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Compensation topic


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Compensation topic

  2. 2. PREPARED BYVipul Pal
  3. 3. COMPENSATION All form of pay or rewards going to employees and arising from their employment.DIRECT FINANCIAL PAYMENTSINDIRECT PAYMENTS
  4. 4. BENEFITES Indirect financial and nonfinancial payments employees receive for continuing their employment with the company.
  5. 5. Benefits Discretionary on Part Benefits Required by Federal of Employer or Most State Law Social Security  Disability, Health, and Life Unemployment Insurance Insurance Workers’ Compensation  Pensions  Paid Time off for Vacation, Holidays, Sick Leave, Personal Leave, Jury Duty, etc. Leaves under family Medical  Employee Assistance and leave Act Counseling
  6. 6. SUPPLEMENTAL PAY BENEFITS Benefits for time not worked such as unemployment insurance, vacation and holiday pay , sick pay. Supplemental pay benefits is also called “PAY FOR TIME NOT WORKED”- This is one of an employer’s most costly benefits , because of the large amount of time off that many employees receive.
  7. 7. SUPPLEMENTAL UNEMPLOYMENTBENEFITS Provide for a “guaranteed annual income” in certain industries where employers must shut down to change machinery or due to reduced work . These benefits are paid by the company and supplement unemployment benefits. As the name implies ,these supplement the employee’s unemployment the employee’ s unemployment compensation, and help the person maintain his or her standard of living for the time he or she is out of work.
  8. 8. UNEMPLOYMENT INSURANCE Provides benefits if a person is unable to work through some fault other than his or her own. The benefits derive from a tax on employers that can range from 0.1% to 5% of taxable payroll in most states. An employer’s unemployment tax rate reflects its rate of personnel terminations.
  9. 9. VACATIONS AND HOLIDAYS The number of paid employee vacation days varies considerably from employer to employer. In the United States, the average is about 10 days per year. A typical U.S. company policy might call for:1. One week after 6 months to 1 year of service;2. Two weeks after 1 to 5 year of service;3. Three weeks after 5 to 10 year of service;4. Four weeks after 15 to 25 year of service; and5. Five weeks after 25 year of service.
  10. 10. SICK LEAVE Provides pay to an employee when he or she is out of work because of illness. Most sick leave polices grant full pay for a specified number of sick days – usually up to 12 days per year . The sick days usually accumulate at the rate of, say , one day per month service .
  11. 11. SEVERANCE PAY A one – time payment some employers provides when terminating an employee. Severance pay makes sense on several grounds. It is a humanitarian gesture , and good public relations. In addition , most managers expect employees to give them at least one or two weeks’ notice if they plan to quit; it therefore seems appropriate to provide at least one or two weeks’ severance pay if an employee is being dismissed.
  12. 12. INSURANCE BENEFITS Most employers also provide a number of required or voluntary insurance benefits ,1. Workers’ Compensation2. Health Insurance
  13. 13. WORKERS COMPENSATION Provides income and medical benefits to work – related accident victims or their dependents regardless of fault. Workers’ compensation benefits can be monetary or medical. In the events of a worker’s death or disablement, the person’s dependents are paid a cash benefit based on prior earning – usually one – half to two –thirds the worker’s average weekly wage, per week of employment.
  14. 14. CONTROLLING WORKERSCOMPENSATION COSTS Minimizing the number of workers’ compensation clams is an important goal for all employers . While the employers insurance company usually pays the claims, the costs of the premiums depend on the number and dollar amount of claims . Workers’ compensation benefits costs are rising: They recently grew by 3.5% overall while wages grew by just 2.4%.
  15. 15. HOSPITALIZATION , HEALTH ,ANDDISABILITY INSURANCE Health and hospitalization insurance looms large in many people’s choice of employer, because such insurance is so expensive . Most employers therefore offer their employees some type of hospitalization , medical, and disability insurance . Most health insurance plans provide at least basic hospitalization and surgical and medical insurance for all eligible employees at group rates.
  16. 16. THERE ARE EMPLOYERS OFFERINGFOLLOWING HEALTH BENEFITS, Health maintenance organization (HMO) Preferred provider organizations (PPO) Mental Health Benefits The Pregnancy Discrimination Act Comprehensive Omnibus Budget Reconciliation Act Long-Term Care Life Insurance
  17. 17. RETIREMENT BENEFITS Social security Fedaral program that provides three types of benefits : retirement income at the age of 62 and thereafter ;survivor’s or death benefits payable to the employee’s dependents regardless of age at time of death: and disability benefits payable to disabled employees and their dependents . These benefits are payable only if the employee is insured under the Social Security Act.
  18. 18. PENSION PLANS• Plans that provide a fixed sum when employee reach a predetermined retirement age or when they can no longer work due to disability .There are following pension plans Defined benefits pension plan Defined contribution pension plan 401(k) plan Economic growth and tax relief reconciliation act Savings and thrift plan Deferred profit-sharing plan Employee stock ownership plan
  19. 19. PENSION ALTERNATIVES EARLY RETIREMENT WINDOWS : A type of offering by which employee are encouraged to retire early, the incentive being liberal pension benefits plus perhaps a cash payment. CASH BALANCE PLANS : Defined benefits plans under which the employer contributes a percentage of employees’ pension plans every year ,and employees earn interest on this amount.
  21. 21. CREDIT UNIONS Credit unions are usually separate businesses established with the employer’ assistance to help employees with borrowing and saving needs. Employees usually become members by purchasing a share of the credit union’s stock .
  22. 22. EMPLOYEE ASSISTANCE PROGRAMS A formal employer program for providing employees with counseling and/or treatment programs for problems such as alcoholism , gambling ,or stress.There are following key steps for launching a successfulEAP program :1. Develop a policy statement2. Ensure professional staffing3. Maintain confidential record- keeping systems4. Be aware of legal issues
  23. 23. FAMILY – FRIENDLY BENEFITS On – site child care ,fitness and medical facilities ,flexible work scheduling , telecommuting , occasional sabbaticals , loan programs for home computers , stock options , concierge services , even insurance for the family pet are all part of the compensation package in the new workplace.There are following family – friendly benefits:1. Effect on performance2. Subsidized Child Care3. Elder Care4. Other Job – Related Benefits5. Executive Perquisites
  24. 24. FLEXIBLE BENEFITS Individualized plans allowed by employers to accommodate employee preferences for benefits. In a survey of working couples , for instance , 83 % took advantage of flexible hours , 69% took advantage of the sorts of flexible – style benefits options packages we’ll discuss next; and 75 % said that flexible – style benefits plans are the sorts of plans they would like to see their companies.
  25. 25. THANK YOU
  26. 26. BIBILIOGRAPHY Human Resource Management Tenth Edition Gary Dessler