presented by:-

Anukampa Shekhawat
• Compensation Management is a systematic approach to provide

monetary value to employees in exchange for

work performed.

• Compensation is what employees receive in

exchange for their contribution to the organization.

• Compensation is the remuneration received by an employee in return for

his/her contribution to the organization.

 It is an organized practice that involves balancing the work-
employee relation by providing monetary and non-monetary
benefits to employees.
 According to Robbins “Compensation management is a process
of determining cost effective pay structure, designed to attract
and retain, provide an incentive to work hard, and structures to
ensure that pay levels are perceived as fair”.
 Cascio has defined compensation as "Compensation includes
direct cash payments, indirect payments in the form of employee
benefits and incentives to motivate employees to strive for higher
levels of productivity”.
 Compensation management, also known as wage and salary
administration, remuneration management, or reward
Management.
1. Base pay: it is the basic compensation an employee gets,
usually as a wage or salary.

2. Variable pay: it is the compensation that is linked directly to

performance accomplishments (bonuses, incentives, stock
options).

3. Benefits: these are indirect rewards given to an employee or

group of employees as a part of organizational
membership (health insurance, vacation pay,
retirement pension, etc).
 Attract and Retain qualified employees.
 Increase or maintain morale/satisfaction.
 Reduce turnover and encourage company loyalty.
 Provide social status to employees.
 Ensure equity.
 Reward and encourage peak performance.
 Create a healthy competition among employees.
 Provide better quality of life.
 Comply With Legal Regulations.
Improve efficiency and results produced by
employees.
Helps in running an organization effectively and
accomplishing its goals.
Increases self-confidence.
Every employees will give their best to the
organization.
Job satisfaction and Motivation.
 Low Absenteeism.

 Minimizes the labor turnover.

 Retain the best talent.

 Help in organization’s success and prosperity.

 A rational compensation system will minimize the complaints

from the employees.

 Help management in complying with the various labor acts.
 Compensation can be viewed as -
a system of rewards that motivate employees

to perform.
a tool used by organizations to foster the

values, culture and the behavior they require.

an instrument that enables organizations to

achieve their business objectives.

 Compensation is a primary motivator for employees. People look

for jobs that not only suit their creativity and talents, but

compensate them—both in terms of salary and other benefits.

 Compensation is also one of the fastest changing fields in Human

Resources, as companies continue to investigate various ways of

rewarding employees for performance.

 Internal factors

 Business strategy
 Corporate culture and philosophy
 Performance appraisal
 employee himself or herself
 Costs/resource availability

 External factors

 Competition
 Labor Market
 Cost of Living
 Labor Unions
 Globalization
 Government Legislations
 Minimum Wages Act, 1948
 Payment of Wages Act , 1936
 Employees Provident Fund Act , 1952
 Employees State Insurance Act, 1948
 Employees Pension Scheme, 1955
 The Workmen’s Compensation Act, 1923
 The Payment of Bonus Act , 1965
 Payment of Gratuity Act,1972