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COMPENSATION
Compensation
is a systematic
approach to providing monetary & non
monetary value to employees in
exchange for work performed.
HISTORY OF COMPENSATION
Started with
Barter System
and was later on
shifted to
monetary terms.
To increase or maintain
morale.
OBJECTIVES
COMPENSATION COMPONENT
compensation
monetary
direct
Non monetary
indirect
COMPONENT
Direct
compensation
Basic Pay
Bonus
CONT
Indirect compensation
Clothes
Company parties
Phones/laptop
BENEFITS OF NON
MONETARY PAYMENTS
Enhance
DETERMINANTS OF COMPENSATION
INTERNAL DETERMINANTS
Employers Compensation Strategy
Setting organization compensation policy to lead, lag, or match
competitors pay.
Worth of a Job
Establishing the internal wage relationship among jobs and skill
levels.
Employees Relative Worth
Rewarding individual employee performance
Employers Ability-to-Pay
Having the resources and profits to pay employees.
EXTERNAL DETERMINANTS
Labor Market Conditions
Availability and quality of potential employees is affected by economic
conditions, government regulations and policies, and the presence of unions.
Area Wage Rates
A firms formal wage structure of rates is influenced by those being paid by
other area employers for comparable jobs.
Cost of Living
Local housing and environmental conditions can cause wide variations in the
cost of living for employees.
Inflation can require that compensation rates be adjusted upward periodically
to help employees maintain their purchasing power.
Collective Bargaining
The term extends to all negotiations that take place between an employer,
group of employers or one or more employers organizations on the one hand,
and
one or more workers organizations on the other to
(a) Determine the working conditions and terms of employment and / or
(b) Regulate relations between employer and employee/workers and / or
(c) regulate relations between employer organization or employee/workers
organization
NEW DEVELOPMENTS
Competency based pay
and reward programmes (also
skill-based pay or knowledgebased pay)
Where the company pays for
the employees range, depth,
and types of skills and
knowledge, rather than for
the job title he or she holds.
Competencies
Demonstrable
characteristics of a person,
including knowledge, skills,
Executive Pay
Package
Base salary
Short-term incentives or
bonuses
Long-term incentives or
stock plans
Perquisites (perks)
COMPENSATION STRATEGY
Step III Identify the current market data and trends for
compensation in comparable locations and industries.
CONCLUSION
We can say that good
compensation can increase the
productivity of an organization
because its provides various
rewards, bonus, schemes etc. and
its compulsory for every
organization.