8/3/2019 Lec-1 Reward Strategies

1/19

Reward Strategies

Presented By:

Devdatt.Tiwari

8/3/2019 Lec-1 Reward Strategies

2/19

REWARD STRATEGIES

Elements

Compensation / remenurationplace in reward strategy

Compensation structure

8/3/2019 Lec-1 Reward Strategies

3/19

Introduction

Individual goals

Efforts

Performance

Organization goals

Rewards

8/3/2019 Lec-1 Reward Strategies

4/19

Types of Rewards (Benefits)

INTRINSIC ( fromjob itself)

EXTRINSIC (fromManagement)

8/3/2019 Lec-1 Reward Strategies

5/19

Extrinsic factors

FinancialPerformancebased

Piece work

Incentive

Commission

Performancebonus

Merit pay

Financial -Membershipbased

Basic pay

D.A

HRA

Protectionprogram

Pay for timenot worked

Non-Financial Preferred

officefurnishing

Flexible time

Preferredleave

Own secretary

Impressive jobtitle

Conveyance

Medical care

8/3/2019 Lec-1 Reward Strategies

6/19

Structure of Rewards

Balancing intrinsic & extrinsic rewards is the key!!!

Wage

Salary

Earning

Nominal wage Take home salary

Minimum wage

Living wage

Fair wage Incentive wage

Wage rate

8/3/2019 Lec-1 Reward Strategies

7/19

Objectives of Wage/SalaryAdministration

Attraction

Retention

Equity

Desired behavior

To keep cost in line

Image

Collective bargaining

8/3/2019 Lec-1 Reward Strategies

8/19

Significant goals driving pay &reward changes

8/3/2019 Lec-1 Reward Strategies

9/19

Mechanism of wage & salaryadministration Wage theories ( Bargaining theory &

Contribution of Behavioral science) Job evaluation Factors affecting wage/salary

- competition- Ability to pay- Cost of living

- Productivity- Union- Govt. legislations

8/3/2019 Lec-1 Reward Strategies

10/19

Wage fixation institute in India

Wage board

Pay commission

8/3/2019 Lec-1 Reward Strategies

11/19

Bonus

Bonus (Important provisions)

- 60% of surplus

- Bonus = Pay+DA

- Rs.1600/- ceiling now Rs.2500/-

- Fraud, theft by employees

- Set off

- Set on

8/3/2019 Lec-1 Reward Strategies

12/19

Managerial compensation

Mumbai = Ceiling Rs.62,700/-

Mumbai = Salary 45% of salary,

Cooking gas/Power 10% of salary,

Pensionary benefits 25% of salary

Medical expenses 3 months salary

Above is ceiling for Managers/ Directors

8/3/2019 Lec-1 Reward Strategies

13/19

Fringe benefits

Defn:

- Benefits on & above the regularwages.

- These are those monetary & non-monetary benefits given to employeesduring & post employment period

which are connected with employmentbut not to the employees contributionto the organization.

8/3/2019 Lec-1 Reward Strategies

14/19

Need / Objective of Fringebenefits

8/3/2019 Lec-1 Reward Strategies

15/19

Types of Fringe benefits

As per Dale Yoder, he has classified it into 4 heads For employment security For health protection For old age & retirement

Personnel identification, stimulationIn Indian context: Payment for time not worked Employee security

Safety & health Welfare & recreational facilities Old age / Retirement Non-financial benefits

8/3/2019 Lec-1 Reward Strategies

16/19

Stock Options (GoldenHandcuffs)

BENEFITS :-

1. Motivational

2. Ownership sharing

3. Productivity increase Profit increase

4. Employee benefit plan

5. Partnership role leads to stock price rise6. Success share

7. It is a productivity incentive

8. It is a popular & effective way to pay for the performance ofemployees & managers

9. Eg:

10. It is a retaining tool

11. Long term incentive

12. Attraction tool

13. Corporate culture

8/3/2019 Lec-1 Reward Strategies

17/19

Types Of Stock plan

Stock price appreciation plan & rights

Stock purchase

Phantom stock Restricted stock / Cash plans

Performance based plans

ESOP

8/3/2019 Lec-1 Reward Strategies

18/19

Employee stock ownershipplans

Meaning

Advantages :1. During retirement2. Capital appreciation

3. Incentive based4. Reduction in taxes

Disadvantages:

1. Liquidity2. Performance of stock3. Accountability of fiduciaries4. Dilution

8/3/2019 Lec-1 Reward Strategies

19/19

Thank you