2. Formulating a Company
Compensation Policy
A company must formulate a sound
company compensation policy on which
basis the nature , and frequency of
administration of its cash, near-cash
compensation, and benefits would be
strategically positioned, developed, and
reviewed.
3. Dimension of a Compensation
Philosophy
Pay for performance
Many companies have some kind of
“pay for performance” compensation
policy. As one company would say, : We
reward outstanding performance with
outstanding pay.”
4. Market competetiveness
This can be seen through the manner by which
a company approaches its market: market rates will
be expressed in terms of total compensation
whenever possible.
5. Degree in which employees are engaged in the
success of a company
Communication link to corporate performance
7. A. Guaranteed cash
Regular salary
Fixed and guaranteed allowance
Fixed/guaranteed bonuses
(13th month pay)
B. Variable or discretionary compensation
(e.g. commission, profit share, performance
bonus, management incentive)
8. C. Total Cash (A+B)
D. Benefits
E. Total remuneration (C+D)
9. Basic Salary
Regular salary = basic salary + fixed and
guaranteed allowance
Guaranteed cash = regular salary + fixed and
guaranteed bonuses
Total cash = guaranteed cash + variable or
discretionary compensation
10. Basic salary is adjusted through various methods
including:
1. Merit Increase
2. Promotion
11. Variable Compensation
There are various forms of variable
compensation. The amount of variable compensation
depends on results of pre-established targets. It is
good to remember not only the obvious factor that
this is potentially additional income to the employee
but that it is also compensation at risk. Some are
individual variable compensation, others are team-
based, and still others are company wide
12. Sales incentive Plans
Sales employees are almost always provided a
compensation package with a variable
compensation component.
13. Management Incentive Plans
Management incentives that provide variable
compensation are effective tools in shaping and
directing behaviors to support company objectives.
While not everything rests on the incentive plan, it still
serves as an effective tool.
14. Benefits
Social Security
The Social Security System of the Philippines,
created by Republic Act No. 1161, as amended, was
established on September 1, 1957. Its purpose is to
render assistance to workers and families in case the
source of their income is terminated, reduced, or
interrupted because of sickness, disability, death or
old age.
15. Health Insurance/ Health Plan
A health plan is an important and valued
protective benefit. It is considered a basic component
of any benefits package today. Differences would be
in coverage and method of delivering the service
16. Life Insurance
Providing employees with life insurance
coverage, as a protective form of benefit, is a
common practice. Policies are usually fully paid by
company, and this benefit is acknowledge as a
supplement to the government-mandated and
limited Employees Compensation Commission
insurance coverage.
17. The usual terms of a life insurance coverage
benefit are:
1. Coverage
2. Premium
3. Beneficiary
18. Retirement
Security and protection benefits are crucial in
the compensation package of employees in the
Philippines. In this country, providing security and
protection for aging employee is supported by law
and is joint undertaking between the Social Security
System, the employer and in some cases, the
employee.
19. Elements of a Retirement Plan
Type of plan
Tax qualification
Eligibility Requirements
Benefits under other conditions
Vesting schedule
Funding and sharing
Investment management
Tax exemption
Cost effectiveness
Professional management
Ease of administrative burden
Protection
20. Car and Car-related Benefits
Car benefits are more narrowly defined in terms
of eligibility. In many cases, eligibility would be defined
in terms of management rank or nature of work. In
one company, a car benefit is given only to the head
of the organization and his/her direct reports or the
executive team
21. The other provision of a car benefit
program may be
Car make/model
Acquisition
Replacement period
Personal usage
Related Expenses
Purchase option and price
Tax impact of car benefit
22. Other Benefits
Allowance
Companies could provide to selected
employees various forms of allowances to
compensate for extraordinary circumstances based
on certain conditions.
a. Overtime/ Transportation Allowance
23. Recognition
Companies use recognition programs and
contests to focus on tactical objectives and celebrate
the success of teams and individuals. There are
various forms of recognition----financial, and non
financial; individual and team.
24. Social Security System Benefits
1. Sickness Benefit
The sickness benefit is daily cash allowance
paid to a member for the number of days the
member is unable to work due to sickness or injury for
at least four days.
2. Maternity Benefit
The SSS Maternity benefit is a daily cash
allowance granted to a female member who is
unable to work due childbirth or miscarriage.
25. 3. Disability benefit
The SSS Disability benefit is to paid to a member
who becomes permanently disabled, either partially
or totally
26.
27. 4. Retirement Benefits
The SSS retirement benefit is paid to a member
who can no longer work due to old age (60 years).
This can take the form of either a monthly pension or
lump sum amount.
5. Death Benefits
The death benefit is paid in cash to the
beneficiaries of a deceased member.
28. National Health Insurance
Program Benefits(Mediocare)
This is a health insurance program for
SSS members and their dependents
whereby the healthy subsidize the sick who
may find themselves in need of financial
assistance when they get hospitalized. The
program aims to provide medical care to
residents of the country in an evolutionary
way.
31. Loans
The principal mandate of the SSS is to give
social security protection. For this reason, it funds and
programs are geared towards the retirement, death
and disability programs. However, at the same time,
the SSS provides various loans programs from which
member can borrow for various purposes including:
dependent education, increase in savings, housing,
and investment.
32. Salary Loan
A loan intended to meet the member’s short-
term credit needs can be made through SSS. The
loanable amount is based on the highest salary credit
of the last two monthly contributions of the member
that are posted in the SSS master file. An annual interest
of 8% applies. The loan is payable within two years.
33. Privatization Fund Loan Program
The Privatization Fund Loan Program is lending
program with an original allocation of Php.2 billion
which enables members to increase their savings or
investments through the purchase of privatized shares
of stocks on an instalment basis and to provide them
with an additional source income.
