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Remunerations and incentives
 

Remunerations and incentives

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    Remunerations and incentives Remunerations and incentives Presentation Transcript

    • Remunerations and Incentives
    • REMUNERATION  Remuneration is a payment or compensation received for service or employment. This includes the base salary and any bonus or other economic benefits that an employee or executives received during employment.  Remuneration is traditionally seen as the total income of an individual and may comprises a range of separate payments determined according to different rules. For instance the total remuneration of medical staff may comprise a capitation fee and a fee for services mot is may include a salary and shared financial risk. A remuneration strategy therefore is the particular configuration of building of payments that go make up an individual’s total income
    • Types of Remuneration  Compensations a) Executives Pay : Executive pay is the total pay or financial compensation an executive offer within the co-corporation salary, and all bonuses, shares, options and any other company benefits. Executives pay is an important part of corporate governance and is often determined by companies’ board of director. b) Deferred Compensation : It is an arrangement in which a portion of an employee’s income is paid out at a date after which that income is actually earned. Example of deferred compensation includes pensions, retirement plans and stock options.
    •  EMPLOYEE BENEFITS : Employee benefits are various non-wage compensation provided to employees in addition to their wage and salaries, where an employee exchange (cash) wages for some other forms of benefits, this is generally referred to as salary sacrifice arrangement. Some of these benefits are housing ( employer provided or employer- paid ) , group insurance ( health, dental, etc), disability income protection, retirement benefits, tuition reimbursement, sick leave, vacation ( pad and not paid), social security, profit sharing, funding of education and other specialized benefits. The purpose of employee’s benefits also is to increase
    •  COMISSION : The payment of commission as remuneration for service rendered or product sold in a common way to reward sales people.  SALARY : A salary is a form an employee to an employee which may be specified in a employment contract. It is contracted with piece wages, where each job, hour or other unit is paid separately rather than on a periodic basis. From a point of business salary can also be viewed as the cost of acquiring human resources for running operation it is the termed personnel expenses or salary expenses. In accounting salaries are recorded in payroll account.
    •  PERFORMANCE LINKED INCENTIVES (PLI) : A performance linked incentives is a form of payment from an employer to an employees which is directly related to the performance output of an employee and which may be specified on an employment contact. PLI may be either open handed ( does not have fixed ceiling) or closed handed ( has an upper ceiling which is normally stipulated in the employment contacts). Open handed incentives are normally applicable revenue generating activities (e.g. sales) and close handed are associated with support functions ( e.g. operation, human resources, administration etc)
    • INCENTIVES  Incentive is a reward monetary or non-monetary which is given to a worker for his efficiency and hard work.  If a worker has raised production by hard work then there must be increase in wage corresponding to an increase in output. Any firm earning high profits give bonus at high rate as incentives. So the workers exert themselves to produce any where near their full capacity and try to increase the profit of the firm because their income increases with the increase in the firm’s profit.  An incentive motivates and encourages a worker to produce more and better and are prevalent in the fixed salary method. Incentives help in increasing the interest of the worker in the production and are in addition to the job hourly rate and in some proportion to the worker’s contribution towards production.  Incentive and production are closely related with each other. Incentives stimulate the worker for increased production and help to create better efficiency
    • TYPES OF INCENTIVES Incentives may be classified in to the following two groups: a) financial incentives b) non- financial incentive
    •  FINANCIAL INCENTIVES Financial incentives involve direct monetary payments or benefits to workers for better productivity and performance. Besides incentives for the immediate work contribution, workers may receive additional financial benefits in the form of; i) bonuses ii) profit sharing METHOD OF FINANCIAL INCENTIVES i) Piece rate system vi) Emerson’s effiency bonus system ii) Cent percent premium vii) Gantt task and bonus system iii) Halsey system viii) Taylor’s differential piece rate system iv) Rowan system ix) Merrick’s multiple piece rate system v) Bedaux or point system x) Weir premium plan vi) Barth system
    •  NON-FINACIAL INCENTIVES The financial incentives must be supported by the non-financial incentives. Only cash wages cannot help in solving the problems of the workers. So there must also be some non-financial incentives. Non financial incentives include good working conditions, amenities and social benefits in the organization. Non financial incentives play an important role in maintaining better production and efficiency in an organization. With this type of incentives workers create interest for greater and better output and will also enjoy richer and fuller life. At last the say that the non-monetary reward given to the worker for the better productivity and performance, is called nonfinancial incentives. Some of the chief Non-financial incentives are: 1. Security of service. The service of the trained person should be secure in the industry. A worker knows that the he is not going to be dismissed, suspended or discharge unless he behaves wrongly or creates indiscipline or shows carelessness against the work. He will have security of his service. 2. Opportunity for training. There should exist a suitable arrangement for the training the workers of different levels and thus offering them opportunities for improving their knowledge and skill. 3. Chances of Quick Promotion. There is no back door entry of the worker. Every worker is likely to be promoted to a higher rank when the opportunity arises. There fore it is necessary for every worker to increase his efficiency and show his skill what he has. Only then he gets the chances of promotion. 3. Chances of Quick Promotion. There is no back door entry of the worker. Every worker is likely to be promoted to a higher rank when the opportunity arises. There fore it is necessary for every worker to increase his efficiency and show his skill what he has.
    • 4. Personal Reward. The rewards like certificates of merit, appreciation for good work, good conduct and attendances etc. also increase the efficiency of the workers. Respect of recognition in the organization in also is itself a reward to the workers. 5. Welfare Measures. Some of the necessary welfare measure like provision of medical facilities, transportation, housing, food services, recreational and educational facilities to workers and their families has a sound effect on the workers. In the factory some facilities like drinking water, shelters, canteen, rest room, latrines and urinals etc must be provided to the increase the efficiency of the workers. 6. Sympathetic Attitude of the Management. For increasing the efficiency of the worker it is necessary for the management that fair and sympathetic treatment is given to a worker. A faith in their individuality is not ignored and their grievances