Compensation management in management.

1. Compensation management
By Priyansh Dwivedi

2. What is compensation
In very simple terms, compensation is the results or
rewards that the employees receive in return for their
work.
Compensation includes payments like bonuses, profit
sharing, overtime pay.
Compensation also includes company-paid car, company-
paid housing.

3. Objectives of Compensation
• Allure suitable staff.
• Keep qualified personnel.
• To develop and maintain motivation.
• Assure that rewards and salary costs handle changes
in market rates or organizational change.
• Appraise performance, duty, and loyalty, and provide
for progression.
• Abide with legal requirements.

4. Importance of Compensation
Management
• It tries to give proper refund to the employees for their
contributions to the organization.
• It discovers a positive control on the efficiency of
employees and motivates them to perform better and
achieve the specific standards.
• It creates a base for happiness and satisfaction of the
workforce.
• It enhances the job evaluation process, which in return
helps in setting up more realistic and achievable
standards.
• It is designed to abide with the various labor acts and
thus does not result in conflicts between the employee
union and the management. This creates a peaceful
relationship between the employer and the employees.

5. Types of Compensations
Direct
Compensations
In-Direct
Compensations/Frin
ge Benefits
Financial
Compensation Non-Financial Compensation
Delegation of
responsibility
Pride in job
Job security
Participation
Recognition

6. Financial Compensation
• Financial compensation is most popular and important
compensation that is given in the form of money.
• It is the most important motivational factor that satisfies
employees’ basic needs like food, clothing, etc.
Direct
Compensations In-Direct
Compensations
Financial
Compensation

7. Direct Compensations
• It is all about money. Plain old cash. It is given directly
given to the employee.
• Salary is the Compensations given to the employee in
return of the work he has done.
• Bonus is the extra money you get for the extra work
which the employee does.

8. In-Direct/Fringe Benefits
Compensations
• They are extra benefits given to employees in order
to keep them motivated.
• They are also used to make the life of the employee
easier especially when they re-locate to a new city.
• They are used a USP in order to standout from the
crowd. As the company can claim certain thing and
put a small T&C* applied.
• Some of the common Fringe Benefits are
• Paid Holidays
• Paid Vacations

9. Non-Financial Compensation
• As the name suggest in this other ways are used to
motivate and encourage the employees.
• It can be done via
1. Job security
2. Recognition
3. Participation
4. Pride in job
5. Delegation of responsibility

10. Factors affecting Compensation
• Economic condition
• Prevailing Wage Level
• Government Control - Government through various
legislative enactments such as Minimum Wages Act, 1948,
Payment of Wage Act, 1936, Equal Remuneration Act,
1976, Payment of Bonus Act, 1965, dealing with Provident
Funds, Gratuity, Companies Act.
• Union’s Influence.
• Employer’s Affordability.
• Worth of a Job.
• Ability to pay

11. Any Questions ?