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  2. 2. IUBAT—INTERNATIONAL UNIVERSITY OF BUSINESS AGRICULTURE AND TECHNOLOGY HRM 502- Human Resources Management, Section –MBA 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
  3. 3. CONTENTS 1 o About Compensation o Definitions 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 o Conclusion
  4. 4. ABOUT COMPENSATION  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 services. 2
  5. 5. DEFINITIONS  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. 3
  6. 6. 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 4
  7. 7. IMPORTANCE OF COMPENSATION PRACTICES  Compensation is important for both employers and employees.  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. 5
  8. 8. MODEL FOR COMPENSATION SYSTEM Analyze Present Compensation Structure Formulate Salary Policies Select Compensation System Develop Implementation Plan Evaluate and Monitor the Plan 6
  9. 9. TOTAL COMPENSATION Employee Satisfaction Salary • Pay • Overtime (if in non- exempt classification) Rewards • Bonus • Salary Increases • Promotions • Equity Offerings • Awards • Recognition • New job assignments Benefits • Health Plans • Retirement Plans • Vacation/ time off • Paid Training • Working Hours 7
  10. 10. 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 / group performance.  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
  11. 11. 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.  geographic location. 9
  12. 12. DESIGNING COMPENSATION STRATEGY IN BANGLADESH 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 compensation.  Importance of linkage between compensation and organisational performance.  Importance of regular review of salary with market benchmark. 10
  13. 13. COMPENSATION PRACTISE IN BANGLADESHI GARMENTS  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 competing nations. 11
  14. 14. 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. 12
  15. 15. COMPENSATION AND ORGANISATIONAL PERFORMANCE  Individual performance contribute to the organisational performance.  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 increments.  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 particular year.  Performance should be linked more to variable pay and bonuses. 13
  16. 16. CONCLUSION  Compensation as a tool to drive performance culture and success of organisations will become more prominent in future.  Given the relatively lower per-capita income of Bangladesh, uncertainty of earnings may backfire at junior levels.  Inflation, cost of living, individual performance are the key determinants for annual increments.  Compensation system should be introduced carefully and with utmost sensitivity. 14
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