COMPENSATION PACKAGE

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

What is Compensation ?

Compensation is the process of directly and indirectly

rewarding employees on a current or deferred basis, for their performance of assigned tasks.

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

Objectives of Compensation

Legal Compliance with all appropriate laws and regulations

Cost effectiveness for the organization Internal, External and Individual equity for employees Performance enhancement for the organization

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

Compensation Types

DIRECT
Base Pay Wages Salaries

INDIRECT
Benefits Medical Insurance Paid time off Retirement Pensions Workers Compensation

Variable Pay Bonuses Incentives Stock Options

Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

Division of Compensation -Responsibility

HR Manager
Develops Administers Compensation system Conducts job evaluation and wage surveys Develops wage / salary structures and policies and

Line Manager
Attempt to march

performance and rewards Recommend pay rates

and increment based on guidelines from HR unit Evaluate performance employee based

compensation purposes
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

COMPENSATION STRATEGIES Compensation Philosophies

Strategic Compensation Design Compensation and Organizational Culture Cost Effectiveness and Labour Market Positioning

Competency Based Pay Broadbanding and Career Development

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

Compensation Philosophy
ENTITLEMENT Seniority Based Across the board raises PERFORMANCE No raises for length of service No raises for longer service poor performers Guaranteed movement of scales Industry comparisons only Santa Claus Bonuses
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

Market adjusted pay structure Broader Industry comparisons Bonuses tied to performance results

Changing Compensation Strategies

Yesterday
Fixed salary Bonuses/perks executives only for

Today
Variable pay as add-on to salary Variable pay emerging throughout organization Flexible benefits Industry-based career, moving around Flatter team-based organizations Total compensation (Look at benefits, too)

Tomorrow
Low fixed salary, variable pay more

Variable pay common throughout the organization Portable benefits Skill-based, employment Network organizations interim virtual

Fixed benefits, reward long tenure Company-based career moving up Hierarchical organizations Cookie cutter pay plans
Copyright 2004 Asia Cryo-Cell Private limited.

Customized, integrated pay systems; pay, benefits, intangibles

In technological collaboration with Cryo-Cell International, Florida, USA.

Quartile Strategy Third Quartile Above-Market Strategy Second Quartile Middle-Market Strategy First Quartile Below-Market Strategy

Maximum

(25% of firms pay above and 75% pay below)

Medium

(50% of firms pay above and 50% pay below)

Minimum

(75% of firms pay above and 25% pay below)

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

Outcomes from Competency Based Systems

Organization-Related Outcomes
Greater workforce flexibility

Employee-Related Outcomes
Enhanced employee understanding of Organisational big picture Greater employee selfmanagement capabilities Improved employee satisfaction Greater employee commitment

Increased effectiveness of work Team Few bottlenecks in work flow Increased worker output
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

DESIGNING EFFECTIVE COMPENSATION PROGRAM

Job Analysis (Job Descriptions, Job Specifications)

Job Evaluation

Pay Surveys

Pay Policies

Pay Structures

Performance Appraisal

Individual Pay

Implementation, Communication, Monitoring

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

Salary Structure
Job Evaluation Results Pay Survey Data

Develop Market Line

Identify Different Pay Structures

Establish Pay Grades

Revise Pay Grades and Ranges as Needed Compare Current Pay to Pay Ranges

Compute Pay Ranges

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

COMPENSATION POLICIES AND PROCEDURES

Know what the competition is doing and benchmark your structure to reflect competitive practices for retention and recruitment purposes. Salaries should reflect level of responsibility employees may have in the organization. Form a compensation committee (preferably represented by management and employees). Contd...
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

COMPENSATION POLICIES AND PROCEDURES

Create a structure where salaries and any increases reflect company performance as espoused by the compensation committee. Develop and document a general company policy and strategy for pay increases. Liaison with the compensation committee for review, adjustments and approval.

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.

Team Based Compensation

Types of Team Incentives

Same size reward for each team member Different size rewards for each team member

Criteria for Best Team Work

Significant interdependence exists among the work of several individuals, and team work and co-operation is absolutely essential. Contd..
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

Team Based Compensation

Difficulties exist in identifying exactly who is responsible for different levels of performance.
Management wants to create or reinforce team work and co-operation among employees Rewards are seen as being allocated in a fair and equitable manner.

Copyright 2004 Asia Cryo-Cell Private limited.

In technological collaboration with Cryo-Cell International, Florida, USA.