By sayani majumder

1. COMPENSATION
MANAGEMENT
By- Sayani Majumder
Roll no: 95/mba/210014
Semester 3

2. Introduction
The term compensation represents the exchange between employees and organization, both gives
something in return for something else. In the past, the compensation issues were often
confidential , but in today’s competitive world the compensation policies are more transparent and
the employees take their own choices based on the compensation package.
Definition
Compensation management means-
The specialist HR discipline of planning and administering everything of financial value that
an employer gives an employee in exchange for their work.
It includes their salary but also benefits, bonuses and rewards.

3. Objective
 Attract and recruit talent
 Motivate employees
 Maintain morale
 Reflect the current job-market

4. Affecting Factors
• EXTERNAL
• Cost of living
• Society
• Labour unions
• Economy
• INTERNAL
• Compensation policy
• The organization ability to pay
• Job analysis and description
• Employee
Types
Compensation are two types-
(1) Monetary compensation-
(a) Direct compensation(financial)
(b)Indirect compensation (combination of financial and non-financial)
(2) Non-monetary compensation

5. Components
During employment-
 Basic Salary-This is the basic salary withdrawn by an employee in an organization.
 Wages and Salary- Wages mark hourly rates of pay, and salary marks the monthly rate of pay of an employee.
 House Rent Allowance (HRA)-It is generally calculated based on the basic salary obtained by an employee.
 Dearness Allowance (DA) -In some places where there is an inflation in the price of goods and services,
dearness allowance helps curb the impact of the price difference.
 Travelling Allowance (TA)-Specific organizations provide travel allowances when an employee needs to
travel.
 Medical Insurance-It is another part of employee benefits and compensation and includes health insurance,
family health insurance, hospital cover, etc.

6. Components
After employment-
 Gratuity- It is a financial component offered by an employer to an employee in recognition of his
or her services rendered to the organization.
 Provident fund- A provident fund​ is an investment fund that is voluntarily established by Employer
and employees to serve as long term savings to support an employee's retirement.
 Pension- A pension is a retirement fund for an employee paid into by the employer, employee, or
both, with the employer usually covering the largest percentage of contributions.

7. Components
Non-monetary Compensation-
 Flexibility at work.
 Rewards and Recognition.
 Provide an extra day off.
 Provide time for volunteer work.
 Fringe Benefits
Importance
• Job description
• Job analysis
• Employee motivation

8. Conclusion
We can say that good compensation can increase the productivity of an organization
because its provides various rewards, bonus, schemes etc and its necessary for every
organization.
ThankYou