Employee Compensation in Industries

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    OBJECTIVE OF MONOGRAPH :

    The aim is not to measure income actually receiv

    workers, but the value which labor contributes to net along with other factors of production.

    How employees works in an industries for its betperformance and getting the promotion in the industgroup members think that, if theres good compensatin the organization, then automatically employees wosmoothly for the companies goals, and because of thisachieve the targets and ultimately profit.

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    Cont.

    The primary purpose of the monograph is to collanalyze current compensation data and develop guideemployee compensation so that rural and small urbanmanagers have a meaningful resource to use when maand benefit decisions.

    The secondary purpose of monograph is to provmanagers with information that can be used to attractretain employees in the unique environment and withchallenges faced by rural and small urban transit man

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    INTRODUCTION :

    Compensation is an integral part of human resoumanagement which helps in motivating the employeesimproving organizational effectiveness.

    When most people hear the term "employee comthey think about wages. Wages are a major part ofcompensation, but compensation goes beyondwages. Compensation consists of all of the tangiblethemployees get in return for working.

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    Word - "all" and "tangible." Compensation does not inintangible things like job satisfaction and pride.

    However, it does include all of the various tangible thiemployees get for working. This would include thingshealth insurance, life insurance, paid vacations and padays. It would even include things like the value of andiscounts that the employee receives.

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    Employee compensation can also be looked at as eithetangible benefit or intangible. Good examples of tangibinclude insurance, holiday packages, maternity leavesbonuses and share of profits. Intangible compensationof promotions, letters of appreciation and being provinice looking offices.

    In some organizations, employees receive annual

    in their compensation both to cover increased cost of also to enhance their employee compensation package

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    Modern organizations are making very significanin their compensation systems in order to better fit thhighly competitive business environment.

    Employee compensation is the essence of humanmanagement. Different organizations establish differepayment schemes to satisfy their workers. Some rely tintroduce monetary benefits along with other types of

    benefits. Monetary or non- monetary, provided to empexchange of their contribution and service to the orgabut compensation does not refer to intrinsic reward. itonly the extrinsic rewards.

    http://localhost/var/www/apps/conversion/tmp/scratch_5/New%20Microsoft%20Office%20PowerPoint%20Presentation.pptxhttp://localhost/var/www/apps/conversion/tmp/scratch_5/New%20Microsoft%20Office%20PowerPoint%20Presentation.pptx
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    employee compensation often includes other benservices.

    In the United States, for example, health insuranccommon employee benefit and is often a significant paemployee compensation package. Companies may alsoemployees other types of insurance, including life insu

    both short- and long-term disability insurance. Some calso offer compensation in the form of child-care servieducational reimbursement, and employee discounts.

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    Direct compensation:

    Direct compensation refers to monetary beoffered and provided to employees in return of services they provide to the organization.

    Indirect compensation :

    Indirect compensation refers to non-monetbenefits offered and provided to employees inst

    the services provided by them to the organizatio

    T f i

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    Types of compensation :

    1.Base compensation for the job.2.Incentive compensation.3.Supplementary compensation.

    1 B i f h j b

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    1.Base compensation for the job.

    Base compensation is the basic pay fixed to variocategories of jobs, posts or position. This can be based, job content , job importance , job skill , etc . Thus, bascompensation is based on the job or the factors relatejob. Most compensation is considered as monetarycompensation.

    Monetary compensation is therefore, the most imp

    component of compensation. Determination of salary o

    important function of the manager who manages the h

    resource.

    2 I i i

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    2.Incentive compensation :

    Among the various purposes of an attractive complan, a good base compensation enable the organizatioattract and retain capable people, to put in their best perform well . Incentive schemes are commonly used motivate people at work, though there are many non-mincentive like appreciations, awards, publicity, participso on , money has remained the best motivator, and nmotivator could take the place of money. Hence, moneincentives can primarily be used to motivate potentialperform in the best manner.

    S l t ti

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    Supplementary compensation :

    This is an additional monetary compensation progroup. Additional annual wage ,employee profit shariday bonus), production sharing plans, employees equ

    participation as an additional bonus etc, in every humresource manager must plan for supplementary compwhich are the employee will certainly appreciate. Andsupplementary compensation is an additional compenpackage given to the employee annually, so that the emwould be motivated to renew his commitment to work

    C t

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    Cont.

    As organizations continue to face mounting competitivpressures, they seek to do more with less and do it witquality. As goals for sales volume, profits, innovation, aare raised, employment growth is often tightly controlmany cases, substantial cuts in employment have beenaccomplish more with fewer employees calls for effect

    management of human resources. Typically, the emplocompensation system, plays a major role in efforts to mhuman resources better.

    METHODOLOGY

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    METHODOLOGY :

    Secondary data :

    We have collected secondary data with the hinternet ,and various books. This helped us to anacompensation system in the industries in a better

    more specifically that- how the workers are actuin the industries and what kinds of changes are rthe compensation systems.

    lit t

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    literature :

    Importance of compensation :

    Compensation often includes an employees base

    additional benefits, such as health insurance, retiremeand performance bonuses.

    The compensation packages a business offers to affects the companys recruitment rate, retention rate

    employee satisfaction.

    Cont

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    Cont..

    Cognizant, India maintains employee benefit plan

    cover substantially all India-based employees. The emprovident fund, pension and family pension plans are defined contribution retirement benefit plans. Under temployees contribute up to 12% of their base compen

    which is matched by an equal contribution by Cogniza

    Objective of Compensation :

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    Objective of Compensation :

    Definition :As compensation expert Richard Henderson notes, To

    competitive advantage in a global economy, the compeprogram of the organization must support totally the s

    plans and actions of the organization.

    Cont

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    Cont.

    1.Adequate:Minimal governmental, union, and managerial lev

    be met.

    2.Equitable:Each person should be paid fairly, in line with his

    effort, abilities, and training.

    3.Balanced Pay:benefits, and other rewards should provide a rea

    total reward package.

    Cont

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    Cont.

    4. Cost-effective:Pay should not be excessive, considering what th

    organization can afford to pay.

    5.Secure Pay :should be enough to help an employee feel secure

    him or her in satisfying basic needs.

    6.Incentive :

    providing Pay should motivate effective and prod

    work.

    Cont

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    Cont.

    7.Acceptable to the employee:The employee should understand the pay system

    is a reasonable system for the enterprise and himself oThe most important compensation objective guiding trespondents 2012 decisions was Retaining Top Empl

    which was chosen by 66% of respondents.

    Strategic Compensation:

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    Strategic Compensation:

    Strategic compensation is determining and provicompensation packages to the employees that are alig

    the business goals and objectives.

    In todays competitive scenario organizations hav

    special measures regarding compensation of the empl

    that the organizations retain the valuable employees. Tcompensation systems have changed from traditional strategic compensation systems.

    Cont

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    Cont.

    Compensation strategy is derived from the businstrategy . The business goals and objectives are aligne

    HR strategies.

    Then the compensation committee or the concerauthority formulates the compensation strategy. It dep

    both internal and external factors as well as the life cyorganization.

    Change in Compensation Systems

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    Change in Compensation Systems

    With the behavioral science theories and evolutiolabour and trade unions, employees started asking for

    rights. Maslow brought in the need hierarchy for the remployees.

    He stated that employees do not work only for m

    there are other needs too which they want to satisfy frjob, i.e. social needs, psychological needs, safety needsactualization, etc.

    Cont.

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    Cont.

    Now the employees were being treated as human reso

    Their performance was being measured and apprbased on the organizational and individual performan

    Competition among employees existed.

    Employees were expected to work hard to have the jobThe compensation system was designed on the basis oand related proficiency of the employee.

    Importance of employees compensation or re

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    Importance of employees compensation or re

    system :

    Compensation or reward system of the organisation isinfluencing factor for employee motivation, must reme

    If we observe history of causes of industrial disputes,

    compensation and reward system issues were the maimost cases.

    Cont.

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    Co t

    Good compensation system of rewards system inorganisation will minimise industrial disputes and hel

    maintaining peace and harmony within the organisatiCompensation system plays a key role in employee att

    Effective compensation system makes employee to pu

    efforts for achievement of organisation's goals and obj

    Effective compensation system builds initiative towardwhich in turn enhances the productivity of organisatio

    Cont.

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    Effective compensation makes employees feel belongitowards the organisation.

    Compensation system mostly influences retention of ethe organisation.

    Most of employee satisfaction depends upon compensreward system of organisation.

    Effective compensation system builds employer brand

    plays a key role in attracting talent.

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    Compensation systems are designed keeping instrategic goals and business objectives. Compensatiodesigned on the basis of certain factors after analyzwork and responsibilities.

    The survey of Compensation was conducted inand December of 2012. the results were analyzed secreating comparisons between -

    Cont.

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    Cont.

    In small companies there less than 100 employees,In medium-sized of companies like 100 - 1,000 emploIn large companies there are more than 1,000.

    1.Traditional Compensation Systems:

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    p y

    2.Todays Modern Compensation Systems:

    1.Traditional Compensation Systems:

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    p y

    In the traditional organizational structures, emplexpected to work hard and obey the bosses orders.

    In return they were provided job security, salary and promotions annually. The salary was determined on the basis of the jobthe years of experience the employee is holding.

    Some of the organizations provided for retiremensuch as, pension plans, for the employees. It was assumed that humans work for money, thespace for other psychological and social needs of work

    Todays Modern Compensation Systems:

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    y p y

    Today the compensation systems are designed althe business goals and strategies.

    The employees are expected to work and take thedecisions. Authority is being delegated. Employees feeand valued in the organization. Organizations offer monetary and non-monetary

    attract and retain the best talents in the competitiveenvironment. Some of the benefits are special allowanmobile, companys vehicle; House rent allowances; sta

    leaves, etc.

    Compensation structure :

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    p

    Although the CEO is primarily responsible for setcompensation budgets, the head of HR is primarily resfor setting compensation structures.

    Almost 50% of respondents reported the head ofcompensation structures at their organization, compa

    42% of CEOs.

    This pattern is seen across all industries and medhowever, for small companies the CEO is typically the

    sets compensation structures (56%).

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    The likelihood of conducting a compensation analysis

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    once a year increases with company size. The followinpercentage of respondents who conduct market andcompensation analysis annually or bi-annually:

    o Small Companies: 46%o Medium Companies: 49%o Large Companies: 63%

    EMPLOYEE ATTITUDES AND BEHAVIOR :

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    The higher the compensation rate, the greater thsatisfaction.

    One would expect that an individual's satisfahis or her compensation would simply be a funct

    amount of compensation received.

    Issues of compensation :

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    Modern organizations are making very significant ctheir compensation systems in order to fit the dyna

    competitive business environment. Firms increasingly are using things such as skill-bas

    which compensates employees for the number and skills they possess instead of the type of job they ha

    Under this system, the employee's bonus does not bpart of his or her base pay. the bonus must be re-eayear. These changes, and numerous others, are desihelp offset.

    Employee compensation are basically divided

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    categories:

    Guaranteed pay:monetary [cash] reward paid by an employer to a

    employee based on employee/employer relations. Thecommon form of guaranteed pay is the basic salary.

    Variable pay:monetary [cash]reward paid by an employer to a

    employee that is contingent on discretion, performancresults achieved. The most common forms are bonuse

    incentives.

    Benefits:P l l l

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    Programs an employer uses to supplement empl

    compensation, such as [paid time off], medical insurancompany car, and more.

    Equity-based compensation :

    A plan using the employers share as compensati

    most common examples are stock option.

    Compensation Given by MNCs to their Employees(GD )

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    Data):

    Google:

    Google Inc. typically pay its employees 19% above

    market.

    Google has given all of its employees $1,000 cashbonuses" and salary thereafter increase by around 10

    Cont.

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    The average intern at Google makes $5,787 montsoftware engineer interns can see monthly earnings a

    $6,432, according to data on the best companies for infrom job rating company Glassdoor.

    Rohan Shah, a 20-year-old Google intern, gushed Business Insider earlier this month about his time wittechnology behemoth. In addition to his $6,100 per mShah said he had free access to 24 in-office cafes, a full

    equipped gym and on-site massages.

    Cont.

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    That's quite a chunk of change -- enough to put Gsecond place for highest intern salaries, according to G

    Only research interns at Microsoft get better pay, pulli$7,050 per month.

    The lowest wages among these top internships co

    Merrill Lynch, which pays $1,554 per month, and Scotwhich offers $1,715. Glassdoor's data comes from selfintern ratings of their experiences working at the orgawith no clarification as to whether salary numbers are

    before or after taxes.

    Facebook:

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    Mark Zuckerberg tasks some of his best engineers on tpays them $129,136 for it, to ensure the website attra

    according to Business Insider.Three roles - research scientist, engineering man

    machine learning engineer - all command about $123,

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    Facebook pays its interns a little more than most ocompanies, in an effort to attract young talent th

    otherwise choose a more established companGoogle. Software engineering interns, for examp

    $74,700.

    BIBLIOGRAPHY :

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    BIBLIOGRAPHY :

    WWW.TRB.ORG

    WWW.NATIONAL-ACADEMICS.ORG

    WWW.IJAIEM.ORG

    WWW.PAYSCALE.ORG

    http://www.trb.org/http://www.national-academics.org/http://www.ijaiem.org/http://www.payscale.org/http://www.payscale.org/http://www.payscale.org/http://www.ijaiem.org/http://www.ijaiem.org/http://www.national-academics.org/http://www.national-academics.org/http://www.national-academics.org/http://www.national-academics.org/http://www.trb.org/
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