3. Mohan Madgulkar-Compensation Management/2006
Compensation
• Cash and non-cash rewards employees receive in
exchange for their work
• Effective compensation management
– Employees more likely to be satisfied and motivated
• Compensation perceived to be inappropriate
– Performance, motivation and satisfaction may decline
dramatically
– Employee turnover may occur
– Dissatisfaction with absolute or relative pay
4. Mohan Madgulkar-Compensation Management/2006
Total Reward
Financial
rewards
Base
pay
Variable
pay
Share
owner-
ship
Benefits
Total
remuneration
Non-
financial
rewards
Recognition
Skills
Development
Current
opportunities
Quality of
working life
Total
Reward
5. Mohan Madgulkar-Compensation Management/2006
Reward management defined
• “Reward management is concerned with the
formulation and implementation of strategies
and policies the purposes of which are to
reward people fairly, equitably and
consistently in accordance with their value to
the organisation and to help the organisation to
achieve its strategic goals”
7. Mohan Madgulkar-Compensation Management/2006
Pay & Organizational Strategy
Areas that impact
pay systems
Attract &
retain
Identifying
valued rewards
Motivating
development
Relating to
performance
Setting
goals
Consequences
Motivating
performance
8. Mohan Madgulkar-Compensation Management/2006
The concept
• Wages and salaries constitute the greatest single cost
of doing business.
• Establishing equitable and competitive pay structure
is important from attracting point of view . the
organization can also hold out the possibility of
varying compensation, the payment of which is
dependant on specific behavior. Supplementary pay
plans ( fringe benefits ) can retain the employees in
the organization on a long term basis
9. Mohan Madgulkar-Compensation Management/2006
The concept
• Development, implementation, maintenance ,
communication and evaluation of reward
processes
• Assessment of relative job values, the design
and management of pay structures,
performance management, paying for
performance, competence or skills , the
provision of employee benefits and pensions,
management of reward procedures
10. Mohan Madgulkar-Compensation Management/2006
Aims of Compensation and reward
management
• Support the achievement of organizations strategic and short
term objectives
• Support culture management and change
• Drive and support desired behavior
• Encourage value added performance
• Promote continuous development
• Compete in employment market
• Motivate all members of the organization
• Promote teamwork
• Promote flexibility
• Provide value for money
• Achieve fairness and equity
