Download - compensation and benefits
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It is all about People
“Take our 20 best people and virtually overnight we become a mediocre company.”
- Bill Gates, Microsoft
“Take my assets, leave my people, and in five years I will have it all back.”
- Alfred Sloan, General Motors
Published by Lecturesheet.iiuc28a9.com
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We will cover the following:– Remuneration & its Components
– Compensation Administration Process
– Wage & salary Administration
– Different types of Incentives and Incentives Plan
– International Compensation.
• Wage, Salary and Wage, Salary and Reward AdministrationReward Administration
• Wage, Salary and Wage, Salary and Reward AdministrationReward Administration
Human Resource Management
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Building Blocks of Direct Compensation1. The Foundation:
A Compensation Philosophy
2.The Basics: Elements of Base Pay Administration
3. The Glue: Pay for Performance Programs
4. The Future: Effective Compensation Management
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The Organizational Reward System Results from employment with the organization Includes all forms of financial returns and tangible services &
benefits employees receive as part of employment relationship:
Intrinsic ExtrinsicAchievement Formal Recognition
Feelings of accomplishment Fringe Benefits
Informal Recognition Incentive Payments
Job Satisfaction Pay
Personal growth Promotion
Status Social Relationships
Work Environment
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Remuneration & Its Components
Hourly Hourly and and
monthly monthly Rated Rated Wages Wages
and and SalariesSalaries
Hourly Hourly and and
monthly monthly Rated Rated Wages Wages
and and SalariesSalaries
Direct Indirect
RemunerationRemunerationRemunerationRemuneration
FinancialFinancialFinancialFinancial Non FinancialNon FinancialNon FinancialNon Financial
Incentives Incentives
Individual Individual PlansPlans
Group Group PlansPlans
Incentives Incentives
Individual Individual PlansPlans
Group Group PlansPlans
Fringe Fringe BenefitsBenefits
P.F, P.F, Gratuity, Gratuity, Medical Medical
Care, Care, Accident Accident
Relief, Relief, Health and Health and
Group Group insuranceinsurance
Fringe Fringe BenefitsBenefits
P.F, P.F, Gratuity, Gratuity, Medical Medical
Care, Care, Accident Accident
Relief, Relief, Health and Health and
Group Group insuranceinsurance
PerquisitesPerquisites
Company Company Car, Club Car, Club
Membership, Membership, Paid Paid
Holidays, Holidays, Furnished Furnished
House, Stock House, Stock option option
scheme, etcscheme, etc
PerquisitesPerquisites
Company Company Car, Club Car, Club
Membership, Membership, Paid Paid
Holidays, Holidays, Furnished Furnished
House, Stock House, Stock option option
scheme, etcscheme, etc
Job ContentJob Content
Challenging job, Challenging job, Responsibilities, Responsibilities,
Recognition, Recognition, Growth Growth
prospects, prospects, Supervision, Supervision,
Working Working conditions, Job conditions, Job
sharing, etc.sharing, etc.
Job ContentJob Content
Challenging job, Challenging job, Responsibilities, Responsibilities,
Recognition, Recognition, Growth Growth
prospects, prospects, Supervision, Supervision,
Working Working conditions, Job conditions, Job
sharing, etc.sharing, etc.
Definition: Remuneration' is a general term covering the monetary and related entitlements of employees - paid by employers in return for the work of employees.
Components:
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Compensation Administration Process
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Job Analysis
It contains two parts: Job Description & Job Specification. This can help to know about the duties and responsibilities will be covered by the specific job and also the quality of the people engaged in that job. This is necessary to set a rationale pay structure for a specific position.
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Job Evaluation
FactorFactorComparisonComparison
FactorFactorComparisonComparison
RankingRankingRankingRanking ClassificationClassificationClassificationClassification
PointPointMethodMethod
PointPointMethodMethod
Job Job Evaluation Evaluation MethodsMethods
Job Job Evaluation Evaluation MethodsMethods
Job Evaluation: The systematic determination of the relative worth of jobs within an organization.
Methods of Job Evaluation
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Developing Pay Surveys
Select Employers with Comparable JobsSelect Employers with Comparable JobsSelect Employers with Comparable JobsSelect Employers with Comparable Jobs
Determine Jobs to be SurveyedDetermine Jobs to be SurveyedDetermine Jobs to be SurveyedDetermine Jobs to be Surveyed
Decide What Information Is NeededDecide What Information Is NeededDecide What Information Is NeededDecide What Information Is Needed
Conduct SurveyConduct SurveyConduct SurveyConduct Survey
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Pay Structures Common Pay Structures
– Hourly and salaried– Office, plant, technical, professional, managerial– Clerical, information technology, professional,
supervisory, management, and executive Factors that affect Remuneration/Pay Structure:
– External: • Labor market• Cost of Living• Society• The economy• Geographic Location
– Internal Factor:• Business Strategy• Job Evaluation & Performance Appraisal• The employee• Kind of business
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Wage & Salary Wages: Wages are compensation. This includes
basic wages, allowances, bonuses etc. On the employers’ points of view, wages form that part of cost of production which is attributed as compensation paid to labor. Wages are paid in the form of time rate or piece rate to the workers, who are directly involved in the production or commercial activities.
Salary: This is compensation paid to the indirect labor in the form of cash. Indirect labor involves supervisors, managers and supporting staff like office assistants, clerks, etc. Salaries are paid in the form of time rate, mostly on monthly basis.
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Wage & Salary On the basis of the employee needs and ability of the
organization, there are various kinds of wages. Wages are generally four types:– Subsistence wages– Minimum Wages– Fair Wages– Living Wages
Subsistence wages: This is level of wage below the minimum level which can lead inhuman life to the employees.
Minimum Wages: This is a wage level fixed by government which is considered adequate, taking into account the cost of living. All the organizations are bound to follow this direction so that no employee is paid a wage less than the minimum wage fixed by government irrespective of grade, class or nature of work.
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Wage & Salary Fair Wages: This is fixed by employer. This level
of wage varies from industry to industry. The main criteria are the capacity of payment. Fair wage is a wage above the minimum wage but below the living wage.
Living Wages: Living wage is one which should enable the earner to provide for himself and his family not only the bare essentials of food, clothing and shelter, but a measure of frugal comfort, including education for his children, protection against ill health, requirement of essential social needs and a measure of insurance against the more important misfortune including old age.
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Incentive CompensationIncentives can be added to the basic pay structure to
provide rewards for performance. It may be 3 types:
1. Individual Incentives include– merit pay plans (annual increase, based on
performance)
– piecework plans (pay based on number of units produced typically in a specified time period.)
– time-savings bonuses and commissions
2. Group Incentives : Incentives can be offered to groups, rather than individuals, when employees' tasks are interdependent and require cooperation.
3. Plant-wide Incentives: Direct employee efforts toward organizational goals (such as cost reduction)
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4. The Future: Effective Compensation Management
S = Strategically-based
M = Market-driven
A = Analyze Thoroughly
R = Reward Results
T = Transformation
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Compensation & Benefits Package
Base Salary - the fixed amount to be paid Incentives - additional variable pay based on performance
against objectives Protectives - programs which insure employees against loss Capital Accumulation – programs that provide the opportunity
to establish a personal estate (equity /stock plan) Retirement Income - plans that defer income for services
rendered to a later payment date Perquisites - company paid allowances beyond direct
pay(Housing,Car, Leave travel, etc.) Paid Time Off - vacations, holidays, maternity leave, etc
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The C&B Cycle
Operationalizing C&B
Corporation’s Strategy on C&B
COMPENSATION POLICY/DESIGN• Policies Designed/Reviewed•Compensation Structure/Design Issues•Annual/Cyclical actions (TIR/Bonus/SPP)•Employee Communication strategy
IMPERATIVES•Top Management Inputs•Market Drivers•HR Strategy
Tracking C&B Info - GEMS, HRIS
Benefits Administration
Gauging employee satisfaction
Employee getting the C&B package
PayrollHR OPERATIONS
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Fixed Cash
Base Salary
Housing Assistance/HRA
Conveyance Allowance (Q/R/S)
Leave Travel Allowance
Medical Allowance
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Benefits Company Housing
Company Car (grades T & above)
Furnishing program
Housing Loan Personal loans Car Loan Tuition Refund Plan Professional Body Membership
Retrials or Parachute Payments – Provident Fund – Gratuity – Superannuation (for certain grades)
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Variable Pay
Individual Performance Award/Annual Bonus
Sales Incentive Plans
Golden Handcuffs
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EMPLOYEE COMMUNICATION - taking C&B to the people
During all C&B actions (e.g., Annual Salary Increase letters , SPP roll-out)
Through the HR web-site
Through online addressal of employee queries– payroll & benefits related (HR Ops)
– policy related (Regional HR/Compensation Unit)
– through supervisors (queries of the type - “how does my salary increase stack-up vis-à-vis my peers ?”)