This document provides an overview of compensation management. It discusses that compensation includes both direct monetary benefits like salary as well as indirect non-monetary benefits. An effective compensation system is designed based on factors like job analysis and market surveys. It is an important part of human resource management that helps motivate employees and improve organizational performance. The various components, types, and importance of compensation management are outlined.

1. A Presentation on
Compensation Management
Mentor Prof. :- Naval Lawande.
By:- Ajay Khot.
Roll No. :- 03
(MERC Institute of Management)
M.B.A. 1st yr.

2. Compensation Management
Compensation is the
remuneration received by
an employee in return for
his/her contribution to the
organization.
It is an organized practice
that involves balancing the
work-employee relation by
providing monetary and
non-monetary benefits to
employees.

3. Compensation Management
 Compensation is an integral part of human resource
management which helps in motivating the employees and
improving organizational effectiveness.
 Compensation provided to employees can direct in the form
of monetary benefits and/or indirect in the form of non-
monetary benefits known as perks, time off, etc.
 Compensation does not include only salary but it is the sum
of all rewards and allowances provided to the employees in
return for their services.
 If the compensation offered is effectively managed, it
contributes to high organizational productivity.

4. Compensation Management
 Compensation systems are
designed keeping in minds
the strategic goals and Job
business objectives. Analysis
 Compensation system is
designed on the basis of
certain factors after
analysing the job work and Salary Pay
responsibilities. Survey Structure
 Components of a
compensation system are
as follows:

5. Types of Compensation Management
There are two types of compensation management.
Compensation Mgmt
Direct Indirect

6. Direct compensation
 Direct compensation refers to monetary benefits
offered and provided to employees in return of the
services they provide to the organization.
 The monetary benefits include basic salary, house
rent allowance, conveyance, leave travel allowance,
medical reimbursements, special allowances,
bonus, Pf/Gratuity, etc. They are given at a regular
interval at a definite time.

7. Direct compensation
Medical
Reimburs
-ement
Special
Basic
Allowanc-
Salary
es
Direct
Compe-
House
Rent
nsation Bonus
Allounces
Leave
Conveya- Travel
nce Allowanc-
es

8. Indirect compensation
 Indirect compensation refers to non-monetary benefits
offered and provided to employees in lieu of the services
provided by them to the organization.
 They include Leave Policy, Overtime Policy, Car policy,
Hospitalization, Insurance, Leave travel Assistance Limits,
Retirement Benefits, Holiday Homes.

9. Indirect compensation
Overtime
Policy
Leave Hospitaliza
Policy -tion
Indirect
Flexible
Timings
Comp- Insurance
ensation
Holiday Leave
Homes Travel
Retire-
ment
Benefits

10. Need of Compensation Management
 A good compensation package is important to motivate the
employees to increase the organizational productivity.
 Unless compensation is provided no one will come and work for
the organization. Thus, compensation helps in running an
organization effectively and accomplishing its goals.
 Salary is just a part of the compensation system, the employees
have other psychological and self-actualization needs to fulfil.
Thus, compensation serves the purpose.
 The most competitive compensation will help the organization to
attract and sustain the best talent. The compensation package
should be as per industry standards.

11. Need of Compensation Management
Motivation
Compen-
sation
Package
Employee Need
Retention Satisfaction

12. Process of Compensation management
Organization's Strategy
Compensatiom Policy
Job Analysis and Evolution
Design and Implementation of
Compensation Plan
Evolution and Review

13. Importance of Compensation Mgmt System
 An ideal compensation system will have positive impact on the
efficiency and results produced by employees. It will encourage the
employees to perform better and achieve the standards fixed.
 It will enhance the process of job evaluation. It will also help in setting
up an ideal job evaluation and the set standards would be more
realistic and achievable.
 It will raise the morale, efficiency and cooperation among the
workers. It, being just and fair would provide satisfaction to the
workers.
 It should motivate and encouragement those who perform better and
should provide opportunities for those who wish to excel.

14. Importance of Compensation Mgmt System
 Sound Compensation/Reward System brings peace in the
relationship of employer and employees.
 It aims at creating a healthy competition among them and
encourages employees to work hard and efficiently.
 The system provides growth and advancement opportunities
to the deserving employees.
 The perfect compensation system provides platform for
happy and satisfied workforce. This minimizes the labour
turnover. The organization enjoys the stability.
 The organization is able to retain the best talent by providing
them adequate compensation thereby stopping them from
switching over to another job.

15. Compensation Management

16. Thank you…!!!