Meaning & concepts<br />The policies & procedures for managing all forms of financial returns & tangible services & benefits that employees receive as part of an employment relationship.<br />Objectives<br /><ul><li>Capable employees are attracted towards the organization.
The employees are motivated for better performance.
The employees do not leave the employers frequently.</li></li></ul><li>Elements of compensation<br /><ul><li>Monthly wage or salary or total pay including basic wage, house rent allowance, D.A, city compensatory allowance.
Contribution towards retirement benefits such as employee provident fund.</li></li></ul><li>Factors determining compensation & pay rates<br />DEMAND FOR AND SUPPLY OF LABOUR<br />PREVAILING WAGE RATES<br />GOVERNMENT<br />COST OF LIVING<br />ABILITY TO PAY<br />LABOR UNIONS<br />PRODUCTIVITY OF LABOUR<br />Important factors which affect the individual differences n wage rate :<br /><ul><li>Workers capacity
Profits or surplus earned by the organization</li></li></ul><li>JOB EVALUATION<br />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.<br />
Broad banding </li></li></ul><li>Pay and Gender<br /><ul><li>Equal Pay Act of 1963</li></ul> Requires that men and women be paid the samefor performing substantially similar jobs withlimited non-gender exceptions (e.g., merit & seniority).<br /><ul><li>Issue of Pay Equity</li></ul> Similarity in pay for all jobs requiring comparable level of knowledge, skills, and abilities, even if actual duties and market rates differ significantly.<br />
Incentives<br />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.<br />Short Term Plans<br /><ul><li>Halsey Premium Plan </li></ul> Total Wages = (Taken Time X Standard Rate) + Bonus <br /> where Bonus =(Time Saved*Standard Rate ) 50%<br /><ul><li>Rowan Plan</li></ul> Total Wages = (Time Taken * Standard Rate) + Bonus<br /> where Bonus=(Time Taken*Time Saved * Std. Rate )/Std. Time<br /><ul><li>Barth System</li></ul> Total Wages = √Standard Time x time taken x hourly rate<br />
Cont…<br />Long Term Plans<br /><ul><li> Service Incentives
rewards employees for years of service with the company.
reward employees based on each employee's annual performance review.</li></li></ul><li>Incentives at different levels<br />
Non-monetary incentives<br />Non-monetary incentives are used to reward participants for excellent behavior through opportunities.<br />
Payment of bonus act,1965<br />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.<br />PAYMENT OF GRATUITY,1972<br />The Payment of Gratuity Act 1972 is a social security enactment.<br />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 <br />