2. An investigative study indicated that most of the employees
left because of compensation issues.
3. COMPENSATION MANAGEMENT
Compensation is what employees receive in exchange for their
contribution to the organization.
Compensation in other terms also called as ‘Employee
Remuneration’
Compensation is a systematic approach to providing monetary &
non monetary value to employees in exchange for work performed.
Compensation may be defined as money received in
performance of work and many kinds of benefits that an
organization provides to their employees.
4. Remuneration occupies an important place in the
life of an employee. His or her standard of living,
status in the society, motivation, loyalty, and
productivity depend upon the remuneration he or
she receives. For the employer too, employee
remuneration is significant because of its
contribution to the cost of production
5. ITS IMPORTANCE
Compensation is an integral part of human
resource management which helps in motivating
the employees and improving organizational
effectiveness.
Effectiveness in terms of:
Attracting & Retaining Talent
Motivating talent for better performance
Cost effectiveness
6. SIGNIFICANCE OF EMPLOYEE COMPENSATION
⚫To an employee, pay is a primary reason for
working. For some individuals, it may be the only
reason. For most of us, it is the means by which we
provide for our own and our family’s needs.
Compensation is also important to
organization. It represents a large
proportion of expenditure. Compensation
is also significant in the operation of the
economy.
8. HIGH COMPENSATION –
LOW COMMITMENT
Hired Guns
HIGH COMPENSATION
– HIGH COMMITMENT
Professionals
LOW COMPENSATION –
LOW COMMITMENT
Workers as commodity
LOW COMPENSATION –
HIGH COMMITMENT
Family oriented
organization
10. DIRECT COMPENSATION
It 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.
11. INDIRECT COMPENSATION
It refers to non-monetary benefits offered
employees in lieu of the services provided by them to
and provided to
the
organization. They include Paid Leave, Car / transportation,
Medical Aids and assistance, Insurance (for self and family),
Leave travel Assistance, Retirement Benefits, Holiday Homes.
12. Wage and Salary:
⚫The most important component of compensation and these
are essential irrespective of the type of organization
⚫Administered individually
⚫Provides employee stabile income and can plan chores of daily
life, budget
Incentives:
⚫Incentives are the additional payment to employees besides the
payment of wages and salaries. Often these are linked with productivity,
either in terms of higher production or cost saving or both.
⚫Can be administered individually and for groups
⚫Additional compensation having immediate effect and no future liability.
13. Demand & supply of
labour
Cost of living
Society
Labour unions
The economy
Labour laws
Compensation policy
The org. ability to pay
Job analysis &
description
Employee
External Internal
FACTORS INFLUENCING EMPLOYEE
COMPENSATION
14. FACTORS INFLUENCING EMPLOYEE
COMPENSATION
EXTERNAL FACTORS
Labour market:
Demand for and supply of labour influence wage
and salary fixation
Labor markets are based on the supply and
demand of labor in a country or a specific location
that are able and willing to work.
A low wage may be fixed when the supply of labour
exceeds the demand for it.
A higher wage will have to be paid when demand
exceeds supply, as in the case of skilled labour.
15. FACTORS INFLUENCING EMPLOYEE
COMPENSATION
Cost of living:
A rise in the cost of living is sought to be compensated
by payment of dearness allowance, basic pay to remain
undisturbed.
DA (Dearness allowance) takes care of the price
inflation that affects the purchasing power of the
employees.
It is a regular and continuing part of the compensation
package that gets changed according to the price
increase.
Many companies include an escalatory clause in their
wage agreement in terms of which dearness allowance
increases or decreases depending upon the movement
of consumer price index (CPI)
16. FACTORS INFLUENCING EMPLOYEE
COMPENSATION
Labour Unions: The presence or absence of
labour organization often determine the quantum of
wages paid to employees.
The benefit of belonging to a labor union is that
wages are always the union's top priority. Union
leaders work hard to ensure members receive
sufficient wages for the work performed.
Employers of non-unionized factories enjoy the
freedom to fix wages and salaries as they please.
Because of large unemployment.
17. LABOUR LAWS
Government makes and enacts laws regarding
welfare aspects of workers, their security and their
prosperity.
Workers CompensationAct,1923
The Payment Of Wages Act, 1936
The Minimum Wages Act, 1948, is precisely
meant to prevent this kind of exploitation.
Employees’ State Insurance Act, 1948
Employees’ Provident Fund Act, 1952
The Payment To Bonus Act, 1965
Maternity Benefit Act, 1971
The Equal Remuneration Act, 1976
18. INTERNAL FACTORS INFLUENCING EMPLOYEE
COMPENSATION
Compensation Policies: Provides general
guidelines for making compensation decisions.
Pay leaders
The market rate
Pay followers
The organization’s ability to pay
19. INTERNAL FACTORS INFLUENCING EMPLOYEE
COMPENSATION
Job
analysis
and job
description:
more difficult
and
challenging a
job, the
higher the
wages.
20. INTERNAL FACTORS INFLUENCING EMPLOYEE
COMPENSATION
The employee:
Performance, seniority, experience, potential and
even luck determine his or her remuneration.
21. CONCLUSION
We can say that good compensation can increase the
productivity of an organization because its provides
various rewards, bonus, schemes etc. and its
compulsory for every organization.
22. “FOR EVERYTHING YOU HAVE MISSED,
YOU HAVE GAINED SOMETHING ELSE; AND
FOR EVERYTHING YOU GAIN, YOU LOSE
SOMETHING ELSE.”
-Ralph Waldo Emerson
THANK YOU
