IUBAT—INTERNATIONAL UNIVERSITY OF BUSINESS AGRICULTURE AND TECHNOLOGY
HRM 502- Human Resources Management,
Instructor: Ferdous Jalal
A presentation on -Compensation
Group Members of Focus group
Serial No Name ID No.
1 Jannatun Nahar Tania 14104028
2 Happy Akter 14104020
3 Nasima Nasrin 14104025
4 Md.Ahad Rahman 14104034
o About Compensation
o Objectives of Compensation
o Importance of Compensation practices
o Model for Compensation System
o Total Compensation
o Different Types of Pay
o Design of Compensation strategy
o Designing Compensation Strategy in Bangladesh
o Compensation practise in Bangladeshi garments
o Compensation and Organizational Performance
Compensation means what the employees receive in exchange
for their work. It is the monetary plus non-monetary return paid
to employees for the work done by them.
Compensation system results from the allocation, conversion,
and transfer of a portion of the income of an organization to its
employees for their monetary and in-kind claims on good and
Remuneration – money paid for services or work done.
Total remuneration / rewards – includes both monetary and
non monetary rewards provided for services or work done.
Incentives – designed to encourage employees to perform in a
certain manner, and commonly take the form of a payment to
stimulate greater output or improved quality. E.g. stock
option, discounts, free memberships, lump sum pay etc.
Benefits – Indirect financial payments which employees are
legally entitled to receive. E.g. paid annual leave, sick leave.
OBJECTIVES OF COMPENSATION
To acquire qualified personnel
To retain current key employees
To ensure equity
To reward desired behavior
To control costs
To comply with legal regulation
To further administrative efficiency
IMPORTANCE OF COMPENSATION PRACTICES
Compensation is important for both employers and
It is one of the main reasons for which people work.
It creates substantial cash out flow of an enterprise .
Compensation includes both financial and non-financial.
MODEL FOR COMPENSATION SYSTEM
Analyze Present Compensation
Formulate Salary Policies
Select Compensation System
Develop Implementation Plan
Evaluate and Monitor the Plan
• Overtime (if in non-
• Salary Increases
• Equity Offerings
• New job assignments
• Health Plans
• Retirement Plans
• Vacation/ time off
• Paid Training
• Working Hours
DIFFERENT TYPES OF PAY
Wages – are calculated by multiplying the number of hours worked by the agreed
hourly rate of pay.
Salary – total monthly / annual paid for performing the job.
PRP – performance related pay when pay is determined on the basis of individual /
Other tangible – vacation, flexible hours, membership, free tickets, time off,
coupons, using company resources for personal use, any other favourable benefit.
Social rewards – praise, recognition, positive feedback, greetings, complements,
company/social gatherings, nonverbal signs.
Status enhancement – office size, location, promotion, furniture and fixtures, “hall
of fame”, company crests, pins, ties etc. 8
DESIGN OF COMPENSATION STRATEGY
Design of compensation strategy are primarily driven by the
organisation’s compensation philosophy based on:
kinds and levels of required knowledge and skills.
kind of business.
capital intensive versus labor intensive.
total compensation package.
employment stability .
profitability of the organization.
DESIGNING COMPENSATION STRATEGY IN
Design of compensation strategy in BD probed into four
dimensions namely –
The perceived importance of strategically designed
compensation for organisational growth.
Importance of giving the right person the right
Importance of linkage between compensation and
Importance of regular review of salary with market
COMPENSATION PRACTISE IN BANGLADESHI
In Bangladesh, many garments industry have been following
the same compensation practices since long.
Since the per capita income is not very high, industry do not
risk experimenting with the earning of individuals.
Garments industry should consider a strategically designed
compensation is critical for success.
Though Garments industry have attached importance to a well
designed compensation system, employee turnover is still
high in these sectors.
In Bangladesh there were very low in comparison to
COMPENSATION PRACTISE IN BD GARMENTS
Compensation has been researched from different
perspectives at home and abroad. most of the garments
industry (87.5%) paid one or more types of allowances in
addition to salary. we found that nearly 7% enterprises
paid festival bonus, 20% paid medical allowance, and
20% provided pay increment.
COMPENSATION AND ORGANISATIONAL
Individual performance contribute to the organisational
Individual performance may not results in organisational
profitability because of various reasons.
Considering organisational performance and individual
performance to determine compensation strategy is important.
Majority of the Bangladeshi organisations determine
individual performance as a parameter for deciding salary
This is not as per leading practices worldwide.
Majority organisations practice increment policy – which is a
promise of continual payment for a performance in one
Performance should be linked more to variable pay and
Compensation as a tool to drive performance culture and
success of organisations will become more prominent in
Given the relatively lower per-capita income of
Bangladesh, uncertainty of earnings may backfire at
Inflation, cost of living, individual performance are the
key determinants for annual increments.
Compensation system should be introduced carefully and
with utmost sensitivity.