EACH EVENING. WE HAVE TO MAKE SURE THAT THEY COME BACK THE NEXT MORNING. Introduction Compensation is a systematic approach to providing monetary & non monetary value to employees in exchange for work performed.
Compensation may be defined as money
received in performance of work and many kinds of benefits that an organization provides to their employees. What is the meaning of.
Salary
Wages
Compensation Salary
Regular wages received by an employee from
the employer on weekly or monthly basis. It includes employee benefits such as health & life insurance savings plans and social security. Wages
Payment for labor or services to a worker,
especially remuneration on an hourly, daily or weekly basis or by the piece. Compensation
Direct & Indirect monetary & Nonmonetary
rewards given to employees on the basis of the value of the job, their personal contributions and their performance. While making this payments one should be alive to the governing legal regulations. Objectives
To recruit & retain qualified employees.
To increase or maintain morale. To determine basic wage & salary. To reward for job performance. Components Direct Compensation: It refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, PF/Gratuity, etc. They are given at a regular interval at a definite time. Indirect Compensation: It refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Paid Leave, Car / transportation, Medical Aids and assistance, Insurance (for self and family), Leave travel Assistance, Retirement Benefits, Holiday Homes. Compensation Models Traditional: Company has a fixed salary structure with bands based on the employees grade. An employee has no choice. Cafeteria: Employee has a flexibility to choose his/her salary components from the basket of components offered by the company. Combined: A combination of Traditional & Cafeteria. Component of compensation System Job Description: A critical component of both compensation and selection system, job descriptions define in writing the responsibilities, requirements, functions, duties, location, environment, conditions and other aspects of jobs. Descriptions may be developed for jobs individually or for entire job families. Job Analysis: The process of analyzing job from which job descriptions are developed. Job analysis techniques include the use of interviews, questionnaires and observation. Job Evaluation: A system for comparing jobs for the purpose of determining appropriate compensation levels for individual jobs or job elements. There are four main techniques: Ranking, Classification, factor comparison and point Method. Pay Structure: Useful of standardizing compensation practices. Most pay structures include several grades with each grade containing a minimum salary/wage and either step increments or grade range. Step increments are common with union positions where the pay for each job is pre-determined through collective bargaining. Salary Surveys: Collection of salary and market data, may include average salaries, inflation indicators, cost of living indicators, salary budget averages. Companies may purchase result of surveys conducted by survey vendors or may conduct their own salary survey. When purchasing the survey form the vendor, note that it may be conducted within a specific industry or across industries as well as within one geographical region or across different geographical regions.