Made By: Imran Khan Saurabh Gupta Shreshtha Jaiswal Subash Kumar

COMPENSATION & BENEFITS

MANAGEMENT

OUR ASSETS WALK OUT OF THE DOOR EACH EVENING. WE HAVE TO MAKE SURE THAT THEY COME BACK THE NEXT MORNING.

--NARAYANA MURTHYExecutive Chairman – INFOSYS

Barter Exchange System

Prior to the introduction of money, trade was carried out by barter i.e. exchange of goods for goods.

Due to the wasteful nature of barter, the amount of trade that could be carried out by this method of exchange was limited.

HISTORY OF COMPENSATION

• SALARY

• WAGES

• COMPENSATION

WHAT IS THE MEANING OF

• Regular money received by an employee from an employer on a weekly, biweekly or monthly basis.

• It includes employee benefits such as health and life insurance, saving plans and Social Security.

SALARY

Payment for a labour or a worker, especially remuneration on an hourly, daily or weekly basis or by the piece rate.

WAGES

COMPENSATIONThe sum of all forms of payments or rewards

provided to employees for performing tasks to achieve organizational objectives.

Compensation is the process of providing adequate, equitable and fair remuneration to the employees.

It is a comprehensive term which includes pay, incentives and benefits offered to the employees.

Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.

Motivate & Retain Staff

Attract Talent Efficient Administration

Effective Compensation

Ensure Equity

PURPOSE OF COMPENSATION

Contribution based Remuneration

Reward Valued Behaviour

Supportive Corporate CultureExecutive Sponsorship

Salary• Pay• Overtime (if in non-

exempt classification – Fair Labor Standards Act)

Benefits• Health Plans• Retirement Plans

• Vacation/ time off

• Paid Training• Working Hours

Employee Satisfaction

TOTAL COMPENSATION

Rewards

• Bonus• Salary Increases• Promotions• Equity Offerings• Awards• Recognition• New job

assignments

COMPENSATION STRATEGY

Business Strategy

Compensation Strategy

Contingent Factors

Defines the intentions of the organization on reward policies, processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve business goals.

Business Strategy:• The direction in which organization is going in

relation to its environment in order to achieve its objectives.

Compensation Strategy:• The intentions of the organization on reward policies,

processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve its business goals.

Contingent Factors:• Legal requirements or Government Policies, Strength

of Trade Union, Labour Market conditions and Capacity to Pay.

(cont.)

COMPONENTS OF COMPENSATION & BENEFITS

C&B

Incentives

Benefits

Perquisites

Basic Pay

Allowances (Taxable)

Reimbursement (Tax Free)

TOTAL COMPENSATION

Financial (Extrinsic Rewards)

Non-Financial (Intrinsic Rewards)

Direct

Indirect

Satisfaction derived from

Job

Praise & Rewards

CLASSIFICATION OF REWARDS

COMPONETS OF FINANCIAL COMPENSATION

COMPONENTS of FINANCIAL COMPENSATION

Direct Indirect

Base Pay• Wages• Salaries

Variable PayIncentives• Individual• Group/Team• Organizational

Benefits

Mandatory• Provident Fund• Gratuity Leave• Health Plans• Medical Leave

Voluntary• Vacations• Breaks• HolidaysSecurity Plans• Pension

The direct financial compensation an individual receives based on the time Worked.

Bases of calculation:• Hourly/wage: payment for the number of hours worked.

• Salaried: receive consistent payments at the end of specific period regardless of number of hours worked Nature.

Generally Market Driven:(Demand > Supply = Increase in Pay)

Job Evaluation:• The formal systematic means used to identify the relative

worth of jobs within an organization.

BASE PAY

Variable Pay/ Incentives

• Any plan that ties pay to productivity or profitability (i.e.) the standard by which managers tie compensation to employee effort and performance.

• It is linked to individual, group, or organizational performance and not to time worked.

• Establish a performance “threshold” to qualify for incentive payments.

• Emphasize a shared focus on organizational objectives.

• Create shared commitment in that every individual contributes to organizational performance and success.

VARIABLE

• Link the incentive with your strategy.

• Make sure effort and rewards are directly related.

• Make the plan easy for employees to understand.

• Get employees’ support for the plan.

• Use good measurement systems.

• Emphasize long-term as well as short-term success.

• Adopt a comprehensive, commitment-oriented approach.

IMPLEMENTING EFFECTIVE INCENTIVE PLAN

Are most effective as motivators when the award is combined with a meaningful employee recognition program.

• Intrinsic motivators are worthwhile as financial package

• Organization reward high performing employees• Psychological rewards that employees receive in

recognition of their skills and contributions

NON FINANCIAL COMPENSATION

Awards• Often used to recognize productivity gains, special contributions or

achievements, and service to the organization.• Employees feel appreciated when employers tie awards to

performance and deliver awards in a timely, sincere and specific way.

Recognition awards• Recognition has a positive impact on performance, either alone or in

conjunction with financial rewards.• Combining financial rewards with nonfinancial ones produces

performance improvement in service firms almost twice the effect of using each reward alone.• Day-to-day recognition from supervisors, peers, and team members

is important.• Best performer of the month awards in Blue Dart, ALACTEL,XANSA

etc., Service awards• Award for the length of service and exactly not on performance• IBM: thanks award• IDEA: appreciation card

TYPES of NON FINANCIAL COMPENSATION

Pay Equity (also Distributive Fairness)

• An employee’s perception that compensation received is equal to the value of the work performed.

• A motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve.

• Individuals form a ratio of their inputs to outcomes in their job and then compare the value of that ratio with the value of the ratio for other individuals in similar jobs.

EQUITY AND MOTIVATION OF EMPLOYEES

RELATIONSHIP BETWEEN PAY EQUITY AND MOTIVATION

DETERMINANTS OF COMPENSATION

PAYSLIPS EXAMPLES

INDIAN ARMY PAY SCALE STRUCTURERANK PAY BANDS/SCALE GRADE PAY MSP

LIEUTENANT PB-3/15600-39100 5400 6000

CAPTAIN PB-3/15600-39100 6100 6000

MAJOR PB-3/15600-39100 6600 6000

LT COLONEL PB-4/37400-67000 8000 6000

COLONEL PB-4/37400-67000 8700 6000

BRIGADIER PB-4/37400-67000 8900 6000

MAJOR GENERAL PB-4/37400-67000 10000 NIL

LT GENERAL / HAG SCALE

67000 - (annual increment @ 3%) -

79000

NIL NIL

HAG + Scale * *Admissible to 1/3rd of total

strength of Lt Gens

75500 - (annual increment @ 3%) -

80000

NIL NIL

VCOAS / Army Cdr / Lt Gen (NFSG)

80000 (fixed) NIL NIL

COAS 90000 (fixed) NIL NIL

Allowances To Whom Applicable Rates

Field Area Allowance Officers Posted to Fd Area Rs. 4200/-PM

High Altitude/ Uncongenial Climate Siachen

Officers Posted in High Attitude/Uncongenial

Climate Officers Posted in Siachen

Rs. 11200

Rs.14000/-PM

Flying Pay Officers Posted as Army Aviators

9000PM

Parachute Pay Officers Posted in Active Parachute BNs/Regt

1200PM

Special Forces Allowance Officers posted in Special Forces 9000PM

Transport Allowance Officers Posted in Peace Stations

Rs3200/-+DA PM in A1/A cities and

Rs 1600+DA PM at other places

House Rent Allowance To officers not provided Govt. Accommodation

10-30% of Basic Pay (Pay Band + Grade Pay + MSP)

Kit Maintenance Allowance All officers 400/-PM

Uniform Allowance (Outfit Allowance)

All officers Initial 14000/- and 3000/- every Three Years

Qualification Pay/ Grant for Service Courses

All officers undergoing specified courses Rs 6000 to 20000/-

Instructional Allowance All Officers Posted as Instructors

1800/-

THANK YOU!!!