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MANAGING COMPENSATION AND BENEFIT
      Driving Employee
     Motivation through
Compensation and Benefit
          Adhyatmika | Amir | David | Kynan | Tantia
MANAGING COMPENSATION AND BENEFIT



                            Why do millions of
                             people go to work
                                 each day?




We all have a drive   to acquire
         money, things,
        prestige, power…
MANAGING COMPENSATION AND BENEFIT

                 Increases
                   Effort

    Improves
      Focus



 Drives
Creativity



    Enhances
   Persistence
                       Aids
                     Retention
MANAGING COMPENSATION AND BENEFIT




ALIGNING WITH
   BUSINESS
   STRATEGY
MANAGING COMPENSATION AND BENEFIT



Why does compensation become important?


      Contribution based                         Ensure Equity
      Remuneration



                                 Effective           Administratively
    Attract talent             Compensation          Efficient        Legal
                                                                    Compliance



               Motivate & Retain                Reward Valued
                            Staff               Behavior
MANAGING COMPENSATION AND BENEFIT



What should the
company be aware of?

                      Link with
                     objectives&
                       culture




  Establishing pay
                                   Motivate
  for performance
                                   employee
      standard
MANAGING COMPENSATION AND BENEFIT



    The Internal and External Equity
   INTERNAL                              EXTERNAL
    FACTORS                               FACTORS
                                     •CONDITIONS OF
COMPENSATION                        THE LABOR
STRATEGY OF THE                      MARKET
ORGANIZATION

                                     •AREA WAGE RATES
WORTH OF JOB
                  PAY LEVELS         •COST OF LIVING
EMPLOYEE’S
RELATIVE WORTH
                                     •COLLECTIVE
                                     BARGAINING
EMPLOYER’S
ABILITY TO PAY
                                     •LEGAL
                                     REQUIREMENTS
MANAGING COMPENSATION AND BENEFIT

                          What is the entire pay model process?
                                                   Business Goals
                                                                                         Compensation
                                                                                        activities serve
CEO




                                                     Business                       Business Objectives
                                                     Strategy


                                                                                            Compensation strategy
HR Head




                                                    Compensation                                    is periodically
                                                      Strategy                                 reevaluated and the
                    Org.Structure                                                   Non-Financial
                                                                                                Compensation plan
                                                                                      Rewards
                                                                                            periodically developed
                                                    Compensation
                                                        Plan
C & B/S M




            Performance           Job Evaluation                       Market Surveys
            Management
                                                      Unit Inputs


                                                     Pay levels /
                                                     structures                         Compensation Manager,
                          Contribution                                                       along with team is
Employee




                            /outputs                                                    responsible for carrying
                                                       Total                                 out compensation
                                                    remuneration                               related activities

                    Performance
                     linked Pay
                                                    Individual Pay
                              Internal Equity                         External Equity
                                                                                                                    9
MANAGING COMPENSATION AND BENEFIT


                 Job Evaluation: HAY Method
            “The Most Widely Used Point System in The World”


           The measurement                       Problem
                                  Know-How                  Accountability
                                                 Solving




Output: Rank Order




Internal
Equity                                Market
Analysis                              Pricing
                                      Analysis
MANAGING COMPENSATION AND BENEFIT



Salary Survey: Kelly Services
MANAGING COMPENSATION AND BENEFIT


 BALANCED, PRACTICAL REWARD
      STRATEGY MODEL
 EMPLOYER’S                                      EMPLOYEE’S
 PERSPECTIVE                                     PERSPECTIVE


ORGANIZATION                                   COMPETENCIES
CAPABILITIES
BUSINESS              EMPLOYMENT
                         DEAL                  DEMOGRAPHICS
STRATEGY
ORGANIZATION
STRUCTURE                                      VALUES
                  TOTAL REWARD STRATEGY

                    PAY            BENEFITS

                  LEARNING &       WORK
                 DEVELOPMENT    ENVIRONMENT




  IMPROVED BUSINESS RESULTS & ALIGNED EMPLOYEE BEHAVIOURS
MANAGING COMPENSATION AND BENEFIT
MANAGING COMPENSATION AND BENEFIT




What Are The
Classification&
 Components?
MANAGING COMPENSATION AND BENEFIT



How the Rewards are
classified?                                          Base Pay:
                                                      Wages,
                                                      Salaries
                                 Direct
                                                    Variable Pay:
                                                Incentives (Individual,
                                                        Team,
                                                    Organization)

                Financial                                                   Mandatory:
                (Extrinsic                                                Provident Fund,
                Rewards)                                                      Gratuity,
                                                                             Maternity
                                                                           Leave, Health
                                                                           Plans, medical
                                                                               Leave
   Total
Compensation                    Indirect          Benefits
                                                                           Voluntary:
                                                                            Vacations,
                               Satisfaction                               Break, Holiday,
               Non Financial     derived                                  Security Plan,
                (Intrinsic                                                 Educational
                                                                            Assistance,
                Rewards)       Praise and                                  Recreational
                                Rewards
MANAGING COMPENSATION AND BENEFIT

How do I get my
Direct Pay?

      Fixed
     Payment
     based on
     Period
    Salaried                             Hourly
                                       Payment 
                                        Wages
                  Project
                  Based
                Commission
MANAGING COMPENSATION AND BENEFIT

How would the company
pay for my risk working
there?


     Health Benefits 
       Wellness
       Programs
      inpatient&
      outpatient                  Security Pensions
                                   plan, mobility,
                                       flexible
                                     retirement,
                                   Provident Fund
MANAGING COMPENSATION AND BENEFIT




 Incentives Plan
                                       •Piece Work Plan
                                       •Straight Piecework
                  Individual
                  Incentives           •Standard Hour Plane




     Organizational            Group/team
       Incentives               Incentives




Profit Sharing                          Gain sharing Plan:
                                        Rucker, Scanlon,
                                        Improshare
MANAGING COMPENSATION AND BENEFIT



 Total Rewards Trends:
 Flexible Rewards
 (Pay For Performance)
Pay plans that aim
                     Paying for skills,                      Collective bonus
     for high-                            Less Fixed, more
                     knowledge, and                            and Bonus
performance work      competencies            variable
                                                                 deferral
      system.




                         Pros                            Cons

               • Higher quality                • Implementation problems
                                               • Cost implications of
                                                 paying for unused
               • Lower absenteeism               knowledge, skills and
                 and fewer accidents             behaviors
                                               • Uncertainty
                                               • Consolidating salary
                                                 grades
MANAGING COMPENSATION AND BENEFIT



                     Total Rewards Trends:
                     Flexible Rewards (Choice)
            Low Flexibility                                                                         High Flexibility

                   Low Cost                                                                                          High Cost


                   - Premium                        - Choice                     - Core: Basic                      Flexible
Salary Reduction




                                  Modular Options




                                                                     Core Plus




                                                                                                    Mix and Match
                     Conversion                       different                    coverage                         Credits
                   - Flexible                         combinations               - Plus: Flexible
                     Spending                         of benefits                  credits to
                     Account                                                       purchase
                                                                                   additional
                                                                                   coverage
MANAGING COMPENSATION AND BENEFIT



                       Total hours
                         worked
                        per week
                                               Childcare
                                                Subsidy
  Childcare
  Flexibility

                 Family Friendly
                   Workplace                           Holidays:
                                                        Number
  Job               Practice                          & Regulation

Switching

                                      Working
                Job Sharing
                                     from Home
MANAGING COMPENSATION AND BENEFIT



What is the Trend for Executive
Compensation?

    Base salary, Short-term incentives or bonuses,
          Long-term incentives or stock plans and
                               Perquisites (perks)


                             Executive                                   Personal
               Company                     Financial     Company-
Company car                   eating                                     liability
                plane                     consulting    paid parking
                             facilities                                 insurance

  Estate       First-class     Home       Chauffeur      Children’s
                                                                       Spouse travel
 planning       air travel   computers     service       education

                               Large                                    Luncheon
  Physical      Mobile                    Income tax    Country club
                             insurance                                    club
   exams        phones                    preparation   membership
                              policies                                 membership

                Personal                    Legal         Vacation
                               Loans
              home repairs                counseling       cabins
MANAGING COMPENSATION AND BENEFIT



                   Issues in Managing
                   Compensation
        Cost                         Attraction/retention
containment/reduction                      Process
• Wage Freeze                       • Sign-on/hiring
• Pay Reduction                       bonus
• Hiring Freeze                     • Employee Referral
• Limit/eliminate                     Bonus
  overtime                          • Flexible work
• Reduction in force                  schedules
• Early retirement                  • Spot Bonus
• Increase employee                 • Merit prevalent
  share of health care
  premiums                            from bonus
Compben Structure in
  FMCG Industry
MANAGING COMPENSATION AND BENEFIT




  4th
Largest
Sector
             Employee Compben
             Structure based on
                  cost-
            competitiveness,
             innovation and
              mass-market
              nature of the
                products
MANAGING COMPENSATION AND BENEFIT



             Unilever:
             Pay For Performance, Market
             Competitive and Long Term
             Retention

Fixed Salary which         Variable Salary linked
                                                      Employee Gain
competitive with its           to company and
                                                        Sharing.
  peer companies           individual performance




                Benefits and            Retirement benefits
            Perquisites aimed at           which market
            providing you choices.          competitive


   Source: www.ghallabhansali.com
MANAGING COMPENSATION AND BENEFIT




 Johnson & Johnson
 Compete and Retain for
 Talented Employees

                            Award Programs:
Flexible Reward Plan:         Standards of
                                                         The benefits programs
Cash and J & J common      Leadership Awards
                                                            and services to
        stock’.          Program, global Encore
                            Awards Program



             Maintain good health
                                          Plan for retirement
               and well-being


                                    Source: www.ghallabhansali.com
MANAGING COMPENSATION AND BENEFIT




Procter and Gamble
High Ownership towards the
Company




                           Every one of P&G’s
                          110,000 employees is
 18% of the Firm owned
                         given P&G stock as part
   by the Employee        of the company’s One
                             Share program.




                             Source: www.ghallabhansali.com
The End Of Presentation

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Compensation & benefit presentation

  • 1. MANAGING COMPENSATION AND BENEFIT Driving Employee Motivation through Compensation and Benefit Adhyatmika | Amir | David | Kynan | Tantia
  • 2.
  • 3. MANAGING COMPENSATION AND BENEFIT Why do millions of people go to work each day? We all have a drive to acquire money, things, prestige, power…
  • 4. MANAGING COMPENSATION AND BENEFIT Increases Effort Improves Focus Drives Creativity Enhances Persistence Aids Retention
  • 5. MANAGING COMPENSATION AND BENEFIT ALIGNING WITH BUSINESS STRATEGY
  • 6. MANAGING COMPENSATION AND BENEFIT Why does compensation become important? Contribution based Ensure Equity Remuneration Effective Administratively Attract talent Compensation Efficient Legal Compliance Motivate & Retain Reward Valued Staff Behavior
  • 7. MANAGING COMPENSATION AND BENEFIT What should the company be aware of? Link with objectives& culture Establishing pay Motivate for performance employee standard
  • 8. MANAGING COMPENSATION AND BENEFIT The Internal and External Equity INTERNAL EXTERNAL FACTORS FACTORS •CONDITIONS OF COMPENSATION THE LABOR STRATEGY OF THE MARKET ORGANIZATION •AREA WAGE RATES WORTH OF JOB PAY LEVELS •COST OF LIVING EMPLOYEE’S RELATIVE WORTH •COLLECTIVE BARGAINING EMPLOYER’S ABILITY TO PAY •LEGAL REQUIREMENTS
  • 9. MANAGING COMPENSATION AND BENEFIT What is the entire pay model process? Business Goals Compensation activities serve CEO Business Business Objectives Strategy Compensation strategy HR Head Compensation is periodically Strategy reevaluated and the Org.Structure Non-Financial Compensation plan Rewards periodically developed Compensation Plan C & B/S M Performance Job Evaluation Market Surveys Management Unit Inputs Pay levels / structures Compensation Manager, Contribution along with team is Employee /outputs responsible for carrying Total out compensation remuneration related activities Performance linked Pay Individual Pay Internal Equity External Equity 9
  • 10. MANAGING COMPENSATION AND BENEFIT Job Evaluation: HAY Method “The Most Widely Used Point System in The World” The measurement Problem Know-How Accountability Solving Output: Rank Order Internal Equity Market Analysis Pricing Analysis
  • 11. MANAGING COMPENSATION AND BENEFIT Salary Survey: Kelly Services
  • 12. MANAGING COMPENSATION AND BENEFIT BALANCED, PRACTICAL REWARD STRATEGY MODEL EMPLOYER’S EMPLOYEE’S PERSPECTIVE PERSPECTIVE ORGANIZATION COMPETENCIES CAPABILITIES BUSINESS EMPLOYMENT DEAL DEMOGRAPHICS STRATEGY ORGANIZATION STRUCTURE VALUES TOTAL REWARD STRATEGY PAY BENEFITS LEARNING & WORK DEVELOPMENT ENVIRONMENT IMPROVED BUSINESS RESULTS & ALIGNED EMPLOYEE BEHAVIOURS
  • 14. MANAGING COMPENSATION AND BENEFIT What Are The Classification& Components?
  • 15. MANAGING COMPENSATION AND BENEFIT How the Rewards are classified? Base Pay: Wages, Salaries Direct Variable Pay: Incentives (Individual, Team, Organization) Financial Mandatory: (Extrinsic Provident Fund, Rewards) Gratuity, Maternity Leave, Health Plans, medical Leave Total Compensation Indirect Benefits Voluntary: Vacations, Satisfaction Break, Holiday, Non Financial derived Security Plan, (Intrinsic Educational Assistance, Rewards) Praise and Recreational Rewards
  • 16. MANAGING COMPENSATION AND BENEFIT How do I get my Direct Pay? Fixed Payment based on Period Salaried Hourly Payment  Wages Project Based Commission
  • 17. MANAGING COMPENSATION AND BENEFIT How would the company pay for my risk working there? Health Benefits  Wellness Programs inpatient& outpatient Security Pensions plan, mobility, flexible retirement, Provident Fund
  • 18. MANAGING COMPENSATION AND BENEFIT Incentives Plan •Piece Work Plan •Straight Piecework Individual Incentives •Standard Hour Plane Organizational Group/team Incentives Incentives Profit Sharing Gain sharing Plan: Rucker, Scanlon, Improshare
  • 19. MANAGING COMPENSATION AND BENEFIT Total Rewards Trends: Flexible Rewards (Pay For Performance) Pay plans that aim Paying for skills, Collective bonus for high- Less Fixed, more knowledge, and and Bonus performance work competencies variable deferral system. Pros Cons • Higher quality • Implementation problems • Cost implications of paying for unused • Lower absenteeism knowledge, skills and and fewer accidents behaviors • Uncertainty • Consolidating salary grades
  • 20. MANAGING COMPENSATION AND BENEFIT Total Rewards Trends: Flexible Rewards (Choice) Low Flexibility High Flexibility Low Cost High Cost - Premium - Choice - Core: Basic Flexible Salary Reduction Modular Options Core Plus Mix and Match Conversion different coverage Credits - Flexible combinations - Plus: Flexible Spending of benefits credits to Account purchase additional coverage
  • 21. MANAGING COMPENSATION AND BENEFIT Total hours worked per week Childcare Subsidy Childcare Flexibility Family Friendly Workplace Holidays: Number Job Practice & Regulation Switching Working Job Sharing from Home
  • 22. MANAGING COMPENSATION AND BENEFIT What is the Trend for Executive Compensation? Base salary, Short-term incentives or bonuses, Long-term incentives or stock plans and Perquisites (perks) Executive Personal Company Financial Company- Company car eating liability plane consulting paid parking facilities insurance Estate First-class Home Chauffeur Children’s Spouse travel planning air travel computers service education Large Luncheon Physical Mobile Income tax Country club insurance club exams phones preparation membership policies membership Personal Legal Vacation Loans home repairs counseling cabins
  • 23. MANAGING COMPENSATION AND BENEFIT Issues in Managing Compensation Cost Attraction/retention containment/reduction Process • Wage Freeze • Sign-on/hiring • Pay Reduction bonus • Hiring Freeze • Employee Referral • Limit/eliminate Bonus overtime • Flexible work • Reduction in force schedules • Early retirement • Spot Bonus • Increase employee • Merit prevalent share of health care premiums from bonus
  • 24. Compben Structure in FMCG Industry
  • 25. MANAGING COMPENSATION AND BENEFIT 4th Largest Sector Employee Compben Structure based on cost- competitiveness, innovation and mass-market nature of the products
  • 26. MANAGING COMPENSATION AND BENEFIT Unilever: Pay For Performance, Market Competitive and Long Term Retention Fixed Salary which Variable Salary linked Employee Gain competitive with its to company and Sharing. peer companies individual performance Benefits and Retirement benefits Perquisites aimed at which market providing you choices. competitive Source: www.ghallabhansali.com
  • 27. MANAGING COMPENSATION AND BENEFIT Johnson & Johnson Compete and Retain for Talented Employees Award Programs: Flexible Reward Plan: Standards of The benefits programs Cash and J & J common Leadership Awards and services to stock’. Program, global Encore Awards Program Maintain good health Plan for retirement and well-being Source: www.ghallabhansali.com
  • 28. MANAGING COMPENSATION AND BENEFIT Procter and Gamble High Ownership towards the Company Every one of P&G’s 110,000 employees is 18% of the Firm owned given P&G stock as part by the Employee of the company’s One Share program. Source: www.ghallabhansali.com
  • 29. The End Of Presentation