Allowances
. Indirect Compensation. Overtime policy Leave Hospitalizatio Policy n Indirect Flexible Compensati Timing on Insurance Holiday Leave Homes Retiremen travel t Benefits
Nonfinancial Compensation• Satisfaction that person receives from job itself or from psychological and/or physical environment in which person works.
BENEFITS OF COMPENSATION• An ideal compensation system will have positive impact on the efficiency and results produced by employees• Sound Compensation/Reward System brings peace in the relationship of employer and employees• It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable• The system provides growth and advancement opportunities to the deserving employees