Chapter-6-: Compensation Management

Compensation Management is an act of determining and maintaining the scheme of an organisation which promises to give monetary and non monetary benefits to the employees in return of their contribution in the form of their work and time. To support the compensation management a proper work measurement approach has to be employed by the organisation. Work Measurement includes the physical, social and psychological aspects of the work. The components of the work includes mental efforts, physical effort, visual attention, initiatives, responsibility, working conditions and physical hazards.

Job Evaluation:
The International Labour Organisation (ILO) defined Job Evaluation, as attempt to determine and compare demands which are normal performance of a particular job or normal workers without taking into account the individual abilities or performance of the workers concerned. A process of determining the relative worth of the various jobs within the organisation, so that differential wages may be paid to jobs of different worth. --Wendell L. French Hence, Job Evaluation may be defined as a process of determining the relative worth of jobs, ranking and grading them by comparing the duties, responsibilities, requirements like skill, knowledge of a job with other job with a view to fix compensation payable to the concerned job holder. Objectives of Job Evaluation: To gather data and information relating to job description, job specification and employee specifications of various jobs in an organisation. To compare the duties, responsibilities and demands of a job with that of other jobs. To determine the hierarchy and place of various jobs in an organisation To ensure fair and equitable compensation plan Principles of Job Evaluation Programme: Rate the job and not the employee. The elements selected for rating should be easily understood and defined clearly. Employees concerned and the supervisors should be educated and convinced about the programme. Supervisors should be encouraged to participate in rating the jobs. Secure employee cooperation by encouraging them to participate in the rating programme. Discuss with the supervisors and employees about rating. Procedure of Job Evaluation:Analyze and Prepare Job description Select and Prepare a Job Evaluation Plan Classify Jobs Install the Programme Maintain the Programme

Methods / Techniques of Job Evaluation: Quantitative Methods Points rating Method Factors Comparison Method Non Quantitative Methods Ranking Method Job Classification and Grading Method

Problems of Job Evaluation:Job Evaluation is not scientific The factors taken for consideration are not exhaustive Supervisor employee management co-ordination becomes difficult The results of job evaluation may not exactly coincide with social evaluations which in turn results in employee dissatisfaction The evaluation structure may require changes every time it gets implemented. Merit Rating:Merit Rating is the process of evaluating an employees performance on the job. ---James Lundy Merit rating is more concerned with the employee appraisal and this feature of Merit rating makes it different from Job Appraisal. It is the systematic and impartial procedure for determining the excellence with which an individual is performing a job. The Evaluation of any given worker as to his fitness for given job in terms of assigned factors by which he may be intelligently appraised. ---Kimball and Kimball Social Security:The governments of the nations are very particular with the involvement of Social security measures for the people of the nation. Social security ensures the social assistance and social Insurance to people. Following the measures of social security, the organisations the adopt the practices of providing various amenities like medical, Education, Maternity etc.. Need for Social Security and Welfare programme: Employee Demand Trade Union Demand Employers Preference As a Social Security To improve Human Relations

What are Benefits and Incentives? o Additions in the remuneration of employees other than basic. o Also know as Fringes, Service Programmes, employee benefits or hidden payroll. What are the problems? o Lack of Employee Participation o Managers not so interested o Lack of Knowledge of benefits Benefits: o o o o Incentives: o o o o Legally Required payments Contingent and Deferred Benefits Payments for time not worked Other Benefits Pay for Performance (P4P) Cash Rewards Project Revenue % Sharing Target Achievement (% Sharing)