1. COMPENSATION MANAGEMENT

2. WHAT IS COMPENSATION PAYMENT PURPOSE AND OBJECTIVES OF COMPENSATION WHAT IS COMPENSATION MANAGEMENT NEED OF COMPENSATION MANAGEMENT TYPES OF COMPENSATION SALARY SLIP SALARY SLIP STRUCTURE EMPLOYEES COMPENSATION PACKAGES FRINGE BENEFITS TYPES OF FRINGE BENEFITS FEATURES OF FRINFE BENEFITS FRINGE BENEFITS IN INDIAN SCENARIO PERFORMANCE LINKED INCENTIVES MEANING OF INCENTIVES PLAN FEATURES OF GOOD INCENTIVE PLANS TYPES OF INCENTIVE PLAN 3. What is compensation payment 4. ContIs an integral part of human resource management whichhelps in.Motivating the employees and improving organizationaleffectiveness .If the compensation offered is effectively managed , itcontributes to high organizational productivity . 5. Purposes and Objectives of Compensation The organization must provide appropriate and equitable rewardsto employees . Individuals who work for organizations want to feel valued . Want to be rewarded at a level commensurate with their skills, abilities and contributions to the organization . Compensation serves a ( signaling ) function . Organizations signal to employees what they feel is important orthe employee to focus on.. (And what they feel is less important )by paying for certain kindsof activities or behaviors and not for others . Compensation can serve as an incentive to employees to increasetheir efforts along desired lines 6. What is compensation managementIs more than just the means to attract and retain talentedemployees .Compensation management is a strategic activity thathelps an organization improve the effectiveness of itsemployee reward processes. This requires integrating employee processes , informationand programs with organizational processes and strategiesto achieve optimal organizational results . 7. Need of compensation management MOTIVATION NEEDCOMPENSATION SATISFACTIONEMPLOYEERETENSION 8. Conto A good compensation package is important tomotivate the employees to increase the organizationalproductivity .o The lucrative compensation will also serve the need forattracting and retaining the best employees .o Unless compensation is provided no one will come andwork for the organization .o Thus , compensation helps in running an organizationeffectively and accomplishing its goals . 9. Conto Unless compensation is provided no one will come and workfor the organization .o Thus , compensation helps in running an organizationeffectively and accomplishing its goals .o Salary is just a part of the compensation system .o The employees have other psychological and selfactualization needs to fulfill , thus , compensations serves thepurpose .o The most competitive compensation will help theorganization to attract and sustain the best talentedemployees 10. Types of compensation Direct Compensationo Wageso Salarieso Commissions, Bonuses, Gainsharing, Profit Sharing Indirect Compensationo Pay for Time Not Worked (vacation, sick leave, holidays,o etc.)o Insurance Coverage (medical, dental, life, etc.)o Income Security (pensions and disability)o Services(education assistance, child care, recreation,discounts, etc.) 11. Salary slipo Pay slip is given monthly , with that particular months (Earning, Gross Earnings) and also (Deductions ,total Deductions) withtotal net pay.o This structure of pay slip would let us know how much we haveearned & how much it has been deducted category wise (basic,HRA ,LTA ,Medical,PF,ESI,ITetc)from our monthly income.o Pay slip is tabular representation of all salary/wage/compensationdetails. Every employer is bound to distribute the salary slipbefore disbursement of salary or on the day of issuing salary.o Salary slip format may vary from employer to employer. it showsall deductions, taxes etc.o Finally it shows the NET (ie. Take home salary )salary foremployee. 12. SALARY SLIP STRUCTURE Pay slip for the month of April 2012Emp. No. : L&T12 Name : Mr. Rane Days worked : 29INCOMEDEDUCTIONSBasic3176 .00Prov. Fund 301.00H.R.A 159.00 E.S.I.C 60.00 Prof. tax 60.00 Loan 0.00NET SALARY PAYABLE : 2912Conveyance 87.00 Advances 0.00Medical0.00Income tax 0.00Other allow.0.00 Transport0.00 Labour welfare 0.00GROSS SALARY : 3422TOTAL DEDUCT- 501.00 13. EMPLYOEES COMPENSATIONPACKAGESWage/ Salary:a) Dearness allowance(DA)b) House rent allowance(HRA)c) City Compensatory allowance (CCA)d) Transport allowance (TA) Fringe benefit. Perquisites Incentives Non-monetary benefits 14. Fringe benefitso Fringe benefits are compensations made to an employee beyondthe regular benefit of being paid for their work.o Some fringe benefits are fairly standard, such as offering a fewdays of sick time or paid vacation time.o Key executives in large companies might also enjoy fringe benefitslike use of time-share condominiums, paid continuingeducation, use of a company jet, use of a company creditcard, discounted or free health club memberships, and asignificant amount of paid vacation.o Most people who work full time in the US could probably not getalong without fringe benefits. For example, offering healthinsurance to employees, where the employer pays part of theinsurance is a typical example of fringe benefits. 15. Conto In fact, in fields where there is a high demand for workers, such asnursing and teaching, some unusual fringe benefits may be offered toattract employees.o A few unusual fringe benefits offered by school districts have been paidhousing, or use of private lakes for fishing.o More likely are paid incentives for joining a teaching staff such ashiring bonuses, offers to fund continuing education so teachers gethigher degrees and thus higher pay, or offering mentor programs fornew teachers.o Some companies also pay fringe benefits for those who work night orswing shifts. These fringe benefits may be in the nature of a 1030%increase of base pay for working a non-standard shift.o Blecher-has defined fringe benefits as any wage cost notdirectly connected with the employees productive effort, performance , service or sacrifice 16. Types of fringe benefitso For Employment Security :o For Health Protection:o For Old Age and Retirement:o For Personnel Identification, Participation andStimulation:o For Transport Facilitieso For Housing Facilitieso Eating Facilitieso For Child Care, etco The fringe benefits are categorized as follows:o a)Payment for Time Not worked:o b)Extra Pay for time Worked: 17. Features of fringe benefito Different from regular wages.o Useful but avoidable expenditure.o Not directly linked with efforto Beneficial to all employeeso Voluntary to character. 18. Fringe benefit in Indian scenarioo With the technological developments taking place at a higherrate, the salary packages are too increasing at a much higher rate.Pay packages in India have witnessed an increase of more than 14%in 2006 over last years salary packages.o The compensation package comprises of monetary and non-monetary benefits that includes salary, special allowances, houserent allowance, travel allowance, mobile allowance, employee stockoptions, club memberships, accommodations, retirement benefitsand other benefits.o Globalization is being considered as the cause for such salary hikes.The establishment of multi national companies and privatizationhas led the Indian industry to witness higher salary package. 19. Conto With the immense competition of attracting and retainingtalented human resource, compensation package is theonly motivation factor available with the organizationsbe it Indian origin organizations or foreign-ownedmultinationals.o With the high attrition rate organizations are increasingtheir salary packages to attract and retain talentedhuman resource.o In the race, India has begged first position followed byLithuania and China. 20. Performance linked incentivesA Performance Linked Incentive (PLI) is a form of paymentfrom an employer to an employee, which is directly related tothe performance output of an employee and which may bespecified in an employment contract.PLI may either be open ended (does not have a fixed ceiling) orclose ended (has an upper ceiling which is normally stipulatedin the employment contract)Open ended incentives are normally applicable revenuegenerating activities (e.g., Sales) and Close ended incentivesare associated to support functions (e.g., Operation, HumanResources, Administration etc.) 21. Meaning of Incentives Planso An incentive program is a formal scheme used to promote orencourage specific actions or behavior by a specific group ofpeople during a defined period of time.o Incentive programs are particularly used in businessmanagement to motivate employees, and in sales to attractand retain customers.o Scientific literature also refers to this concept as pay forperformanceo According to G. K. Suri, a wage incentives scheme isessentially a managerial device of increasing a workersproductivity. Simultaneously, it is a method of sharing gains inproductivity with workers by rewarding them financially fortheir increased rate of output. 22. Features of good incentives planso Simplicity :o Promote initiative :o Definiteness and Flexibility :o Prompt payment :o Properly communicated to employees :o Wide coverage and equitable :o Guarantee of minimum wage payment :o Justice to employer and employees :o Acceptable to workers :o Grievance procedure : 23. Types of incentives plans(A)Individual Incentives Planso Rowan plano Hasely Plano Emersons Plano Tyalor Differentiate Rate Systemo Gnatt task and Bonus Plano Bedeaux Point premium plano Scaion plano Haynes Plano Merrics Multiple Piece Rate plan(B)Group Incentives planso Profit sharingo Bonus payment