crm module 3 student

Amity Business School

Elements of Compensation


Elements of Compensation

Pay Incentives

Indirect Compensation

Benefits

Base Compensation


Indirect Compensation Benefits• Income Protection

• Medical insurance

• Retirement programs,

• Life insurance,

• Saving plans

• Work / Life Focus • Vacations

• Flexible Work Arrangements (telecommuting, non-traditional schedules, non-paid time off)


Indirect Compensation Benefits• Allowances

• D.A.• P.F.• C.C.A• Acting• Car• Books• Computer• Conveyance / transport• Deputation• Education• LTC• Overtime• Night-duty• Telephone

Amity Business SchoolPay-Incentive

Micro Level Macro Level

Individual Team Business Unit Firm

Merit Pay Bonuses Gain-sharing Profit Sharing

Bonuses Awards Bonuses Stock plans

Awards Awards

Piece rate


Principles of Reward strategy

&

Gain Sharing


Principles of Reward strategy• Give value to the reward system. Employees must have a preference for

the types of rewards being offered. Many employees prefer cash awards and plaques. Some employees like to see their name in the company’s newsletter. Others like the public recognition surrounding award ceremony.

• Make the reward system simple to understand. Elaborate procedures for evaluating performance, filling out forms, and review by several levels of management lead to confusion. The system must be easy to understand if it is to be used effectively.

• Lay down performance standards within the control of the team.

• Make the reward system fair and effective.

• Ensure participation in the reward system.

• Involve people in the reward process and empower them to do the needful.


Gainsharing

Amity Business SchoolConcept of gain-sharing

• Gainsharing is an incentive plan that engages many or all employees in a common effort to achieve a company’s productivity objectives, with any resulting cost savings gains shared among employees and the company.

There are three tenets which make for a successful program:– Employee Involvement– Commitment– Communication

• This type of bonus program is most common in manufacturing plants and is designed to reward productivity and improved product quality.

• It works best when company performance levels can be easily quantified.

• Gainsharing is used in more than a quarter of the Fortune 1000 companies, as well as many smaller firms and public sector organisations.


Designing a Gain Sharing Plan


To determine what is to be accomplished

to determine how employees will be

grouped under the program

to determine what measures of performance are necessary to

meet the stated objectives

to design the key elements of the program

to implement the plan and get employees actively involved in a

team approach to performance improvement.

to ensure that it stays current with the development of

the organization


Implementing a Gainsharing Plan

Amity Business SchoolEstablish general plan objectives e.g. boosting productivity, lowering costs

Choose specific performance measures e.g. labor hours per unit produced, return on net assets to measure employee performance

Decide on funding formula. What portion of gains will employee receive?

Decide on a method for dividing and distributing the employee’s share of the gains

Decide how often to pay bonuses?

Choose the form of payment cash or common stock

Develop the involvement system. E.g. steering committee, update meetings, suggestion systems.

Implement the plan

Amity Business SchoolAdvantages

Attain specific objectives, Increase credibility Stimulate teamwork, Reduce resistance Reduce costs, Sustained increases in productivity. Enhances commitment to organizational goals. Favor the knowledge of the performance of units or branches, Increase the demand from employees for improvement systems, Improvements in product quality, lower rates of absenteeism,

defects, and "downtime." Employees become more involved the productivity gains made

by the employer. Employees can share in the benefits of employee sponsored

improvements.


Disadvantages

Time consuming to design, implement and administer

Requires employee orientation, education and training

Accurate and timely production and cost data must be available

If not already in place, gain sharing requires a shift to participative management and employee involvement Once you decide to add a gain sharing plan to your company you must pick the type of plan you wish to implement into your company.

Amity Business SchoolDifferent types of plans a company can implement

Scanlon Plan (Single Ratio Volume)

RuckerPlan

Imposhare

Numerator of ratio (input factor)

Payroll costs LaborCost

Actual Hours worked

Denominator of ratio (output factor)

Net sales (plus or minus inventories)

Valueadded

Total standard value hours


Perquisites


What are Perquisites?• "Perquisite" may be defined as any casual emolument or

benefit attached to an office or position in addition to salary or wages.

• "Perquisite" is defined in the section17(2) of the Income tax Act as including: Value of rent-free/concessional rent accommodation

provided by the employer. Any sum paid by employer in respect of an obligation

which was actually payable by the assessee. Value of any benefit/amenity granted free or at

concessional rate to specified employees etc.


Perquisites• Perks• Form of Indirect Compensation• Competitive package • Taxable in hands of employees• Develops favorable attitude towards company • Increased long term commitment


Valuation of Perquisites(Rule 3 of Income Tax Rules)

• Valuation of Residential Accommodation Accommodation owned by employer Accommodation taken on lease Furnished Accommodation

• Valuation of Motor Car Owned / Hired by employer used exclusively for official

duties Used exclusively for private or personal use Used partly for official and partly for personal use


Valuation of Perquisites(Rule 3 of Income Tax Rules) Contd...

• Sweeper, Gardner, watchman etc.• Benefits resulting from supply of gas , electric energy for

household consumption• Fee or concessional education facilities in own institution• Medical facilities • Free meals during office hours or through vouchers at

eating joints• Gift vouchers• Expense for credit card


Non -Taxable Perquisites

• Refreshment provided by employer during working hours of office premises

• Subsidized lunch or dinner in canteen• Recreational facilities• Subsidized transport from office to residence• Goods manufactured by Company sold at subsidized

rates to employees etc.• Laptops and computers etc.• Expenses on telephone, including mobile phone


Bonus&

Social Security


BONUS

• Payment of Bonus Act,1965• Act is applicable to factories and other establishments

employing 20 or more employees• Minimum rate of 8.33 percent of salary earned• Maximum is fixed at 20 percent


Social Security• Introduced in 1937• Social Security Act• Old Age or disability benefits• Death payments


Team Based Pay


What is a TeamTeam Definition (By Katzenbach & Smith, 1993)

• Group of employees whose members are mutually accountable to each other for common goals.

• Team members interact on a regular basis.• There is the possibility of synergy between team

members.• Size of team is between 2 and 25 members.


Types of Teams (By :- Cohen & Bailey, 1997)

• Work Team

• Project Team

• Parallel Team


Why Use Team Pay?To Encourage Behaviors such as…• Peer Cooperation• Information Sharing• Unselfish behavior supportive of team

– Sacrifice personal interest for good of team such as giving up leisure time on weekend to work for an important team goal.

• Mutual Monitoring– Provide performance feedback to team members.

Amity Business SchoolMonetary Team Rewards(Gomez-Mejia & Balkin, 1992)

• Team Bonus - Cash payment to tied to achieving major team performance outcome and allocated on non-recurring basis.

• Team Merit Pay - Cash adjustment to salary tied to achieving team behavioral and performance outcomes.

• Skill-based Pay - Adjustment to base pay rate of team members tied to team competence level.


• Gain sharing - Share gains of unit/department with interdependent teams.

• Spot Cash Rewards - Discretionary basis.

Amity Business SchoolNon-monetary Team Rewards

• Team Recognition Reward - Public ceremony or announcement in company newsletter.

• Team Celebration - Celebrate team “win”; includes special dinner, ticket to sports event, etc.

• Travel - Team members (and possibly spouses) travel to resort for relaxation and fun - often used for sales teams after successful marketing “push.”


Role Of Compensation In Sales Force Success


Definition Of A salesperson

• An individual acting for a company by performing one or more of the following activities: prospecting, communicating, servicing, and information gathering.


Definition Of Sales Force Management

– The analysis, planning, implementation, and control of sales force activities. It includes setting and designing sales force strategy; and recruiting, selecting, training, supervising, compensating, and evaluating the firm’s salespeople.


Compensating Sales force

– Compensation elements: salary, bonuses, commissions, expenses, and fringe benefits

– Basic compensation plans:• Straight salary• Straight commission• Salary plus bonus• Salary plus commission


Compensation plans should direct the sales force toward activities that are consistent with overall marketing objectives.

• Gain market share• Solidify market leadership• Maximize profitability


Role Of Supervision

• Effective supervisors provide direction to the sales force.• Effective supervisors also motivate the sales force.

crm module 3 student

Documents

costsamity business

gainsharing plan

employee performance

type of plan

incentive plan

bonuses gain

benefits of employee

general plan objectives