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Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
Module 1 (1st part)
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Module 1 (1st part)

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  • 1. COMPENSATION MANAGEMENT
    MODULE 1
  • 2. COMPENSATION MANAGEMENT
    • Compensation is what employees receive in exchange for their contribution to the organization.
    • 3. Compensation in other terms also called as ‘Employee Remuneration’
    • 4. Remuneration occupies an important place in the life of an employee. His or her standard of living, status in the society, motivation, loyalty, and productivity depend upon the remuneration he or she receives. For the employer too, employee remuneration is significant because of its contribution to the cost of production.
  • Objectives of compensation planning
    Attract talent
    Retain talent
    Ensure equity
    Reward appropriately(loyalty, commitment, experience, risk raking and other desired behaviours)
    Control costs
    Comply with legal rules
    Ease of operation
  • 5. FACTORS INFLUENCING EMPLOYEE COMPENSATION
  • 6. FACTORS INFLUENCING EMPLOYEE COMPENSATION
    EXTERNAL FACTORS
    Labour Market
    Cost of living
    Labour unions
    Labour laws
    Society
    The Economy
    Compensation Survey
  • 7. FACTORS INFLUENCING EMPLOYEE COMPENSATION
    INTERNAL FACTORS
    Compensation policies
    The Organizational ability to pay
    Job analysis and job description
    The Employee
  • 8. FACTORS INFLUENCING EMPLOYEE COMPENSATION
    EXTERNAL FACTORS
    • Labour market: A labour market is defined as a pool of all potential workers who compete for jobs.
    • 9. It also includes the employers who compete for workers.
    • 10. Labor markets are based on the supply and demand of labor in a country or a specific location that are able and willing to work.
  • EXTERNAL FACTORS
    • A low wage may be fixed when the supply of labour exceeds the demand for it.
    • 11. Labour economics seeks to understand the functioning and dynamics of the market for labour. Labour markets function through interaction of workers and employers.
    • 12. Labour economics looks at the suppliers of labour services (workers), and demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment and income.
  • FACTORS INFLUENCING EMPLOYEE COMPENSATION
    Cost of living: DA (Dearness allowance) takes care of the price inflation that affects the purchasing power of the employees.
    It is a regular and continuing part of the compensation package that gets changed according to the price increase.
    For the employees of PSU’s, Governments through the Wage Board and/or the Pay Commissions fix this component periodically based on the CPI (Consumer Price Index) to satisfy the real values of wage or salary.
  • 13. FACTORS INFLUENCING EMPLOYEE COMPENSATION
    • Labour Unions: The presence or absence of labour organization often determine the quantum of wages paid to employees.
    The benefit of belonging to a labor union is that wages are always the union's top priority. Union leaders work hard to ensure members receive sufficient wages for the work performed.
  • 14. LABOUR LAWS
    Government makes and enacts laws regarding welfare aspects of workers, their security and their prosperity.
    Workers Compensation Act,1923
    The Payment Of Wages Act, 1936
    The Minimum Wages Act, 1948
    Employees’ State Insurance Act, 1948
    Employees’ Provident Fund Act, 1952
    The Payment To Bonus Act, 1965
    Maternity Benefit Act, 1971
    The Equal Remuneration Act, 1976
  • 15. Compensation survey
    Collection of salary and market data. It includes average salaries, inflation indicators, cost of living indicators and salary budget averages.
  • 16. Culpepper Salary Budget & Planning Survey
    Results from the 2010-2011 Culpepper Salary Budget & Planning Survey reveal that salary budgets for 2011 are projected to continue rising after hitting historic lows in 2009. Despite a weak job market, most companies report improved confidence with their cash compensation budgets. Projected budgets for 2011, including salary increases, promotional increases, and variable incentives are all higher than 2010. Furthermore, the number of companies reporting salary freezes has significantly declined, and salary reductions have nearly disappeared.
  • 17. This year’s report includes data from 933 participating organizations for 90 countries and 21 international geographic regions. Topics include salary budgeting & planning practices, base salary increases, salary structure increases, promotional increases, and budgets for variable cash incentives.
  • 18. Key Survey Findings and Trends
    Most Companies Aim to Match or Lead Market Pay Rates: Nearly 70 percent of companies have a base salary philosophy with an objective to either match or lead the market and pay salaries at or above current market levels.
    Annual Salary Reviews Most Common: Most organizations review base salaries annually on a common focal date.
    Salary Increases Rise: Average global base salary increases across all jobs and locations are projected to jump from 2.59% in 2010 to 3.14% in 2011.
    Salary Freezes Continue to Thaw: The number of companies freezing salaries is projected to decline sharply from 14 percent in 2010 to 4 percent in 2011.
    Very Few Companies Cutting Salaries: Only 0.2% (two tenths of one percent) of companies plan to cut salaries in 2011.
    U.S. Salary Increases: Base salary increases in the United States are projected to rise from 2.38% in 2010 to 2.91% in 2011.
  • 19. Canada Salary Increases: Base salary increases in Canada are projected to rise from 2.26% in 2010 to 2.95% in 2011.
    Global Regions with the Highest Salary Increases: Base salary increases in South Asia, South America, Africa, and the former Soviet Republics (i.e., Commonwealth of Independent States) are higher and more volatile than other regions of the world.
    Global Regions with the Lowest Salary Increases: Base salary increases in Northern America (i.e., United States and Canada), the Eurozone (€), and member states of European Free Trade Association (EFTA) are lower and less volatile than other regions of the world.
    Technology, Life Science, and Energy Sectors Lead the Way: Base salary increases in technology, life science, and energy sectors are projected to outpace other sectors in 2011.
    Salary Range Structure Increases: Average global salary range structure increases across all jobs and locations are projected to rise from 1.41% in 2010 to 2.10% in 2011.
  • 20.
  • 21.
  • 22. INTERNAL FACTORS INFLUENCING EMPLOYEE COMPENSATION
    Compensation Policies: Provides general guidelines for making compensation decisions.
    Pay leaders
    The market rate
    Pay followers
    The organization’s ability to pay
  • 23. INTERNAL FACTORS INFLUENCING EMPLOYEE COMPENSATION
    Job analysis and job description: more difficult and challenging a job, the higher the wages.
  • 24. INTERNAL FACTORS INFLUENCING EMPLOYEE COMPENSATION
    The employee: Performance, seniority, experience, potential and even luck determine his or her remuneration.
  • 25.
  • 26. “For everything you have missed, you have gained something else; and for everything you gain, you lose something else.”
    -Ralph Waldo Emerson

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