This document discusses compensation and performance appraisal. It begins with an introduction to compensation, defining it as the remuneration awarded to employees in exchange for their services and contributions. The document then discusses the importance of compensation, noting that it can attract top talent, increase motivation and loyalty, and boost productivity and profits. It outlines the objectives of compensation management as attracting, engaging, and retaining top talent through competitive plans that align with the company budget, job market, and regulations. The final section lists some common types of compensation including insurance benefits, retirement packages, profit sharing, paid time off, and bonuses.

1. Presented By
Prof. Dipashri Pawar
Assistant Professor,
Sanjivani College of Engineering,
Dept.of MBA,
Kopargaon
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
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Human Resource Management
COMPENSATION & PERFORMANCE APPRAISAL

2. Unit-4 COMPENSATION & PERFORMANCE APPRAISAL
• Policies and practices, Limitations
• Introduction: Meaning, Objectives of Compensation
• Components of Compensation System; Compensation
Management Process
• Factors of Determining Pay Rates; Pay Incentives
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3. Policies and practices of HRM
HRM policies and practices are guidelines and procedures that organizations use to manage their employees. They can include
recruitment, selection, training, performance management, compensation, and employee relations. HRM policies and practices
play an important role in creating an effective and efficient workforce. They help to ensure that employees are treated fairly and
equitably, and that the organization meets its legal obligations. HRM policies and practices can also help to foster an
environment of trust, respect, and collaboration among employees.
• Recruitment.
• Selection
• Training
• Performance Management
• Compensation
• Employee Relations

4. Policies and practices of HRM
1. Employee selection: Establishing criteria for the selection of qualified employees is an important part of HRM.
This includes developing job descriptions and job postings, conducting interviews, testing, and background
checks.
2. Training and development: HR professionals must stay up to date on industry trends and innovations in order
to effectively train and develop employees. This includes providing seminars, workshops, and other learning
opportunities to ensure that employees are equipped with the skills they need to be successful.
3. Performance management: A comprehensive performance management system is essential for any
organization. This involves setting expectations, providing feedback, and rewarding employees for their
performance.
4. Compensation and benefits: Compensation and benefits are an important part of employee motivation and
retention. HR professionals must be knowledgeable about current salary levels, market trends, and legal
requirements in order to develop and administer appropriate compensation and benefits packages.
5. Labor relations: Establishing and maintaining positive relationships between management and employees is a
key part of HRM. This includes understanding and following labor laws, negotiating collective bargaining
agreements, and resolving disputes.

8. 1. Lack of Strategic Focus: HR departments often lack the strategic focus to help organizations meet their goals and objectives.
HRM professionals are experts in their field, but may lack the business acumen to effectively create and implement strategies
that will help the organization meet its objectives.
2. Limited Resources: HR departments are often resource-constrained, which limits their ability to effectively manage the
organization’s human capital. Limited resources can also mean that HR professionals are unable to effectively respond to
changing business conditions.
3. Poor Communication: Poor communication between HR and other departments can lead to miscommunication and
misunderstandings. This can prevent the organization from making the best use of its human capital.
4. Low Employee Engagement: Low levels of employee engagement can lead to reduced productivity, increased employee
turnover and decreased customer satisfaction. This can be a major obstacle to achieving desired business outcomes.
5. Legal Challenges: HR departments must stay abreast of changing legal requirements, such as labor laws and regulations, to
ensure compliance and avoid potential legal action.

9. WHAT IS COMPENSATION
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Compensation is the remuneration awarded to an employee in exchange for their services
or individual contributions to your business. The contributions can be their time,
knowledge, skills, abilities and commitment to your company or a project.
In simpler words, compensation is the money received by an employee from an employer
as a salary or wages.

10. Importance of Compensation
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Compensation is one of the most important aspects of running a business that can make
or break a business. Having a good compensation plan can help organizations to flourish
and compete in their respective markets.
Some of the benefits of providing the right compensation package to your employees
are:
• Attracts top talent
• Increases employee motivation at the workplace
• Boosts employee loyalty
• Increases productivity and profitability
• Improves job satisfaction and employee engagement
• Helps in retaining top employee
• Helps stay in compliance with the Federal and State government agencies

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Compensation
Objectives: The objectives of compensation management are to attract, engage, and retain top talent through
competitive compensation plans that align with the company budget, corresponding job market, and government
regulations.
Good compensation management should:
Attract and recruit talent
Motivate your people
Maintain morale
Adhere to government regulations and company compensation philosophy
Reflect the current job-market
Compensation management can achieve its objectives by offering:
Attractive salaries
Useful benefits
Bonuses, incentives, and programs to improve employee wellbeing
Retirement savings
Insurance

14. Types of Compensation for Work
• Insurance Benefits
• Retirement Package
• Profit sharing and stock option
• Paid time off
• Bonuses and compensation

15. Thank You !