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Unit 8,9,10. Compensation, Rewards and Benefits
Unit 8,9,10. Compensation, Rewards and Benefits
Quantitative Methods
Point rating method
Factor comparison method
Techniques are:
Relative Ranking: Representative job is identified, compared with each
job and then ranked
Paired Comparison: Each job is compared with every other job in pairs
Single Factor Ranking: Single most important dimension of a job is
identified and compared with single most important dimension of other
jobs
Financial Management
Legal requirements
Minimum Wage: It is the amount of remuneration
which is just sufficient to enable an average worker
to fulfill all his obligations
Fair Wage: Workers performing work of equal skill,
difficulty or unpleasantness should receive equal or
fair wages
Living Wage: Enabling the male 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 including education for
the children, protection against ill-health,
requirements of essential social needs and a measure
of insurance against misfortunes
Time wage plan: Employees are paid for the period
of time for which they have been employed
Piece wage plan: Workers are paid for the work
done
Skill based pay: Employees are compensated for
their job related skills
Competency based pay: Employee is compensated
for their knowledge, skills and behavior he/she
brings to the job
Broad-banding: It reduces the number of salary
levels into broad salary bands having a fixed
minimum and maximum which overlap with other
bands
Variable compensation programs are designed to pay
employees in accordance with their performance and not in
accordance with their position in the organizational hierarchy.
They differentiate between performers and non-performers
External Factors
Labor Market Conditions
Area Pay rates
Cost of Living
Collective bargaining
Compensation Strategy
It is the compensation of employees in ways that enhance motivation and
growth, while at the same time aligning their efforts with the objectives of
the organization
Pay grades: They are groups of jobs within a particular class that
are paid the same rate
Red circle Rates: They are payment rates above maximum of the
pay range
Administering benefits
Food Coupons
Flexible Time
Transportation Benefits
Retirement Programs
Work-Life balance
Credit Unions
Educational assistance
It is a provision and a benefit offered by an organization to its
employees to stay away from work for genuine reasons with prior
approval of the authorities. The kinds are:
Casual Leave
On-duty special Leave
Earned Leave
Vacation
Half pay Leave
Maternity Leave
Paternity Leave
Sick Leave
Sabbatical/Study Leave
Incentives are rewards to an employee, over and
above his/her base wage or salary in recognition of
his/her performance and contribution
A challenging assignment
Wages= 5 *√ ( 8 * 6) = Rs.34.5
Task bonus system: The task of each group member
is pre-determined and has to be achieved to earn a
bonus above standard pay
Profit Sharing
Stock Options
ESOPs
Base Salary
Short-term incentives
Long-term incentives
Benefits
Perks
The incentive plan should be:
Linked to employee performance
Communicated to the employees clearly
Proportional to the contribution of each employee
Minimally affected by external factors
Flexible enough to accommodate changes in external factors
Provide a challenge to the employees
Also benefit the management
Only add value on the bottom-line of the company
Include both monetary and non-monetary incentives for
employees
Possible to measure the value of the non-monetary incentive
plans
Money is not a motivator
Rewards punish
If an employee has not worked for all the working days in an accounting
year, the minimum bonus payable to him for that year shall be
proportionally reduced
Bonus should not exceed 20% of the salary or wages of the employees
The Payment of Wages Act passed in the year 1936 was
enforced in March, 1937 on the recommendations of the
Royal Committee to facilitate regular and prompt payment of
wages to the workers and to prevent the exploitation of wage
earner by prohibiting arbitrary fines and deductions from his
wages.
The Act came into force from 16th September 1972. As per the Act,
‘Gratuity’ will be payable to any salaried employee, on the termination of
his employment after he has rendered continuous service for not less than
five years (A) on his superannuation , on his retirement of resignation or
death or disablement due to death or disease.