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I t is all about People

Take our 20 best people and virtually overnight
we become a mediocre company.

- Bill Gates, Microsoft


Take my assets, leave my people, and in five
years I will have it all back.

- Alfred Sloan, General Motors
Published by Lecturesheet.iiuc28a9.com
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We will cover the following:
Remuneration & its Components
Compensation Administration Process
Wage & salary Administration
Different types of Incentives and Incentives Plan
International Compensation.
Wage, Salary and
Reward Administration
Human Resource Management
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Building Blocks of Direct
Compensation
1. The Foundation:
A Compensation
Philosophy

2.The Basics: Elements
of Base Pay
Administration
3. The Glue: Pay for
Performance Programs

4. The Future: Effective
Compensation
Management
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The Organizational Reward System
Results from employment with the organization
Includes all forms of financial returns and tangible services &
benefits employees receive as part of employment relationship:
Intrinsic Extrinsic
Achievement Formal Recognition
Feelings of accomplishment Fringe Benefits
Informal Recognition Incentive Payments
Job Satisfaction Pay
Personal growth Promotion
Status Social Relationships
Work Environment

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Remuneration & Its Components
Hourly
and
monthly
Rated
Wages
and
Salaries
Direct
Indirect
Remuneration
Financial Non Financial
Incentives
Individual
Plans
Group
Plans
Fringe
Benefits
P.F,
Gratuity,
Medical
Care,
Accident
Relief,
Health and
Group
insurance
Perquisites
Company
Car, Club
Membership,
Paid
Holidays,
Furnished
House, Stock
option
scheme, etc
Job Content
Challenging job,
Responsibilities,
Recognition,
Growth
prospects,
Supervision,
Working
conditions, Job
sharing, etc.
Definition: Remuneration' is a general term covering the
monetary and related entitlements of employees - paid by
employers in return for the work of employees.
Components:
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Compensation Administration Process
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Job Analysis
It contains two parts: Job Description & Job
Specification. This can help to know about
the duties and responsibilities will be
covered by the specific job and also the
quality of the people engaged in that job.
This is necessary to set a rationale pay
structure for a specific position.
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Job Evaluation
Factor
Comparison
Ranking
Classification
Point
Method
Job
Evaluation
Methods
Job Evaluation: The systematic determination of the
relative worth of jobs within an organization.
Methods of Job Evaluation
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Developing Pay Surveys
Select Employers with Comparable Jobs
Determine Jobs to be Surveyed
Decide What Information Is Needed
Conduct Survey
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Pay Structures
Common Pay Structures
Hourly and salaried
Office, plant, technical, professional, managerial
Clerical, information technology, professional,
supervisory, management, and executive
Factors that affect Remuneration/Pay Structure:
External:
Labor market
Cost of Living
Society
The economy
Geographic Location
Internal Factor:
Business Strategy
Job Evaluation & Performance Appraisal
The employee
Kind of business
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Wage & Salary
Wages: Wages are compensation. This includes
basic wages, allowances, bonuses etc. On the
employers points of view, wages form that part of
cost of production which is attributed as
compensation paid to labor. Wages are paid in the
form of time rate or piece rate to the workers, who
are directly involved in the production or
commercial activities.

Salary: This is compensation paid to the indirect
labor in the form of cash. Indirect labor involves
supervisors, managers and supporting staff like
office assistants, clerks, etc. Salaries are paid in
the form of time rate, mostly on monthly basis.
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Wage & Salary
On the basis of the employee needs and ability of the
organization, there are various kinds of wages. Wages are
generally four types:
Subsistence wages
Minimum Wages
Fair Wages
Living Wages
Subsistence wages: This is level of wage below the
minimum level which can lead inhuman life to the
employees.
Minimum Wages: This is a wage level fixed by
government which is considered adequate, taking into
account the cost of living. All the organizations are bound
to follow this direction so that no employee is paid a wage
less than the minimum wage fixed by government
irrespective of grade, class or nature of work.
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Wage & Salary
Fair Wages: This is fixed by employer. This level
of wage varies from industry to industry. The
main criteria are the capacity of payment. Fair
wage is a wage above the minimum wage but
below the living wage.

Living Wages: Living wage is one which should
enable the earner to provide for himself and his
family not only the bare essentials of food,
clothing and shelter, but a measure of frugal
comfort, including education for his children,
protection against ill health, requirement of
essential social needs and a measure of insurance
against the more important misfortune including
old age.

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Incentive Compensation
Incentives can be added to the basic pay structure to
provide rewards for performance. It may be 3
types:
1. I ndividual I ncentives include
merit pay plans (annual increase, based on
performance)
piecework plans (pay based on number of units
produced typically in a specified time period.)
time-savings bonuses and commissions
2. Group I ncentives : Incentives can be offered to groups,
rather than individuals, when employees' tasks are
interdependent and require cooperation.
3. Plant-wide Incentives: Direct employee efforts
toward organizational goals (such as cost reduction)
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4. The Future: Effective
Compensation Management
S = Strategically-based

M = Market-driven

A = Analyze Thoroughly

R = Reward Results

T = Transformation

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Compensation & Benefits Package

Base Salary - the fixed amount to be paid
Incentives - additional variable pay based on performance against
objectives
Protectives - programs which insure employees against loss
Capital Accumulation programs that provide the opportunity
to establish a personal estate (equity /stock plan)
Retirement Income - plans that defer income for services
rendered to a later payment date
Perquisites - company paid allowances beyond direct
pay(Housing,Car, Leave travel, etc.)
Paid Time Off - vacations, holidays, maternity leave, etc
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The C&B Cycle
Operationalizing C&B
Corporations Strategy on C&B
COMPENSATION POLICY/DESIGN
Policies Designed/Reviewed
Compensation Structure/Design Issues
Annual/Cyclical actions (TIR/Bonus/SPP)
Employee Communication strategy
IMPERATIVES
Top Management Inputs
Market Drivers
HR Strategy
Tracking C&B Info
- GEMS, HRIS
Benefits
Administration
Gauging employee
satisfaction
Employee getting
the C&B package
Payroll
HR OPERATIONS
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Fixed Cash
Base Salary

Housing Assistance/HRA

Conveyance Allowance (Q/R/S)

Leave Travel Allowance

Medical Allowance
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Benefits
Company Housing

Company Car (grades T & above)

Furnishing program

Housing Loan
Personal loans
Car Loan
Tuition Refund Plan
Professional Body Membership

Retrials or Parachute Payments
Provident Fund
Gratuity
Superannuation (for certain grades)
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Variable Pay
Individual Performance Award/Annual Bonus

Sales Incentive Plans

Golden Handcuffs
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EMPLOYEE COMMUNICATION - taking C&B to the people
During all C&B actions (e.g., Annual Salary Increase
letters , SPP roll-out)

Through the HR web-site

Through online addressal of employee queries
payroll & benefits related (HR Ops)
policy related (Regional HR/Compensation Unit)
through supervisors (queries of the type - how does my salary
increase stack-up vis--vis my peers ?)