Compensation Management

Compensation Management
• To be presented by:

Kehar Khan Khoso

MBA, LLB, M.Phil (Eco)
Deputy Director (HR)
University of Balochistan
 Marks Distribution
• Quizzes 10
• Projects/presentations 10
• Assignments 05
• Attendance 05
• Midterm Exam 30
• Final Exam 40
Total Marks 100
 Question…

Why in the same setup/organization

one gets higher salary, while the other
(of the same rank) gets lower pay?
 Compensation Management
• What is Compensation?
It is comprised of all the extrinsic rewards
that employees receive in exchange for
their work.
Example:
• Base wage or salary
• Bonuses
• Any other incentives/benefits
 Compensation Management
• What is Compensation System?

It is a total reward system which includes

both monetary and Non-monetary
compensation
 Compensation Management
Cont..
Compensation Management

It is the art to manage and determine the

worth of an employee against the job
rendered by him/her.
 Compensation Management
Cont..

Is compensation only related to

money?
 Compensation Management
Cont..
• What includes in compensation?
Non-Monetary Monetary

Job satisfaction Salary/Pay

Informal recognition Perks/Incentives
Achievement Formal Recog:
Personal Growth Promotion
Status Social relations
 Compensation Policies
Policies must deal with the following
issues:

1.Minimum and maximum levels of pay

keeping into consideration:
• the worth of the job to organization
• the organization’s ability to pay
• Government regulations
• Union influences
• Market pressures
Compensation Policies Cont..
2. General relationships among levels of
pay between:

• Senior management and operating

management.
• Operative employees and Supervisors.
Compensation Policies Cont..
3. The division of total compensation
dollar ( ie, what portion goes into:

Base pay
Incentive programs
Other benefits
 Important terms
• Pay
Pay is a statement of employee’s worth by
an employer.

Pay refers to the actual dollars employees

receive in exchange for their work.
 Important terms Cont..
• Base wage or salary.
Hourly, weekly or monthly pay that
employees receive for their work.

Example:
• Hourly wage
• Weekly or monthly salary
• Overtime
 Important terms Cont..
• Incentives
Rewards offered in addition to the salary
and often directly related to salary.
Example:
• Bonuses
• Commissions
• Profit sharing
• Piece work rate
 Important terms Cont..
• Benefits
Rewards received by an employee as a
result of their employment and his/ her
position with organization.
Example:
• Paid vacations
• Car/fuel facility
• Health/Life insurance
• Pensions