Compensation

Determining Pay Rates

Employee compensation

All forms of pay or rewards going to employees and arising from their employment.

Direct financial payments

Pay in the form of wages, salaries, incentives, commissions, and bonuses.

Indirect financial payments

Pay in the form of financial benefits such as insurance.

Compensation scenario in India

Wage-related legislations

Minimum Wages Act, 1948

Payment of Wages Act, 1936

Equal Remuneration Act, 1976

Other legislations covering bonus, retirement

Benefits and social security legislations

Government employees - Salaries fixed according to recommendations of pay commission

States free to adopt different structure

Wage boards to determine salaries of specific occupational groups

Compensation scenario in India

Companies Act, 1956

Employee Stock Option Scheme (ESOS)

and Employee Stock Purchase Plan

(ESPP)

Minimum Wage in India

Compensation scenario in India

Social Security and other legislations

Employee Provident Fund Act

Employees State Insurance Act

Payment of Bonus Act

Payment of Gratuity Act

Compensation scenario in India

Unorganized Workers Social Security Act,

2008

Welfare schemes

Rashtriya Swasthya Bima Yojana

Aam Admi Bima Yojana

Indira Gandhi Old Age Pension Scheme

Compensation scenario in India

Competitive Strategy, Corporate

Policies and Compensation

Aligned reward strategy

Create a bundle of rewards

Produce employee behaviors that firm

needs to support and achieve its

competitive strategy

The IBM Way

Pay to Market

Fewer, Broadband jobs

Let managers manage

Incentivize employees

Equity and Its impact on pay rate

People are motivated to maintain balance

between what they perceive as their inputs or

contributions and their rewards

in case a person perceives inequity, a tension

will develop and person will be motivated to

reduce or eliminate the tension and perceived

inequity

Equity and Its impact on pay rate Managers to address four forms of equity

External jobs pay rate in comparison to other companies Salary Surveys

Internal jobs pay rate in comparison to other jobs within the company Job Analysis and Job Evaluation

Individual jobs pay rate in comparison to same or similar jobs performance appraisal and incentive pay

Procedural perceived fairness of processes and procedures used to make decisions regarding allocation of

pay communications, grievance mechanisms and employees participation

Addressing equity issues

Salary surveys

Job analysis and job evaluation

Performance appraisal and incentive pay

Employee participation in developing

companys pay plan

Maintain confidentiality over pay rates

Equity and Its impact on pay rate

Overpaying people can backfire too