This document discusses compensation and benefits programs. It begins by introducing the importance of having attractive compensation and benefits to motivate employees and reduce turnover. It then defines key terms like compensation, benefits, and compensation management. It outlines the goals of compensation management programs and different compensation theories. The document also discusses factors that affect salary ranges, the importance of developing a compensation administration program (CAP), and the steps to develop a CAP. Finally, it discusses some common issues in compensation management.

1. COMPENSATION
&
BENEFITS

2. Presenters
John Lui
Roel Balita
Matt Bravo

3. INTRODUCTION
▸One of the main priorities of any business is to have a
loyal and motivated set of employees.
▸Having an attractive compensation rate is important in
motivating your employees and reducing absenteeism.
▸Having a good set of benefits and services that fit your
employees reduces turnover rate and develops loyalty
towards the company.
▸The combination of good compensation and benefits
gives a feeling of security to employees. This causes
them to be more productive employees for the company.

4. CONCEPT PAY
▸Payment is the satisfactory amount of value to be
compensated to a person who has provided the same
value of goods or services.
▸In human resource management, this equates to the
salaries and wages that employees receive for their work
done.
▸In the Philippines, the form of salary/wage can only
come in legal tender which means that salary/wage in
the Philippines cannot be paid in any other manner than
Philippine Pesos.

5. COMPENSATION
What is COMPENSATION?
▹Compensation refers to employee compensation.
▹Refers to all forms of monetary pay given to an
employee in exchange for the work that was provided.
▹Compensation is the salary or wage given to a person
arising from employment.
▹It is directly related to the employee’s responsibility
and role in the company.

6. Base Salary
▸The minimum amount of
salary guaranteed to be
received by an employee.
▸Does not include possible
overtime pay, incentives,
and other monetary
incentives.
▸Usually given out weekly,
bi-weekly, or monthly
PARTS OF
COMPENSATION
Bonuses
▸Includes all incentives
received by an employee
due to performance.
▸Added to the Base Salary
before tax reduction.
Ex.
▹Overtime
▹Sales commission
▹Hot Skill Bonus

7. BENEFITS &
SERVICES
What is Employee Benefits?
▹Any rewards received by an employee in addition to
direct monetary remuneration as a result of being an
employee of a company.
▹It is not related to the responsibility or performance of
the employee but as a result of being a member of the
company.
▹The benefits given to the employees usually are
related to the nature of work, work environment, and
health, safety & recreation of the employees.
▹In the Philippines, it is in the labor code that it is illegal
to stop offering benefits that were already experienced
by employees. Non-diminution of benefits

8. BENEFITS &
SERVICES

9. BENEFITS &
SERVICES
What are Company Services?
▹Company services ,also known as employee facilities,
are services provided by the company to its employees
to improve their accommodation and workplace quality .
▹These usually are services provided to employees at
very low costs or sometimes even for free.
▹These usually are provided to give convenience to
employees rather than an actual benefit.

10. BENEFITS &
SERVICES
BENEFITS
▸Pay for time not worked
▸Employee Guarantee
▸Safety & Health
▸Maternity
▸Dependent
▸Insurance
▸Welfare & Recreation
▸Retirement
SERVICES
▸Cafeteria
▸Transportation
▸Child Care
▸Accommodations
▸Educational
▸Medical
▸Clothing
▸Food

11. BENEFITS &
SERVICES

12. COMPENSATION MANAGEMENT
What is Compensation Management?
▹Is a system in an organization designed to ensure that
no money is wasted on the labor costs and the labor cost
expenditure is used to secure the highest level of
productivity from the employees.

13. COMPENSATION MANAGEMENT
Goals and Objectives of Compensation
Management:
▹To be able to pay employees well enough which keeps
them highly motivated and loyal to the organization.
▹To draw in highly talented applicants based on the fact
that the organization has a great compensation package.
▹To be able to establish a work culture of high skill and
productivity because of the motivation of incentives.

14. COMPENSATION MANAGEMENT
Three Theories:
1. Behavior Reinforcement Theory:
▹The theory is that when a particular action is rewarded,
others will follow suit to receive the same reward.
▹The idea is that the positive consequences of an action
will motivate employees to do the same or better to feel
the satisfaction of the positive feedback that someone
else has received.

15. COMPENSATION MANAGEMENT
Three Theories:
2. Equity Theory:
▹The theory is that everyone who does the same exact
amount, time and effort at work should receive the same
compensation to prevent decrease in motivation.
▹The idea is that when two employees who does exactly
the same amount, time and effort at work receives
different level of pay, the one who receives a lower pay
will greatly decrease his/her productivity.

16. COMPENSATION MANAGEMENT
Three Theories:
3. Agency Theory:
▹The theory is to use compensation to organize the
agenda of different people within the organization.
▹Through good compensation, the management can
increase different aspects of the organization to achieve
different goals.

17. COMPENSTION
PROGRAM
▸SALARY RANGE is the range of pay in which an
employer is willing to pay an employee based on the
responsibility, function, and difficulty of the task assigned
to the employee.
▸ The salary range of a position is usually established
by the market in the same region of a country who are
doing similar tasks.
▸The salary range is heavily affected by demographics
and market factors.
▸The Salary range of an organization is established
through COMPENSATION ADMINISTRATION
PROGRAM

18. FACTOR
AFFECTING
SALARY RANGE
DEMOGRAPHICS
▸Age
▸Educational Attainment
▸Job Preference
▸Culture
MARKET FACTORS
▸Employee Demand &
Supply
▸Economic Market
Structure
▸Government Subsidies

19. IMPORTANCE OF
COMPENSATION
PROGRAM
▸Allows organizations to have a package which
produces a motivated and contributing workforce.
▸Develops a salary range which fits the nature of the
organization.
▸Develops a recognizable “brand” which can attract
better quality applicants.
▸Reflects the quality of the human resources of the
organization.
▸Allows organizations to gain competitive advantage
through better compensation and benefits cost
management.

20. STEPS ON DEVELOPING
C.A.P.
Develop Program
Outline
Form A
Compensation
Program
Committee
Develop
Compensation
Philosophy
Conduct Job
Analysis Of All
Positions
Rank Jobs and
Determine
Grades
Establish Salary
Range For Every
Grade
Determine Salary
Structure
Determine
Prerequisites for
Incentives
Circulate
Information and
Monitor

21. STEPS ON DEVELOPING
C.A.P.
Developing
Program Outline
• Determine
Salary Budget
• Determine
Goals and
Objectives of
Salary
Form A
Committee
• Form a group
who will study
all proposals
• Determine if a
consultant is
necessary
Compensation
Philosophy
• Determine the
level of
compensation
compared to
the market
• Determine the
extent to which
benefits
replace
monetary
compensation

22. STEPS ON DEVELOPING
C.A.P.
Job Analysis
• Determine all
of the
positions
needed and
its functions
and duties.
• Draft and
finalize all job
descriptions.
Determine
Ranks
• Determine
the hierarchy
for every
department.
• Determine
which market
salary for
each grade.
Establish
Salary Range
• Establish
benchmarks
using the key
jobs.
• Determine
the balance
of
compensation
and benefits
for each key
job.

23. STEPS ON DEVELOPING
C.A.P.
Establish Salary
Structure
• Determine the
salary
difference for
each grade.
• Determine the
minimum and
maximum
increase for
each position.
Determine
Prerequisites
• Establish
policies to merit
promotions &
raises.
• Determine
requirements to
avail bonuses
and incentives.
Inform & Monitor
• Inform all
employees of
compensation,
benefits,
services, &
related policies.
• Monitor the
program
through
feedback and
make
necessary
changes.

24. ISSUES IN
COMPENSATION
MANAGEMENT
• Under appreciation of non – monetary benefits
Undervaluation of Benefits
• Similar organizations use cut throat tactics to edge
out other companies
Pay Competitiveness
• Different ages has different priorities in
compensation packages.
Generational Differences

25. ISSUES IN
COMPENSATION
MANAGEMENT
• Benefits cost a lot of money and additional costs are incurred
to process them.
Excessive Expenditures
• Benefits are still availed by employees who are not
contributing.
Maintaining low productive workers
• Despite good compensation packages, employees
sometimes still leave due to other issues such as work
environment.
Retention