pmrs - salary & wages intro - dhaval
TRANSCRIPT
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 1/49
& SCHEMES INWAGES
Presented By : Kanchan Sharma , Richa Agrawal , Dhaval Jain
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 2/49
Employee Compensation :
Employee compensation refers to all forms of pay accruing toemployees and arising from their employment.
It consists of both direct financial payments (wages, salaries,incentives, commissions, bonus) and indirect financial
payments (club membership, insurance etc) Direct financial payments made on the basis of time or
performance
Time based pay can be hourly or daily (blue collared workers)or monthly as salary (managers)
Performance based pay can be piecework or commissions Most pay structures today are a combination of time based
pay and incentives (based on productivity, sales, profits orcost reduction efforts)
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 3/49
Factors Influencing Compensation :
Internal Factors :
Compensation policy of organization
Worth of job
Employees relative worth
External Factors :
Labour Market rates
Cost of living
Collective Bargaining
Govt Legislations
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 4/49
The compensation structure of an organization addresses 4forms of equity:
External equity ² refers to how a job·s pay rate in onecompany compares with other companies
Internal equity ² refers to how fair a job·s pay rate iscompared to other jobs within the same company
Individual equity ² refers to the fairness of an individual·spay as compared to the pay of coworkers in same or
similar jobs based on each individual·s performance Procedural equity ² refers to perceived fairness in
processes and procedures used in allocating pay
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 5/49
ESTABLISHING PAY RATES :
Conduct a salary survey of what other employers arepaying for comparable jobs (external equity) to pricebenchmark jobs
Conduct job evaluation (internal equity) to determineworth of all jobs in relation to benchmark jobs
Group similar jobs into pay grades (consists of jobshaving equal difficulty or equal importance)
Price each pay grade
Fine tune pay rates which involves
Developing pay ranges
Correcting out of line rates
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 6/49
Purpose :
Attracting talented resources- a competitive pay structure can help
to recruit top performers and good resources for the organization
Retaining and motivating employees- a fair and rewarding paystructure serves as a positive reinforcement for higher performance
levels in the organization
Financial management- a rational compensation system helps in
reducing turnover and ensuring better ROI. Wage bill can be kept
reasonably low by a judicious salary administration Legal requirements- are in place to ensure fair pay to employees
and organizations operating in several countries, states need to
comply with laws relating to compensation
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 7/49
Concepts : Types of Wages
MINIMUM WAGE- is the amount of remuneration that is just sufficient toenable an average worker to fulfill all his obligations. It is fixed by the governmentand enforced by law with respect to all scheduled employments and is revised atleast once in 5 years based on CPI
FAIR WAGE- In a narrow sense wage is fair if it is equal to the rate prevailing
in the same trade and in the neighborhood for similar work and in a wider sense itis fair if it is equal to predominant rate for similar work throughout the countryand for trades in general. Fair wage is between minimum and living wage andmust consider the capacity of organization to pay, productivity of labor and reflectthe level of national income and its distribution
LIVING WAGE- is higher than fair wage and is described as one which enablesthe wage earner to provide for himself and his family not only the bare essentials
of food, clothing and shelter, but also a measure of frugal comfort includingeducation for children, protection against ill-health, requirements of essentialsocial needs and a measure of insurance against misfortunes including old age
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 8/49
Elements of Pay :
Base Salary
Short-term Incentives
Long-term Incentives
Deferred Compensation/Capital Accumulation
Non-monetary incentives and benefits
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 9/49
BASIC WAGE PLANS :
SKILL BASED PAY-
COMPETENCY BASED PAY-
BROADBANDING
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 10/49
TYPES OF INCENTIVE PLANS :
Short Term Plans : based on time rate or piece rate
HALSEY PLAN
ROWAN PLAN
BARTH SYSTEM
POINT RATING SYSTEM
Long Term Plans :
ANNUAL BONUS
PROFIT SHARING GAIN SHARING
EMPLOYEE STOCK OPTION PLANS
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 11/49
NON-MONETARY INCENTIVES :
Recognizing an employees performance. It can be a social or
informal recognition but it should boost the employees self-esteem
an job satisfaction
Achallenging assignment would assure an employee of themanagements confidence and expectations of the employees
capabilities
Giving additional responsibility to an employee also motivates the
employee
Rewarding the employee for his performance through free gifts orfree vacations
Awards, as a form of incentive, for exceptional performance and
valuable contributions will add to the social esteem of an employee
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 12/49
INCENTIVES SCHEMES
An incentive program is a
formal scheme to promote
or encourage specific action
or behavior by a specific
group of people during a
defined period of time.
It is an employeemotivational scheme
designed to encourage
commitment to increase
productivity.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 13/49
TYPES OF INCENTIVES OF SCHEMES
Incentives schemes can be classified into
A) Individual incentives schemes:-
Measured day work system.
Payment by results system.
B) Group incentive system.
C) Plant wide /Company wide incentive system. D) Financial incentives.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 14/49
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 15/49
MEASURED DAY WORKED SYSTEM
Under this system, an employee have to maintain a
target level of output in order to secure a stable
higher wage rate.
If employee performance falls below target, their
wage rate will be downgraded.
It suits organizations where a high , steady and
predictable level of performance is required ratherthan highest individual performance.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 16/49
Employees who fulfills specified target level of output
will secure higher wage rate.
Employee if not meeting target level for a period
1-First given warning and
2-If again the same is repeated the basic wage rateis reduced.
Two levels of wages:-
1-An agreed higher level of wages for a specific
higher level of consistent performance.
2-Basic wage for lower levels of performance.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 17/49
PAYMENT BY RESULT
It is the continuous relation between money and
results.
It gives different results with different wages. The schemes are modified to accommodate the
modern day requirement that the worker are
guaranteed a minimum flat wage rate.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 18/49
GROUP INCENTIVE SCHEMES
Used to increase social cohesiveness of staff,
foster cooperation and team effort
Free-Riding Effect Group incentives is restored to, where the
enhanced earnings of the group are distributed
amongst the members in an equitable manner
agreed upon earlier.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 19/49
Rewards employees for their collective performance
Use has increased in industry
2 types Team - based or small group
Gain sharing
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 20/49
COMPANY BONUS SCHEMES
Many company likes to retain the principle
of motivation by financial incentives.
U
ltimate objective is to enhance the over all productivity of the plant or company.
This calls for working in an integrated
manner with cooperation from all the
departments of a company
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 21/49
This cooperation is to be achieved through the use
of financial incentives.
A suitable measure of productivity established by
agreement between the management and the
workers.
This is used to distribute the labor cost savings
amongst all the workers of the company.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 22/49
TYPES OF COMPANY INCENTIVES
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 23/49
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 24/49
Ownership
---Stock optionAn employee ownership plan that gives
employees the opportunity to buy
the company·s stock at a previously fixed
price.
Employee stock ownership plan (ESOP).
---An employee ownership plan that provides
employers certain tax and financialadvantages when stock is granted to
employees.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 25/49
FINANCIAL INCENTIVES
Much space for labor-management bargaining.
May perpetuate old technologies and practices.
May be difficult for the employees to comprehend.
Quality of output may become a judgmental issue.
Problems in planning of production.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 26/49
EXAMPLES OF INCENTIVE PLANSHalsey Plan
Rowan Plan
Barth Plan Time-Based
Bedaux Plan
Taylor·s
Differential Piece
Rate Output-Based
Merrick
Gantt task
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 27/49
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 28/49
CONDITION FOR EFFECTIVE
INCENTIVES PLANS
Plan is clearly communicated.
Plan is understood.
Rewards are easy to calculate.
Employees participate in administering the plan.
Employees believe they are being treated fairly.
Employees believe they can trust the company and that
they have security. Rewards are awarded as soon as possible after the
desired performance.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 29/49
Bonus schemes are designed to motivate employeesby rewarding them for achieving particular targets orstandards previously agreed with the employer.
These payments are in addition to basic salary and
are usually paid as a cash reward, although someschemes may award shares as part of the bonuspackage
BONUS SCHEMES
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 30/49
ADVANTAGES
They allow the company to focus efforton areas that can maximize performanceand profit
A good scheme can help to recruit,motivate and retain staff
They can support other importantcompany objectives, such as promotingeffective team working or reducingsickness absence
Payment is not consolidated into basesalary, and is therefore not perpetuatedregardless of future performance
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 31/49
They can raise management andemployee awareness andrecognition of good
individual/group work
They can increase employeeunderstanding, involvement and
commitment to the business
Schemes can be designed to beflexible, easily administered and
to more than cover the costs.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 32/49
DISADVANTAGES
Forcing employees to concentrate onthe performance targets can stifletheir creativity and innovation
Not all jobs can show a clear linkbetween employee performance andproductivity/profit gains, and itmight be difficult to design aneffective bonus scheme for these
posts, for example some employeesworking in research & development
Measurement of performance can bedifficult and arbitrary
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 33/49
TYPES
of BONUS SCHEMES
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 34/49
CURRENT PROFIT SHARING
One very basic type of bonus program is current profit sharing.
A company sets aside a predetermined amount,
usually between 2.5 and 7.5 percent of payroll butsometimes as high as 15 percent, as a bonus on topof base salary.
Such bonuses depend on company profits, either theentire company's profitability or from a given line
of business.
Sometimes the bonuses are given across the board,and sometimes they are given in larger percentagesof compensation the more someone makes.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 35/49
The purpose of profit sharing bonuses is to encourageemployees to understand how their work affects thecompany's performance and to improve the company'sprofitability.
Learn how your company makes money and how yourposition can help it make more.
The annual report and other statements will give an ideaof how the company is performing.
It will also make you look good to your manager if you
show an interest in the company's performance.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 36/49
GAIN SHARING
This type of bonus program is most common in manufacturing plants and isdesigned to reward productivity and improved product quality.
Gain sharing works best when employees become responsible for production
quantity and quality and are encouraged to improve the way the product ismade.
This program reflects a philosophy that employees know their job best.
Gain sharing programs pay out bonuses for statistical improvements inproduction and quality on a quarterly or sometimes monthly basis, providinga sense of excitement for participants.
These programs are often very successful, transforming the manufacturingplant into a center of employee commitment.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 37/49
SPOT BONUS AWARD
Some companies reward employees on the spot forachievements that deserve special recognition.
Spot bonus awards are typically $50 and up and can bemade by your immediate supervisor and any higher-level person or peer in your company.
You can get these for just being extra helpful. The math
is in employees' favor: companies with spot bonusprograms offer approximately 1 percent of payroll andexpect to give out such bonuses to 25 percent of theemployees eligible for them, allowing them to earn morethan one instant bonus in a year.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 38/49
NONCASH BONUS
Although the wrong kind of "employee of themonth" concept can be cheesy, smarmy, andcondescending, it's all in the execution.
A well designed noncash bonus program caninstill pride and improve employee morale.
Employees who have done a great job shouldhave to come to the front of a crowded room ata special ceremony, as if they are receiving anAcademy Award.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 39/49
The certificate or trophy should bethoughtfully and cleverly designed, andappropriate to the occasion. These awardsare sometimes coupled with a token
tangible award, such as a gift certificate, abonus day off, or a great parking space.
You know your company has a goodnoncash bonus program if these awards are
coveted, and if people who receive themdisplay them proudly at their desks or intheir homes. Moreover, this type of awardmay help you get a promotion or a new job,so include it on your resume.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 40/49
SIGN-ON BONUS
No longer just for star athletes, sign-on bonuses
have become commonplace. Their usage nowextends to nearly all level of employees in all walks
of life, especially when unemployment is low andtop talent is hard to find.
Given to new employees who have just joined the
company, this award serves two purposes: toestablish goodwill and to buy out any compensation"left on the table" from a previous employer.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 41/49
The second purpose is important toremember. Before joining a new company,be sure to account for every kind ofcompensation program in which youparticipate. If you are expecting a bonus ina few months, ask your new employer to buyyou out of it. If you have any stock options,particularly options that are in the money,ask the employer to buy them out (either incash or new stock options).
Don't forget to include profit-sharing bonusesor defined contributions match or anEmployee Stock Options Program (ESOP))made to your retirement account. Remember,a sign-on bonus, at a minimum, is to keepyou whole as you trade one set ofcompensation programs for a new one.
Medium to large signing bonuses may bepaid over a period up to a year to protectthe company's interests.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 42/49
Mission bonus (also known as a task
bonus or a milestone bonus) T ask bonuses are given to a team of employees for achieving a milestone or
for completing an important project.
Usually these bonuses are offered sparingly, but they have been used more
frequently in software and hardware development to encourage meeting tightdeadlines.
Sometimes these programs incorporate a quality measure to guard against too
much focus on speed.
Mission bonuses are in addition to any other compensation program in which
you participate and can be significant (one month's salary is not uncommon,
and certainly no less than one week). Again, this award is for the kind of
achievement that deserves mention in your resume
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 43/49
REFERRAL BONUS
In hot job markets, it can be difficult for employers
to find qualified personnel. When talent is scarce,
many employers retain recruiters to find candidates,
typically paying the recruiter 20 to 30 percent ofthe new hire's first-year pay.
Many employers would rather not pay this fee, andinstead offer referral bonuses to employees for
recommending friends and acquaintances.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 44/49
Employers are comfortable in hiringfriends of employees because employeesare unlikely to recommend people whowill make them look bad. So don't beafraid to invite your friend to work at
your company.
Referral bonuses are typically hundredsto thousands of dollars and normallydepend on the level of the new hire.Some firms pay as much as $10,000 to
$20,000 if you introduce a new seniorperson to the firm. So if your former bossis a good fit for an opening, it might beworthwhile to let your new companyknow.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 45/49
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 46/49
The bonus lets employees know their
employer wants them to complete
the project or, in the case of amerger, to stay until a specified
date so that critical activities can
continue without disruption.
Retention bonuses are usually about
10 to 15 percent of salary.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 47/49
HOLIDAY BONUS
It range from small gifts (for example, cash or the
ubiquitous holiday turkey) to one month's salary.
The amount is usually dictated by the company's
practices. If you do receive one month's salary, countit as part of your salary if you look for work
elsewhere.
This practice is usually referred to as a "13-month
salary," and is not a true bonus since noperformance is required to receive it.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 48/49
SALES COMMISSION
Sales commissions are awarded to salespeople for selling
These awards are paid out as a percentage of salesvolume.
In some cases, commission percentages can increase withhigher sales volume. In fewer cases, the percentage candecrease.
It all depends on the scheme. Sales commissions aresupposed to be a significant source of income for salesemployees, making up at least 50 percent of total cashcompensation.
8/9/2019 PMRS - Salary & Wages Intro - Dhaval
http://slidepdf.com/reader/full/pmrs-salary-wages-intro-dhaval 49/49