The document discusses various compensation policies and philosophies. It provides information on: 1) Factors that determine compensation including supply and demand, prevailing wages, ability to pay, and cost of living. 2) Different compensation policies for industries like IT, insurance, and telecommunications that consider education, experience, and performance. 3) Compensation philosophies like productivity philosophy which links pay to productivity and purchasing power philosophy which aims to increase standards of living. 4) Types of minimum wages paid and differentials in compensation based on occupations, firms, regions, industries and individuals.

1. CRITERIA IN COMPENSATION
Law of supply & demand
Prevailing wages
Ability to pay
Governmental factor
Standard & cost of living
Productivity
Bargaining power
Job requirements

2. DIVERGENT POLICIES HELP
To pay minimum wages
To pay more than prevailing wages
To pay higher wages
To pay competitive wages

3. COMPENSATION SCENARIO IN IT
SECTOR-POLICIES
 The growth rate of recruitment is 14.5%
 The average increase in the salary in 2006 was 16%
 Salary offered based on
education,experience,position & skill

4. AVERAGE SALARY OFFERED IN
IT SECTOR BASED ON
EXPERIENCE
10+
Years 7-10
5-7
2-5
0-2
0 55
5 110 15
Salary(in
5 0

5. TOP TEN HIGHEST SALARY
PRAYERS IN INDIAN IT SECTOR
• HCL Infosystems Limited
• Hexaware Technologies
• RMSI Private Limited
• Cadence Design Systems
• Tata Consultancy Services
• Aztecsoft Limited
• Nucleus Software
• Induslogic
• Kanbay International Inc
• Cybage Software Private Limited

6. COMPENSATION
POLICIES IN
INSURANCE SECTOR
 Policies cover the following
 Accidental Insurance
 Medical Insurance
 Medi claims
 Family health Insurance
 Diabetes Insurance etc
 Policies involve
 Basic salaries
 Perks
 Allowances
 Accomodation etc

7. AVERAGE SALARY OFFERED IN
INDIAN INSURANCE SECTOR
BASED ON EXPERIENCE
12+
4-9
Years
1-3
0-1 Salary(in lakhs)
0 2 4 6 8

8. TOP PLAYERS OF THE
INSURANCE SECTOR
• Life Insurance Corporation
• New York Life
• Prudential
• Met Life
• Birla Insurance
• Kotak Mahindra
• ICICI
• HDFC

9. COMPENSATION POLICY AT
ENTRY LEVEL-INSURANCE
SECTOR
LIC
ICICI Prudential
New York Life
Insurance
Met Life Insurance
In lakhs
Birla Insurance
0 2.5
0.5 1 1.5 2 3

10. COMPENSATION POLICY AT
MANAGERIAL LEVEL-INSURANCE
SECTOR
10+Years
8-10Years
In lakhs
6-8Years
3-5Years
0 5 10 15 20 25

11. COMPENSATION POLICY IN IT
ENABLED SERVICES
 Policy is designed to attract young talents
 Policy considers high attriition rate
 High average salary
 Compensation is target based
 Compensation don’t cover job security.
 Average salary offered by top players at entry level is
from 1.5 to 3 lakhs
 For top management lucrative monetary & non
monetary benefits are offered.

12. IT ENABLED INDUSTRIES WITH
BEST COMPENSATION POLICY
 Microsoft
 Oracle
 IBM
 HCL
 Infosys
 Satyam
 Sify
 Wipro
 LG
 Samsung

13. COMPENSATION POLICIES IN
TELECOMMUNICATION SECTOR
 Policies cover the following
 Annual bonus
 House rent allowance
 Mobile allowance
 Transportations
 Paid vacations
 Travel leaves etc
 Average salary at entry level ranges from 0.5 to 2.5 lakhs
 Average salary at managerial level ranges from 5 to 40
lakhs,based on experience.

14. TELECOMMUNICATION SECTOR
WITH BEST COMPENSATION
POLICY
 Tata Teleservices
 Reliance Communications
 Bharti Airtel
 Ericcson
 Motorola

15. PHILOSOPHY OF COMPENSATION
 PRODUCTIVITY PHILOSOPHY
 PURCHASING POWER PHILOSOPHY

16. PRODUCTIVITY PHILOSOPHY-
ASSUMPTIONS
 Use of updated tools,techniques & machineries
 Optimum production
 Minimising the unit cost of production
 Lower price of goods
 Expanded market
 Increased income from sales
 Profit sharing with employees
 Utilising profit to regenerate process

17. PURCHASING POWER
PHILOSOPHY-ASSUMPTIONS
 Good compensation to workers
 Increased purchasing power of the large work force.
 Effective demands for goods & services
 Stimulation of future production.

18. GROWTH OF SERVICE INDUSTRY
 Tourism sector is growing at the rate of 8%
 Good compensation encourage tourists pouring into
holiday spots.
 Average income of people have improved a lot
 It helped to attain national prosperity
 People expect quality service & they are ready to
pay for it

19. EXAMPLE
o Distribution of Compensation is as follows
 Roadways-19%
 Railways-19%
 Airlines-27%

20. NON IMPLEMENTATION OF PHILOSOPHY- CONSEQUENCES OF PAY
DISSATISFACTION
Strike
Desire for Grievances Absenteeism
more pay
Search for a
higher paying
jobs
Turnover
Pay dissatisfaction Lower Absenteeism
Attractivene Job
ss of job
dissatisfaction
Psychological
withdrawal
Poor mental
Health health

21. COMPENSATION & PERFORMANCE MODEL
Feedback
Employee sets
Performance is
Expectations Employee considers
rewarded
& goals Equity in
compensation
Employee sets new goals & expectations
Based on performance

22. MINIMUM WAGE
It is provided for maintenance of life plus for
preservation of the efficiency of worker

23. MINIMUM WAGE PAID TO
Workers working in
• Agricultural sector
• Cement working establishments
• Bakery,Dairy products
• Chemicals
• Construction activities
• Transport Corporation
• Ice factories,cold storages
• Laundry sevice
• Textile Industry
• All shops & other establishments

24. MINIMUM WAGE IN INDIA
 Applicable to labourers & workers
 The Minimum Wage Act,1948 prevents labour exploitation.
 It varies from state to state.
 Change in wage rate-(per day)
 Rs 35 in 1996
 Rs 40 in 1998
 Rs 45 in1999
 Rs 66 in 2004
 Rs 80 in 2007

25. MINIMUM WAGE IN DIFFERENT
STATES-W.E.F. JUNE,2008(Per
day)
Delhi 156 140
Uttar Pradesh 143.87 113.70
Rajasthan 91 83
Orissa 100 80
Tamil Nadu 158 29
West Bengal 100 81
Gujarat 115 50
Punjab 125 96
Manipur 79.40 72.40
Madhya Pradesh 101 93

26. FAIR WAGE
Equal to the rate prevailing in the same trade
& in the neighbourhood & equal to the
predominant rate for similar work throughout
the country,

27. LIVING WAGE
Higher than fair wage,provides for bare
essentials plus frugal comforts.

28. Living wage is concerned with
 The needs of the workers & their families
 Cost of living
 Social security benefits.

29. WAGE DIFFERENTIAL
An element that works as wage scale
reflecting the average schedule of worker’s
pay that takes into account the performance
of related tasks or services

30. WAGE DIFFERENTIALS
• Occupational differentials
• Inter-firm differentials
• Regional differential
• Inter-Industry differentials
• Personal differentials

31. OCCUPATIONAL
DIFFERENTIAL
Wages are fixed based on different
occupations & various degrees of skill.

32. FUNCTIONS
 Inducing workers to undertake more demanding jobs
 Encouraging people to develop skills
 Performing social function

33. INTER-FIRM DIFFERENTIALS
It reflects the relative wage level of workers in
different plants in the same area & occupation

34. INTER FIRM DIFFERENTIAL-THE
MAIN CAUSES
 Difference in the quality of labour employed by firms
 Imperfections in labour market
 Difference in technological advance
 Financial capacity of the firm
 Size of the firm

35. INTER-AREA OR REGIONAL
DIFFERENTIALS
It occurs when workers in the same idustry or
same occupational group,but living in different
geographical areas are paid different wages.

36. REGIONAL DIFFERENTIAL-THE
MAIN CAUSES
 Different rate of payment
 Difference in cost of living
 Availability of manpower

37. INTER-INDUSTRY
DIFFERENTIALS
It occurs when workers in the same industry
or in the same area but in different industries
are paid different wages

38. INTER-INDUSTRY DIFFERENTIAL-
THE MAIN CAUSES
 Extent of unionization
 Capacity to pay
 Labour capital ratio
 Stage of development
 Supply-demand of needed skill

39. PERSONAL DIFFERENTIAL
It refers different payment made to different
individual working in the same plant or same
occupation

40. PERSONAL DIFFERENTIAL-THE
MAIN CAUSES
 Merit
 Individual output
 Experience

41. JOB EVALUATION & WAGE
Phase 1 SURVEY
Identify & study jobs Job analysis
Phase 2
Job evaluation
Internal equity
Job ranking Job grading Factor comparison Point system
Phase 3
Wage survey
External equity
Employer Professional
Department Self conducted
associations associations
Of labour surveys
Phase 4
Pricing jobs
Matching Internal & external worth
Job evaluation worth Match Labour market worth