Compensation management

SAURABH JAIN

COMPENSATION MANAGEMENT

• Objective .• Definition. • An Integral Part of Human Resource

Management.

TYPES OF COMPENSATION

• Direct• Indirect• Variable• Executive.

TRENDS IN INDIA

• Compensation trends in India changed with liberalization in 1991.

• Government was the biggest job creator• Guaranteed pay determined by

agreement between employee unions and Government

• Private sectors made government pay scales as benchmarks

• More fringe benefits

CURRENT TRENDS

Factors that influenced compensation post liberalization Increase in productivity gains Fast growth in real wages Faster GDP growth IT and Outsourcing services Average salary increases over 2005-06 ranged

from 10% to 40%

FACTORS DEVISING PAY STRUCTURE

• Job evaluation.• What must be paid to attract right

people• Affordability of the organization• Requirements to meet organizational

goals• It must have 2 components- base rate

and scope for increasing base rate.

THE CONCEPT OF WAGE AND SALARY ADMINISTRATION

Compensation administration.The principles governing compensation

administration.• a)Maintaining equity.• b)Maintaining competitiveness.• c)Matching employee expectations.• e)Devising a most efficient system.• g)Maintaining industrial relations and

harmony.

THE PURPOSE OF WAGE AND SALARY ADMINISTRATION.

Attracting a talented resources.Retaining and motivating

employees.Financial management.Legal requirements.

CONCEPTS OF DIFFERENT WAGES.

Minimum wage (The six norms).Fair wage .Living wage.

BASIC WAGE PLANS

Time wage plan.Piece wage plan.Skill-based wage plan.Competency based pay.Broad banding.

Types Of Incentive Plans

Short Term Plans

Long term Plans

Halsey Plan

Rowan Plan

Barth System

Point Rating system

Progressive Bonus

Annual Bonus

Profit Sharing

Gain Sharing

Employee Stock Option

NON MONETARY INCENTIVE

• Recognisation• Assigning challenging assignment.• Giving additional responsibility.• Giving non cash rewards.• Awards for exceptional

performance and valuable contribution.

GUIDELINES

• Linked to employee’s performance• Communicated• Suggestions should be valued• Not affected by external factors • Should not add negative value• Flexible, challenging and beneficial• Both Monetary and non- monetary

WAGES POLICY IN INDIA

• Minimum Wages Act, 1948..• Payment of Wages Act, 1936..• Payment of gratuity 1972 • Industrial Dispute Act, 1947.• Payment of Bonus Act, 1965..