Compensation

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Compensation

  1. 1. Compensation and Benefits BY K R Prathap
  2. 2. Meaning of Compensation Sum of direct benefits (such as salary, allowances, bonus, commission) and indirect benefits (such as insurance, pension plans, vacations) that an employee receives from an employer. Something, such as money, given or received as payment or reparation, as for a service or loss.
  3. 3. Meaning of benefits An advantage or profit gained from something. Benefits are a form of compensation paid by employer to employee over and above the amount of pay specified as a base salary or hourly rate of pay.
  4. 4. Significance of compensation and benefits  Job satisfaction: Fair rewards in exchange of their services. Motivation: A compensation plan that hits workers’ needs is more likely to motivate them to act in the desired way. Low Absenteeism. Low Turnover.  Peace of Mind. Increases self-confidence.
  5. 5. Components of compensation system • Job description • Job analysis • Job evaluation • Pay structure • Salary surveys.
  6. 6. A benefits includes
  7. 7. Incentives A thing that motivates or encourages one to do something: "incentive to conserve". Incentives aim to provide value for money and contributes to organization success. A payment or concession to stimulate greater output. Common kind of incentive is cash reward.
  8. 8. List of incentive pay plans • Bonus pay • Profit sharing • Stock incentive • Retirement incentive • Vacation incentive • prizes
  9. 9. Basic wage/salary It is the price for service render. it varies according to mental and physical requirements of the job evaluation. It is a need based minim wage it should take care of the cost of basic existance which include food, clothing, housing. Base salary does not include benefits, bonuses or any other potential compensation from an employer.
  10. 10. Level of wage • Living wage • Fair wage • Minimum wage
  11. 11. Allowances A sum of money paid regularly in addition to salary to meet some particular requirements. Money that a company or government agency provides to an employee for a specific purpose, such as transportation, healthcare costs or a flexible spending account. Benefit allowances administered to employees can be distributed through regular payroll. regularly to a person, typically to meet specified needs or expenses.
  12. 12. Important allowances • Housing rental allowance • Leaves travel allowance • Washing allowance • Conveyance allowance • Shift allowance • Education allowance • Food allowance • Servant allowance
  13. 13. Perquisites • Perk range from such amenities special parking and plus offices to pay for vacation travel, automobile expenses, and company paid membership in clubs. • The perks goes with the executive status. • Strictly restricted to the CEO’S and small group of key officials.
  14. 14. Fringe benefits • It is an various extra benefits provided to the employees in addition to the compensation paid in the form of wages or salary. • Not directly connected with the employee’s productive effort, performance, services or sacrifice.
  15. 15. Purpose of fringe benefits • For employment security • For health protection • For old age and retirement • For personnel identification
  16. 16. Thank you

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