Compensatio administation
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  • 1. Compensation Administration Presented by: Bipin RawatMB79 Chitranshu Sahu MB52 Darshana Barman MB91 Deepayan Goswami MB17
  • 2. Table of Contents 2 Topics Slide No. Compensation 3 Goals of compensation 4 How is compensation used 5 Compensation Administration 6 Features of Compensation Administration 7 Bonus 8 Types of Bonus 9 ESOP 11 Advantages of ESOP 12 Variable Pay System 13 Advantages of Variable Pay System 14 Disadvantages of Variable Pay System 15 Establishing a Variable Pay System 16 Conclusion of Variable Pay System 18 Reference 19
  • 3. 3 Compensation  It is the method of maintaining balance between interest of company and attracting , developing, retaining and rewarding high quality staff through wages and salary.  Compensation is a systematic approach to provide monetary value to employee in exchange for their work performed.  It includes all forms of wages, salaries, incentives, commissions, variable pay and bonus.
  • 4. 4 Goals of Compensation  To design pay system that elicit desired behavior by employee at work.  To motivate employee to join, stay & perform at high levels.  For the organization to remain ethical and legal in its compensation.
  • 5. 5 How is Compensation used  Recruit and retain qualified employee.  Increase or maintain morale/satisfaction.  Reward and encourage peak performance.  Achieve internal and external equity.  Reduce turnover and encourage company loyalty.
  • 6. 6 Compensation Administration  Compensation administration is a segment of management or human resource management focusing on planning, organizing, and controlling the direct and indirect payments employees receive for the work they perform. Compensation includes direct forms such as base, merit, and incentive pay and indirect forms such as vacation pay, deferred payment, and health insurance.  Objectives: Efficient maintenance of a productive workforce, equitable pay, and compliance with federal, state, and local regulations based on what companies can afford.
  • 7. 7 Features of Compensation Administration  Compensation Packaging  This make the distinction between different types of compensation and to categorize the compensation types.  Eligibility  This to identify who qualifies for compensation awards based on a series of eligibility criteria.  Guidelines  This to determine how compensation awards are calculated or to set limits on the calculation results.
  • 8. 8 Bonus  Bonus pay is compensation over and above the amount of pay specified as a base salary or hourly rate of pay.  A structure of bonus payments is frequently found in sales organizations to reward sales performance at specified levels over and above commission.
  • 9. 9 Types of Bonus  Individual Bonus Scheme  Productivity Bonus  Quality Bonus  Targets  Team Bonus Schemes  Company Bonus Schemes  Profit Sharing  Retention Bonus
  • 10. 10 Types of Bonus (Cont..)  Bonus Scheme Options  Cash Bonus  Gift Vouchers  Flexible Benefits  ESOP
  • 11. 11 Variable Pay System  Variable pay system provides some or all workforce's compensation based on employee performance or on the performance of a team.  These programs are sometimes referred to as "pay-for-performance" or "at-risk" pay plans.  Variable pay programs are an increasingly popular mode of compensation in today's business world.
  • 12. 12 Compensation Methods of Variable Pay System  Variable pay programs include  Annual incentives  Bonus payments  Individual incentive plans  Payments for newly acquired skill and knowledge.  Objectives: The ultimate goal of variable pay plans is to share a common emphasis on recognizing achievement
  • 13. 13 Advantages of Variable Pay System  Variable compensation can motivate employees and promote team building.  It also encourages people to take responsibility for the outcome of their work.  Variable pay boosts profitability by encouraging creative problem solving.  Workers are ideally situated to generate new ideas.  These often include ways to streamline processes, improve products/services, and increase customer satisfaction.
  • 14. 14 Disadvantages of Variable Pay System  Incorporating bonuses into sales and marketing is simple because success is easy to measure whereas figuring out how to calculate what outcomes you should reward in other industries takes a lot more thought.  If you have no clear goals or guidelines, an incentive program will simply be money wasted.  Many companies fail to make variable pay programs meaningful to individual employees, which in turn robs the program of much of its power to facilitate increased productivity.
  • 15. 15 Establishing a Variable Pay System Proponents of variable pay programs contend that implementation of such a system is far more likely to be successful if the following conditions are met :  Differences in performance must mean something to the business. Employees must see that mediocre and high-quality performances are not rewarded equally, and that results count  Business goals must be clearly defined and adequately disseminated to employees, and they should be arrived at with their assistance.
  • 16. 16 Establishing a Variable Pay System (Contd..)  Performance must be measured regularly and reliably. A clear system of performance appraisal and feedback must be put in place, with regularly scheduled meetings as one component.  Employers should use variable pay as a tool in reaching ambitious business goals. The targets should be set high so that extra effort is needed to reach them.  Businesses should make sure that their variable pay plans reward employees for actions or skills that actually further the aims of the company
  • 17. 17 Conclusion of Variable Pay  Communicate how the program benefits both the employees and the company.  Give bonuses to those who increase the company’s profitability by creating more efficient systems – not those who cut costs at the expense of ethics and morale.  Determine how performance will be measured and make the guiding principles easy to understand.  Set short term, achievable goals that require employees to challenge themselves.
  • 18. 18 Reference  http://www.referenceforbusiness.com/encyclopedia/CloCon/Compensation-Administration.html#b  http://help.sap.com/saphelp_45b/helpdata/en/66/9bb8033aff11d1893700 00e829fbbd/content.htm  http://www.love2reward.co.uk/rewards/info-centre/bonus-schemes.jsp  http://www.inc.com/encyclopedia/variable-pay.html  http://hr.blr.com/HR-news/Compensation/CompensationAdministration/zn-Executive-Compensation-Different-From-Other-Com  http://my.safaribooksonline.com/book/hr-organizationalmanagement/9789332501393/14-compensationadministration/ch14_sub3_xhtml
  • 19. 19 Thank You