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COMPENSATIO
N
MANAGEMENT
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GROUP MEMBERS
DEEPAK ARORA (16)
RADHIKA SINGH (40)
RAMAN ROY (44)
SNEHA DUBEY (52)
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INTRODUCTION
Compensation Management is an integralpart of the management of theorganization.
Compensation is a systematic approachto providing monetary value toemployees in exchange for workperformed.
It is the remuneration received by anemployee in return for his/hercontribution to the organization.
It is an organized practice that involves
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The increasingcompetitiveness ofthe labour market and
turnover ofemployees hadresulted in nightmarein compensationplanning.
Human Resource is
the most vitalresource for anyorganization. It isresponsible for eachand every decision
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NATURE OF COMPENSATION
BASE PAY
VARIABLE PAY
BENEFITS
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WAGE AND SALARYADMINISTRATION
It denotes the process of managing acompanys compensationprogramme. The goals of
compensation administration are todesign a cost effective pay structurethat will attract, motivate and retain
competent employees.
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OBJECTIVESTo establish a fair and equitable remuneration
offering similar pay for similar jobs.
To attract qualified and competent personnel.
To retain the present employees by keeping wagelevels in tone with competing units.
To control labour and administrative costs in line
with the ability of the organisation to pay.
To project a good image of the company and tocomply with legal needs relating to wages and
salaries.
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ELEMENTS OF WAGE AND SALARYSYSTEM
Identifying the available salary opportunities, theircosts, estimating the worth of its members, oftheir salary opportunities and communicatingthem to employees.
Relating salary to needs and goals.
Developing quality, quantity and the time
standards related to work and goals.
Determining the effort necessary to achievestandards.
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Measuring the actual performance.
Measuring the job satisfaction of the employees.
Evaluating the unsatisfied wants and unrealised
goals aspirations of the employees.
Finding out the dissatisfaction arising fromunfulfilled needs and unattained goals.
Adjusting the salary levels accordingly with a viewto enabling the employees to reach unreachedgoals and fulfil the unfulfilled needs and
aspirations
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WAGE POLICY IN INDIA
MINIMUM WAGE
FAIR WAGE
LIVING WAGE
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WHY WAGE DIFFERENTIALS?
o Interpersonal differences- differentials in sex,skills, age, knowledge, experience.
o
Inter-occupational differentials- varyingrequirements of skill, knowledge, demand-supplysituation.
o
Inter-area differentials- cost of living, ability ofemployers to pay, demand and supply situation,and extent of unionisation.
o
Inter- firm differentials- ability of employer topay, employees bargaining power, degree of
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CHOICES IN DESIGNING ACOMEPNSATION SYSTEM
External and internal pay
Fixed vs. Variable pay Performance vs. membership
Job vs. individual pay
Below market vs. above marketcompensation
Open vs. secret pay
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COMPONENTS OFCOMPENSATIONMANAGEMENT
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Job analysis is asystematic
approach todefining the jobrole, description,requirements,
responsibilities,evaluation, etc.
It helps in findingout required levelof education, skills,knowledge,
training, etc for the
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COMPONENTS OF JOB
ANALYSIS
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PAY STRUCTURES
Pay structure refers to the processof setting up the pay for a job in anorganization.
The process deals with internal andexternal analysis to estimate thecompensation package for a jobprofile.
Internal e uit External e uit and
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INTERNAL EQUITYThe internal equity
method undertakesthe job position in theorganizationalhierarchy.
The process aims atbalancing thecompensationprovided to a jobprofile in comparisonto the compensationprovided to its seniorand junior level in the
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EXTERNAL EQUITY Organizations
formulate theircompensationstrategies by assessingthe competitors or
industry standards.
Organizations set thecompensation
packages of theiremployees aligned withthe prevailingcompensationpackages in themarket.
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INDIVIDUAL EQUITY
Individual equity exists when an
employer compensates individualswho are in similar jobs on the basisof variations in individual
performance.
PERSONAL EQUITY
Personal equity exists when anemployer pays a wage rate thatsatisfies an employee's own
perception of his or her worth.
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SALARY SURVEYS
The Salary survey is the researchdone to analyze the industrystandards to set up thecompensation strategy for the
organization. Organizations can either conduct the
survey themselves or they can
purchase the survey reports from areputed research organization.
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To gather informationregarding the industrystandards
To know more about themarket rate i.e.compensation offered bythe competitors
To design a faircompensation system
To design and implement
most competitive reward
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Types of compensationsurveys
Standard:Standard surveys are undertaken by
organizations on a regular basis. Thesesurveys are conducted annually based on theorganizational objectives.
Custom:
A few organizations need to know somespecific information. The surveys which caterthis need are known as custom surveys.The organizations either higher research
organizations to conduct theses surveys forth m r th th m lv n t th rv .
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NEED FOR COMPENSATIONMANAGEMENT
A good compensation package is important to motivatethe employees to increase the organizationalproductivity.
Unless compensation is provided no one will come andwork for the organization. Thus, compensation helps inrunning an organization effectively and accomplishing itsgoals.
Salary is just a part of the compensation system, theemployees have other psychological and self-actualization needs to fulfil. Thus, compensation servesthe purpose.
The most competitive compensation will help theorganization to attract and sustain the best talent. The
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TYPES OFCOMPENSATION
DIRECT COMPENSATION
INDIRECT COMPENSATION
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ARTICLE
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5 SIMPLE STEPS TO THETOP OF YOUR
COMPENSATION PLAN
By- Yvonne Chihak
Y t t t t th t f '
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You want to get to the top of your company'scompensation plan? Here are 5 simple steps
that will get you there.
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CANT PAY YOUREMPLOYEES WHAT
YOUD LIKE?? PRAISETHEM INSTEAD
By- Kevin Gray
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The economy may be showingsigns of life, but that doesntmean managers and employersare starting to shower their
people with cash.
Instead, theyre turning to anold-timey, feel-good techniqueto motivate their overburdenedworkers: praise.
As a motivational tool, of course,praise has been around forever,
long before the self-styledexperts began teaching us howto practice it.
All employees and their
managers are more stressedthan ever workin faster and
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CASE STUDY:
THE SUPERVISORS DILEMMA
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CASE
Case - soap factory situatedin Ghaziabad, UP
Production - low
Top management never
satisfied
Factory workers take thingseasy because they are also
farmers so they do nothave shortage of food
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Factory wage only provide
them liquid cash
Absenteeism is also a
problem
for the management
Six years ago, within the
same factory compound, a
fruit processing unit was
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Jobs in this unit are seasonal
The unit employs 22 workers All of them are given semi
skilled grade E jobs
Jobs done in the unit are
peeling fruits
extracting juice
bottling,capping,labeling,
storing and keeping the
premises clean.
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During the lean period , part of theworkforce is transferred to the soap
plant
A small portion of workers who remain
in the fruit processing plant are givenlight jobs, such as keeping thepremises clean, rolling the barrels, and
so on
The only exceptions are the two
workers who are engaged in filling and
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When these two seeothers having an easytime they becomedisgruntled and demandhigher wages or that other
do the filling and cappingjob as well. They cannot
be given higher grades
The bottle filler andcappers have done the job
for years and have
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What is the problem??
1. Absenteeism of factory workers
at the soap plant
2. At the food processing plant whentwo workers i.e. Bottle filler and
capper, see others having an easytime they become disgruntled anddemand higher wages or that other dothe filling and capping job as well
P ibl t
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Possible measures tosolve the problem
Job rotation?
Change their designation?
Acknowledge their performance?
Compensation to employees
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CONCLUSION
A fair compensation package isimportant to motivate the employeesto increase the organizational
productivity
To get the best talent a company
should look for the bestcompensation payment method
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Compensation
managementof
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SALARY AND ALLOWANCES
Salary and allowances are paid as per the terms of employment.
DA is based on the CPI number issued by the BOMBAY CHAMBER OFCOMMERCE.
It Is paid @ Rs.2.50 for every 10 points increase over index number8067.
If the BASIC + DA adds to Rs 5000/-pm or more, DA will merge with thebasic salary .
DA is not applicable on salary above Rs 500/- . DA is not applicable tograde 100 and above.
Employee drawing salary between Rs 3,501 /- and 50,000 /- pm (basic+ DA) may opt for bonus or superannuation.
The communication regarding the option should be received with in 15days from HRD from the date of joining . However , employees whose
salary is Rs. 50,001/- or more will be compulsorily enrolled under thesuperannuation scheme.
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PROVIDEND FUND
Company contributes 12% of salary to the PF account of a new employee.
In the event of the employee being a member of the provident fund.
He / She is advised to communicate his / her PF number immediately to
salary department.
Salary and allowances are subject to deductions as per incometax act. Previous employers TDS certificate along withinvestment plans must be submitted to HRD within 15 days of
joining so as to enable salary department to calculate tax liability.
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MEDICAL AID SCHEME
1) ALL EMPLOYEES.
2) PROCEDURE
The amount as per employees eligibility will be paid through the monthly
salary on pro rata basis.
For eg: if yearly salary eligibility is Rs. 15000/- then 1/12 th ie.1250/- will be paidthrough monthly salary
Employees will need submiy relevant proof (medical bills) for the current
financial year and to the tune of max. Rs 15000/- only once a year from jan
1st until february 15 every year to the concerned HR operations
representative( currently Ms sadhana kochrekar)
if the bill not received by 15th february then the appropriate tax , if any , wil
be computed & deducted from the salary during of the month of february.
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HEALTH / INSURANCE
SPECIAL MEDICAL BENEFIT SCHEME EMPLOYEES & DEPENDENTS
ELIGIBILITY
ALL employee who are not covered under ESIS will be covered under the
GROUP MEDICLAIM POLICY .
The following reimbursement towards medical expenses will be made by thecompany under the COMPANYS SPECIAL MEDICAL BENEFITS SCHEME.
-Reimbursement of expenses for dependent parent.
-Diagnostic tests for employees & dependents.
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REIMBURSEMENT OF EXPENCES FOR DEPENDENT
PARENTS
Years of service of
employee with thecompany(all level)
Total
reimbursements forhospitalisation perparent during thetenure of service ofthe employee will besubject to the upper
limit given below:
remarks
Less than 5 years seviceNil
5 to 10 years Rs 50,000 Reimbursement towardsa single claim must notexceed 30% of theupper limit
More than 10 years Rs 1,00,000
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Reimbursement of medical expences under the scheme is given with the
intention to help employees who are associated for long period of time with the
organisation. As such when an employee resign from the services of the
company, special medical benefits 9self and dependents) claimed during the
preceding 6 months from the date of resignation , will be recovered from theemployee as given below
Years of the service withthe company
To be recovered from theemployee
Less than 5 years service 100%
More than 5 years servicebut less than 10 years
service
50%
More than 10 years service NO RECOVERY
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DIAGNOSTIC TESTS FOR EMPLOYEES AND DEPENDENTS
Claim for expensive diagnostic test will be considered under special medical
benefits even when there is no hospitalisation subject to following .
i)The test should have been conducted on the recommendation of a specialist.
ii) Test will include the following:
TESTS
Sonography
Endoscopy
C.T. scan
MRI scan
Angiography
Stress
2 D Echo
Mammography
Colour Doppler
DISALLOWABLE ITEMS
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DISALLOWABLE ITEMS
Baby feeding bottles
Baby food like nestle lectogen , farex
Tooth paste
Tooth powder
Talc powder
Health drinks like bournvita , horlicks , boost etc
REIMBURSEMENT OF CONSULTATIONS & DIAGNOSIS EXPENSES
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REIMBURSEMENT OF CONSULTATIONS & DIAGNOSIS EXPENSES
Domicillary treatment of specialized nature is included in our special medical scheme.This to
obviate the heavy expenses of which employees incur in consulting specialists. The grade
wise eligibility is given in the following table.
GRADES A CLASSCITIES(Rs.)
B CLASSCITIES(Rs)
C CLASSCITIES(Rs0TIES
STAFF UPTO
GRADE 175(NON ESIS)
4,200 3,750 3,300
200/225 6,000 5,500 5,100
250/275 9,000 8,550 8,100
300/325/350 12000 11,550 11,100
375 TO 500 15000 14,550 14,100
550 & ABOVE 18000 17,550 nil
The reimbursement of consultation & diagnosis expenses wil be subject to
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The reimbursement of consultation & diagnosis expenses wil be subject to
the following:
1.The reimbursement will be available for major diseases / medical conditions
certified as requiring specialised consultation and diagnosis by the companys
medical consultant.
2.The disease or medical abnormality mentioned as above should have been
registered by the company appointed doctor or during the annual medical check up
organised by the company prior to incurring consultation and diagnosis expenses.
3.The reimbursement will be limited only toward the consultation / diagnosis
charges, subject to overall list mentioned above .the consultation / test must have
been recommended by a specialist (referred to by company doctor ).
4.Expenses toward treatment and medicine will not form part of this reimbursment
scheme.
5.The company shall not make any payment under the scheme in respect of any
expenses wheresoever incurred by the employee in connection with or incurred by
the in connection with or in respsect of such diseases which are listed in the
EXCLUTION LIST ,given below
EXCLUSION LIST FOR CONSULTATION & DIAGNOSIS
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EXCLUSION LIST FOR CONSULTATION & DIAGNOSIS
1.Expenses incurred for pre and post hospitalisation treatment.
2.Asthma ,bronchitis, cough & cold.
3.arthritis, Gout & Rheumastism .
4.Medical expenses arising from or traceable to pregnancy.
5.Routine eye check up ,cost of spectacles , contact lenses and hearing aids .
6.Dental treatment , dental surgery of any kind ,unless requiring hospitalization.
7.Expence on vitamins and tonic
8.Any chronic illness
9.Any illness existing prior to joining pidilite
LEAVE TRAVEL ALLOWANCE (LTA)
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LEAVE TRAVEL ALLOWANCE (LTA)
(1) ELIGIBILITY :- All employee who have completed one year of service.
(2) PROCEDURE :-
2.1 The employee must avail of privilege leave for a period of not less than 6
days in order to claim LTA
2.2 The employee can make his first LTA claim after completion of one year of
service.
2.3 Second LTA can be availed after completion of 6 months of availing the firstLTA .
2.4 After the first LTA has been availed, LTA amount for subsequent LTA will
be
the same as BASIC + DA of the employee as on 1st April of the financial year
in which LTA is being availed.2.5 LTA can be carried forward and claimed together with the next entitlementie. Once in two years.
2.6 LTA is payable in advance if PL for 6 days or more is sanctioned at least 15
days prior to the date of proceeding on leave provided the prescribed LTA
application form complete in all respect s is submitted and the application for
PL.
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2.7 LTA entitlement for every completed year of service . However for any
shortfall / excess claimed, the same will be paid / recovered on prorata basis
at the time of leaving service.
2.8 LTA claim should be made in the prescribed form.
2.9 LTA will be taxable as per I.T. act 1961.2.10 In case PL applied in advance as per rules has been refused, the employee
can avail LTA . However in such cases if he does not provide a suitable
declaration in the prescribed format after availing leave, before end of the
financial year , the LTA amount will be treated as an allowance and fully taxed
in the hands of the employee.
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LEAVES
LOCATION(MUMBAI)
CASUALLEAVE
SICKLEAVE
PRIVILEGE LEAVE
TOTAL
MAX. NO.OF DAYS
7 8 24 39
Only working days will be counted as leave. Intervening weekly off / paid
holidays will not be considered as leave.
The leave rules w.r.t. no. of days of leave / encashment will differ as branches
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OTHER BENEFITS
EMPLOYEE REFERRAL PROGRAMME- BRING A FRIEND SCHEME
THE SCHEME:
BRING A FRIEND SCHEME is an opportunity for employees to refer quality
applicants for vacant positions within the organisation and thereby enabling
employees to earn some extra incentives.
THE SALIENT FEATURES OF SCHEME:The scheme was in effect from 1.9.2008. Employees can recommend their
friends / relatives for any vacant position based on the position specific
requirements. The recommendation received will be classified into :
CATEGORY A CATEGORY B
The employee must know the candidate
personally / must be in close contact with
the candidate for more than two years.
The employee can be known to the
candidate through his close
friends/relatives or the candidate can
be referred to the to the employee by a
close friend.
Grade of the selected candidate Amount/ gift voucher to be given
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in category A as incentive to the employeewho has referred the hiredcandidate
Upto grade200 Rs 5,000
Grade 225 to 325 Rs 15,000
Grade 350 to 450 Rs 25000
Grade 500 & above Rs 50,000
Grade of the selected candidatein category B
Amount/ gift voucher to be givenas incentive to the employeewho has referred the hiredcandidate
Upto grade 200 Rs 2,500
Grade 250 to 325 Rs7,500
Grade 350 to 450 Rs 12,500
Grade 500 & above Rs 25000
OTHER BENEFITS
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OTHER BENEFITS.
WEDDING GIFT
On the occasion of the wedding of an employee a token gift of Rs 1001/- ispresented by the management as a symbol of affection.
On the occasion of employees childs marriage a gift of Rs 501/- shall be given to
the son/daughter.
In addition to the above , a bouquet of flower on behalf of Sri M.B. PAREKH andall of the employees of PIL will be sent on the above occasion by the concerned
department .the budget for the bouquet is 150/-.
OTHER BENEFITS
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OTHER BENEFITS.
ANNIVERSARY AWARDS
The anniversary awards provide recognition to employee on their fifth, tenth,fifteenth, twentieth and twenty fifth aniversaries with the company.
To honour employees on their completion of:
5 yrs service : An additional incremental of Rs.100/- per month.
10 yrs service : An additional incremental of Rs.100/-per month.
15yrs services: An additional increment of Rs.100/-per month and a wrist watch
worth Rs.1000/-
20yrs service :An additional increment of Rs.100/-per month and one silver coinof 100 gms
This award is in recognition of their loyalty to the company. However it will be
subject to the employee consistently displaying reasonably good level of
performance.
OTHERS BENEFITS
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OTHERS BENEFITS
UMBRELLA ALLOWANCE
Confirmed staff members as on 15th june will be given fixed allowance in lieu of an
umbrella and an increase of Rs.20/- will be allowed once in three years from the
base price. Consequently confirmed staff members will get a fixed allowance in lieu
of an umbrella as under.
Years 2000 2001 2002 2003 2004 2005 2006 2007
Rs 160 nil 180 nil 200 nil 220 nil
MONSOON WEAR OF FIELD STAFF UP TO GRADE 175
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MONSOON WEAR OF FIELD STAFF UP TO GRADE 175
During the block period of two years starting from the date of joining field staff
may purchase:
(a)Pair of gum boots / ankle shoes.
(b)Standard quality raincoat.
ELIGIBILITY for monsoon wear given below:
MONSOON WEAR RS.
RAIN WEAR( RAIN COAT /RAINSUITS/RAIN JACKETS)
300
RAIN SHOES/GUM BOOTS 200
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