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Compensation & Benefits Management - HRM


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Compensation & Benefits Management - HRM

  1. 1. Made By: Imran Khan Saurabh Gupta Shreshtha Jaiswal Subash Kumar COMPENSATION & BENEFITS MANAGEMENT
  3. 3. Barter Exchange System Prior to the introduction of money, trade was carried out by barter i.e. exchange of goods for goods. Due to the wasteful nature of barter, the amount of trade that could be carried out by this method of exchange was limited. HISTORY OF COMPENSATION
  5. 5. • Regular money received by an employee from an employer on a weekly, biweekly or monthly basis. • It includes employee benefits such as health and life insurance, saving plans and Social Security. SALARY
  6. 6. Payment for a labour or a worker, especially remuneration on an hourly, daily or weekly basis or by the piece rate. WAGES
  7. 7. COMPENSATION The sum of all forms of payments or rewards provided to employees for performing tasks to achieve organizational objectives. Compensation is the process of providing adequate, equitable and fair remuneration to the employees. It is a comprehensive term which includes pay, incentives and benefits offered to the employees. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.
  8. 8. Motivate & Retain Staff Attract Talent Efficient Administration Effective Compensation Ensure Equity PURPOSE OF COMPENSATION Contribution based Remuneration Reward Valued Behaviour
  9. 9. Supportive Corporate Culture Executive Sponsorship Salary • Pay • Overtime (if in non- exempt classification – Fair Labor Standards Act) Benefits • Health Plans • Retirement Plans • Vacation/ time off • Paid Training • Working Hours Employee Satisfaction TOTAL COMPENSATION Rewards • Bonus • Salary Increases • Promotions • Equity Offerings • Awards • Recognition • New job assignments
  10. 10. COMPENSATION STRATEGY Business Strategy Compensation Strategy Contingent Factors Defines the intentions of the organization on reward policies, processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve business goals.
  11. 11. Business Strategy: • The direction in which organization is going in relation to its environment in order to achieve its objectives. Compensation Strategy: • The intentions of the organization on reward policies, processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve its business goals. Contingent Factors: • Legal requirements or Government Policies, Strength of Trade Union, Labour Market conditions and Capacity to Pay. (cont.)
  12. 12. COMPONENTS OF COMPENSATION & BENEFITS C&B Incentives Benefits Perquisites Basic Pay Allowances (Taxable) Reimbursement (Tax Free)
  13. 13. TOTAL COMPENSATION Financial (Extrinsic Rewards) Non-Financial (Intrinsic Rewards) Direct Indirect Satisfaction derived from Job Praise & Rewards CLASSIFICATION OF REWARDS
  14. 14. COMPONETS OF FINANCIAL COMPENSATION COMPONENTS of FINANCIAL COMPENSATION Direct Indirect Base Pay • Wages • Salaries Variable Pay Incentives • Individual • Group/Team • Organizational Benefits Mandatory • Provident Fund • Gratuity Leave • Health Plans • Medical Leave Voluntary • Vacations • Breaks • Holidays Security Plans • Pension
  15. 15. The direct financial compensation an individual receives based on the time Worked.  Bases of calculation: • Hourly/wage: payment for the number of hours worked. • Salaried: receive consistent payments at the end of specific period regardless of number of hours worked Nature.  Generally Market Driven: (Demand > Supply = Increase in Pay)  Job Evaluation: • The formal systematic means used to identify the relative worth of jobs within an organization. BASE PAY
  16. 16.  Variable Pay/ Incentives • Any plan that ties pay to productivity or profitability (i.e.) the standard by which managers tie compensation to employee effort and performance. • It is linked to individual, group, or organizational performance and not to time worked. • Establish a performance “threshold” to qualify for incentive payments. • Emphasize a shared focus on organizational objectives. • Create shared commitment in that every individual contributes to organizational performance and success. VARIABLE
  17. 17. • Link the incentive with your strategy. • Make sure effort and rewards are directly related. • Make the plan easy for employees to understand. • Get employees’ support for the plan. • Use good measurement systems. • Emphasize long-term as well as short-term success. • Adopt a comprehensive, commitment-oriented approach. IMPLEMENTING EFFECTIVE INCENTIVE PLAN
  18. 18.  Are most effective as motivators when the award is combined with a meaningful employee recognition program. • Intrinsic motivators are worthwhile as financial package • Organization reward high performing employees • Psychological rewards that employees receive in recognition of their skills and contributions NON FINANCIAL COMPENSATION
  19. 19. Awards • Often used to recognize productivity gains, special contributions or achievements, and service to the organization. • Employees feel appreciated when employers tie awards to performance and deliver awards in a timely, sincere and specific way.  Recognition awards • Recognition has a positive impact on performance, either alone or in conjunction with financial rewards. • Combining financial rewards with nonfinancial ones produces performance improvement in service firms almost twice the effect of using each reward alone. • Day-to-day recognition from supervisors, peers, and team members is important. • Best performer of the month awards in Blue Dart, ALACTEL,XANSA etc.,  Service awards • Award for the length of service and exactly not on performance • IBM: thanks award • IDEA: appreciation card TYPES of NON FINANCIAL COMPENSATION
  20. 20.  Pay Equity (also Distributive Fairness) • An employee’s perception that compensation received is equal to the value of the work performed. • A motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve. • Individuals form a ratio of their inputs to outcomes in their job and then compare the value of that ratio with the value of the ratio for other individuals in similar jobs. EQUITY AND MOTIVATION OF EMPLOYEES
  23. 23. INDIAN ARMY PAY SCALE STRUCTURE RANK PAY BANDS/SCALE GRADE PAY MSP LIEUTENANT PB-3/15600-39100 5400 6000 CAPTAIN PB-3/15600-39100 6100 6000 MAJOR PB-3/15600-39100 6600 6000 LT COLONEL PB-4/37400-67000 8000 6000 COLONEL PB-4/37400-67000 8700 6000 BRIGADIER PB-4/37400-67000 8900 6000 MAJOR GENERAL PB-4/37400-67000 10000 NIL LT GENERAL / HAG SCALE 67000 - (annual increment @ 3%) - 79000 NIL NIL HAG + Scale * *Admissible to 1/3rd of total strength of Lt Gens 75500 - (annual increment @ 3%) - 80000 NIL NIL VCOAS / Army Cdr / Lt Gen (NFSG) 80000 (fixed) NIL NIL COAS 90000 (fixed) NIL NIL
  24. 24. Allowances To Whom Applicable Rates Field Area Allowance Officers Posted to Fd Area Rs. 4200/-PM High Altitude/ Uncongenial Climate Siachen Officers Posted in High Attitude/Uncongenial Climate Officers Posted in Siachen Rs. 11200 Rs.14000/-PM Flying Pay Officers Posted as Army Aviators 9000PM Parachute Pay Officers Posted in Active Parachute BNs/Regt 1200PM Special Forces Allowance Officers posted in Special Forces 9000PM Transport Allowance Officers Posted in Peace Stations Rs3200/-+DA PM in A1/A cities and Rs 1600+DA PM at other places House Rent Allowance To officers not provided Govt. Accommodation 10-30% of Basic Pay (Pay Band + Grade Pay + MSP) Kit Maintenance Allowance All officers 400/-PM Uniform Allowance (Outfit Allowance) All officers Initial 14000/- and 3000/- every Three Years Qualification Pay/ Grant for Service Courses All officers undergoing specified courses Rs 6000 to 20000/- Instructional Allowance All Officers Posted as Instructors 1800/-
  25. 25. THANK YOU!!!