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compensation
 

compensation

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    compensation compensation Presentation Transcript

    • Compensation Cash, Bonuses, Insurance, Vacation, Holidays Perks, Recognition
    • All forms of financial return, tangible services and benefits that employees receive as part of their employment relationship
    • Compensation refers to wages, salaries or tips while benefits describes job extras provided by the employer.  Benefits might include health care packages, dental and life insurances, and paid time off.
    • High compensation and appealing benefits attract employees . Some workplace benefits are required by law and others are offered as a job perk.
    • ‘COMPENSATION’ IN OThEr TErMS AlSO CAllEd AS ‘EMPlOyEE remuneratioN’ Remuneration is the compensation; an employee receives in return of his or her contribution to the organization. His or her standard of living, status in the society, motivation, loyalty and productivity depends upon the remuneration he or she receives.
    • Components of compensation EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT COMPENSATION FINANCIAL DIRECT INDIRECT NON-FINANCIAL THE JOB THE ENV.
    • FINANCIAL Direct wages, salaries, commissions, bonuses Indirect insurance plans life, health, dental, disability social assistance benefits retirement plans, social security. paid absences vacations, holidays, sick leave
    • Non-Financial The Job interesting, challenging, responsible opportunity for recognition, advancement, feeling of achievement Job Environment policies, supervision, co-workers, status symbols, working conditions, flextime, compressed work week, job sharing, telecommuting, flexible benefits programs
    • Factors that Influence Wage Levels CONDITIONS OF LABOR MARKET AREA WAGE RATES EMPLOYER’S ABILITY TO PAY WAGE MIX COST OF LIVING WORTH OF JOB EMPLOYEE’S RELATIVE WORTH COMPENSATION POLICY OF ORGANIZATION
    • COMPENSATION PACKAGE OF ASHOK LEYLAND
    • CLASSIFICATION OF REWARDS TOTAL Compensation Financial Direct Monthly Salary Annual Incentives Bonus Indirect Non - Financial Job Satisfaction Provident Fund Gratuity Travel allowance Mobile expense Sales Promotional Expense Praise / Rewards
    • PRAISE/REWARDS Future Leadership Program (FLP): Executives earmarked and declared future leader based on their competency Development based Career Plan (DLCP): Competent executives committing 5 years service to company in the form of bond will be given minimum 2 elevation during the bond period. Executive of the year Award Company Jeep at individual level Foreign Tour with family for the team achieving their yearly target Major medical claim for self and dependant
    • Aims of employee compensation Attract capable employees to the organization. Motivate them towards superior performance. Retainment of their services over an extended period of time.
    • The Importance of Compensation Impacts an employer’s ability to attract and retain employees. Ensure optimal levels of employee performance in meeting the organization’s strategic objectives.
    • Theory Behind Compensation Equity Theory Comparing inputs and outputs of a similar co-worker Perceived inequity affects employee effort
    • Expectancy Theory People are motivated by intrinsic and extrinsic outcomes they desire. People will only be motivated if outcome is possible. People will only be motivated if outcome is contingent.
    • Types of Base Pay Systems Job-based oPay the job (not the person) oMarket-based (external equity focus) oPoint factor-based (internal equity focus) Skills / knowledge-based oPay the person (not the job)
    • Job Based Pay Attraction Depends on market pricing Motivation No performance impact Skill Development Learn job-related and upward mobility skills Culture Bureaucratic, hierarchical Structure Hierarchical, individual jobs and differentiation Cost Good control of individual pay
    • Knowledge Based Pay Attraction Attracts learning-oriented individuals, high skills individuals Motivation Little performance impact Skill Development Motivates needed skill development Culture Learning, self-managing Structure Flat or team-based Cost Higher individual pay
    • Strategic Issues in Compensation Determining compensation relative to the market. Striking a balance between fixed and variable compensation. Deciding whether or not to utilize teambased versus individual pay.
    • CONT…….. Creating the appropriate mix of financial and non-financial compensation. Developing a cost-effective compensation program that results in high performance.
    • New Thinking for the New Millennium Pay the person . Reward excellence . Individualize the pay system .