Assignment on Compensation Management

​on
Current Trends And Practices In Compensation Management

SUBMITTED BY

Name:​ Atul Raj

Enrollment no:​ A3590617006
Course:​ B.com(H)
Sem: ​VI
Session:​ 2017-2020

SUBMITTED TO
​Ms. Mona Ratnesh
( Assistant Professor )
Compensation Meaning
Compensation means the basic returns that an employee obtains from his/her work. Every
organization offers good compensation to attract and retain the ablest employees on the actual
work floor. ​Compensation refers to a wide range of financial non non-financial
rewards to employees for their services rendered to the organization. It is paid in the
form of wages, salaries and employee benefits such as paid vacations, insurance,
maternity leave, free travel facility, retirement benefits etc.

Compensation should be designed that it achieves the following objectives:

​ 1. Capable employees are attracted towards the organization.

2. The employees are motivated for better performance.

3. The employees do not leave the employer frequently.

Elements of Compensation:

1. Monthly wage & salary including basic wage, house rent allowance, dearness
allowance and city compensatory allowance.
2. Bonus at the end of the year.
3. Economic benefits such as paid holidays, leave travel concession.
4. Contribution towards insurance premium.
5. Contribution towards retirement benefits such as employee provident fund.
6. Transport and medical facilities.

Current Trends and Practices In Compensation Management

Compensation in present days to be studied is a need for achieving competent employees to
bring effectiveness in day to day operation of the organization. It must be complete and at the
satisfactory level of employees. Many studies have been taking place in recent few past years
regarding compensation.

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HR’s role in the organization will change: ​HR and compensation professionals will need to
know how their roles and responsibilities fit into the overall employee experience.
Self-service and augmented-service offerings in HR will become the new normal, and
best-in-class organizations will begin to goal their HR leaders on employee service and
satisfaction metrics.

HR will prioritize employee experience to drive engagement:​Focusing on the complete

employee experience, rather than considering employee engagement or corporate culture
standalone initiatives, will allow HR to deliver real, measurable results in 2018. Rather than
relying on once-annual engagement surveys, the most successful HR departments will
leverage ongoing employee net promoter score assessments to track their progress in real
time.

More stakeholders will influence compensation decisions: ​As more managers, recruiters,
and HR business partners join discussions about compensation, comp professionals will need
to adjust how they plan and budget to account for a new diversity of inputs. Changes to the
compliance landscape, like bans on inquiring about candidate salary histories during the
interview process, will mean that far-reaching and ever-evolving training programs will be
required to keep these organization.

Communication and enablement will empower managers to do more​: In compensation,

this often means asking managers to do the heavy lifting around communicating comp
strategy to the organization. Successful compensation professionals will look to close existing
gaps in managers’ comp knowledge and their ability to effectively communicate about pay.

Compensation’s conscience will pay dividends​: HR and compensation professionals will

need to refocus pay equity discussions around business outcomes to drive action. Pay equity
is a critical part of the overall employee experience, and making pay equity a priority can
positively impact an organization’s bottom line. With research showing that less than half of
all organizations currently have a formal process in place to address pay equity, this work
will start with simply putting a process in place.

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New Trends in Compensation Management
The following are the new trends in compensation management Group Mediclaim/Insurance
Scheme, Personal Accident Insurance Scheme, Company Leased Accommodation,
Recreation/ATM facilities, Corporate Credit Card, Club memberships, Cellular
Phone/Laptop, Personal Health Care (Regular medical check-ups), Loans, Educational
Benefits (For Higher studies), Regular Get together and other cultural programs, Wedding
Day/Birthday Gift, Employee Referral Scheme, Maternity Leave, Paternity Leave, Work-life
Balance, Pay Transparency, Broad banding, Variable Pay (Incentive Pay), Flexible Benefits,

Those current issues about compensation management are

● Skill-based pay: Compensation to employees is made on the basis of skills. Skill

makes the person competent to perform the job. The basis of the job is moving away
from job base to competency based. Competency is a person’s skills, knowledge, and
behavior that enable performance. Job-based pay considers the value of a current job
based on job title. Under this method, skilled, semi-skilled and unskilled employees
are grouped and compensation is made to them affording their competency.
● Broad banding: Reduced number of ranges of salary into a low number of the range
is called broad banding. Generally, several grades are divided into three bands like
clerical bands, professional bands, and managerial bands. It provides flexibility for
employee’s assignment.
● Comparable worth or pricing method: Pricing job is an equity pay. The brand of
compensating employees is to be on the basis of the value of the job which gets the
certain price. The main objective of developing this trend is to overthrow the inequity
between male and female with respect to their compensation. It avoids races and class
discrimination to their compensation. Under this method, the weight of each job is
determined by considering its factors and certain value is given and on the basis of
value, compensation is determined.
● Cafeteria approach: ​The important current trend in compensating employees is the
cafeteria approach that consists of pay plus benefits and services. The employee picks
benefits and services as per needs within the limit of the pay package.

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● Variable pay plans: Variable pay plans are also a current issue in compensation
management. The use of a variable pay system is increasing. This system is based on
improving production and sharing of prosperity.