Meaning & concepts The policies & procedures for managing all forms of financial returns & tangible services & benefits that employees receive as part of an employment relationship. Objectives
Capable employees are attracted towards the organization.
The employees are motivated for better performance.
The employees do not leave the employers frequently.
Elements of compensation
Monthly wage or salary or total pay including basic wage, house rent allowance, D.A, city compensatory allowance.
Bonus at the end of the year.
Economic benefits such as paid holidays, L.T.C.
Contribution towards insurance premium.
Transport and medical facilities.
Contribution towards retirement benefits such as employee provident fund.
Factors determining compensation & pay rates DEMAND FOR AND SUPPLY OF LABOUR PREVAILING WAGE RATES GOVERNMENT COST OF LIVING ABILITY TO PAY LABOR UNIONS PRODUCTIVITY OF LABOUR Important factors which affect the individual differences n wage rate :
Hazards involved in works
Stability of employment
Demand for special skills
Profits or surplus earned by the organization
JOB EVALUATION Job evaluation is the process of determining the worth of one job in relation to that of the other jobs in a company so that a fair and equitable wage and salary system can be established.
Concepts of wages
Time wage plan
Piece wage plan
Pay and Gender
Equal Pay Act of 1963
Requires that men and women be paid the samefor performing substantially similar jobs withlimited non-gender exceptions (e.g., merit & seniority).
Issue of Pay Equity
Similarity in pay for all jobs requiring comparable level of knowledge, skills, and abilities, even if actual duties and market rates differ significantly.
Incentives An incentive is any factor (financial or non-financial) that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. Short Term Plans
Halsey Premium Plan
Total Wages = (Taken Time X Standard Rate) + Bonus where Bonus =(Time Saved*Standard Rate ) 50%
Total Wages = (Time Taken * Standard Rate) + Bonus where Bonus=(Time Taken*Time Saved * Std. Rate )/Std. Time
Total Wages = √Standard Time x time taken x hourly rate
Cont… Long Term Plans
rewards employees for years of service with the company.
Profit Sharing Plans
certain percentage of profits is distributed
employees are given the option of purchasing the company’s stock
Performance Bonus Plans
reward employees based on each employee's annual performance review.
Incentives at different levels
Non-monetary incentives Non-monetary incentives are used to reward participants for excellent behavior through opportunities.
Payment of bonus act,1965 Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. PAYMENT OF GRATUITY,1972 The Payment of Gratuity Act 1972 is a social security enactment. Gratuity shall be paid to an employee on the termination of his employment after she/he has rendered continuous service of not less than 5 years i.e. on superannuation, retirement, resignation, death or disablement due to accident or disease