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Presented By Sujata Mhatre Roll No 23 Specialization {HR} 1

Content
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2. 3. 4.

Chapter 9:- Pay for Performance: The Evidence Chapter10:- Pay-for-Performance Plans Chapter 12:-The Benefits Determination Process Chapter 13:- Statutory Benefit including Health Care, Employee Welfare And Retirement Benefits
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Employers want employees to perform in ways that lead to better organizational performance Organizational strategy is the guiding force that determines what kinds of employee behaviors are needed
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Behaviors that compensation needs to reinforce Compensation should be sufficiently attractive to make recruiting and hiring good potential employees possible (attraction) Need to make sure the good employees stay with the company (retention) Need to find ways to motivate employees to perform well on their jobsto take their knowledge and abilities and apply them in ways that contribute to organizational performance
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Performance measurement Need to accurately measure performance to tell if compensation efforts are working Performance management
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How do we get good employment prospects to join our company? How do we retain these good employees once they join?

How do we get employees to develop skills for current and future jobs?
How do we get employees to perform well on their current job?
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In the simplest sense, motivation involves three elements: 1. What is important to a person? 2. Offering it in exchange for some 3. Desired behavior
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 Employees

learned what behaviors were important as part of the socialization process is designed to support this risk-taking

Compensation

behavior

Total

Reward System Compensation is but one of many rewards that influence employee behavior

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Key factors affecting a persons decision to join a firm

Level of pay

Pay system characteristics

Job candidates look for organizations that fit their personalities

Reward systems should be designed to attract people with desired

Personalities
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Values

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Factors

impacting turnover Pay based on individual performance Group incentive plans Level of employee satisfaction with pay Type of pay system

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Other rewards affect the decision to stay Work variety and challenge Development opportunity Social Status recognition Work importance Benefits

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Evidence is unclear
Relevance of skill-based pay

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Not clear if performance of individuals can be increased by tying it to pay

If the incentive depends on individual performance, applicants find the company more attractive Team-based incentives, in contrast, are less attractive

A number of recent studies provide strong evidence that pay for performance has a direct and, at times, substantial impact on firm performance
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Efficiency Strategy Structure Standards Objectives Measures Eligibility Funding

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Chpt:10 Pay-forPerformance Plans

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Pay for performance plans signal a movement away from entitlements

Pay will vary with some measure of individual, team, or organizational performance

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Types of plans

Use of Different Variable- Pay-Plan Types

Base vs. Variable Pay Competition from foreign competitors

Fast-paced business environment
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Increasing interest in variable pay

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Merit Pay Lump-Sum Bonuses Individual Spot Awards Individual Incentive Plans

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A merit pay system links increases in base pay to how highly employees are rated on a subjective performance evaluation Issues Expensive Doesnt achieve the desired goal: improving employee and corporate performance
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Improve accuracy of performance ratings Allocate enough money to truly reward performance Make sure size of merit increase differentiates across performance levels
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 Increasingly Not

used substitute for merit pay

built into base pay

Viewed Less

as less of an entitlement than merit pay

expensive than merit pay over the long run

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Viewed as highly or moderately effective Typically awarded performance

Special projects Exceptional performance

for

exceptional

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Offer a promise of pay for some objective, pre-established level of performance

Common feature - An established standard against which employee performance is compared to determine magnitude of incentive pay

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Dimension on which incentive systems vary Method of rate determination Specified relationship between production level and wages

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 Substantial

contribution to: Productivity raise Lower production costs Workers earnings Reduces direct supervision to maintain reasonable output levels Enables labor costs to be estimated more accurately than under payment by time Helps costing and budgetary control
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 Conflicts

may emerge between employees managers Introduction of new technology may be resisted by employees Reduced willingness of employees to suggest new production methods Increased complaints of poor maintenance, hindering employee efforts to earn larger incentives
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Improve organizational performance Use organizational measures Measured periodically

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 Uses

a collection of measures Pinpoints areas of success Indicates areas to improve of measures Financial results Process improvements Customer service Innovation
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Categories

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Many varieties of teams Level problem Complexity

Control
Communication
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Employees earn bonuses tied to unit-wide performance as measured by a predetermined, gain sharing formula

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Strength of reinforcement Productivity standards Sharing the gains Scope of the formula

Perceived fairness of the formula

Ease of administration

Production variability
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Predetermined index of profitability Employees may not feel their jobs directly impact profits The trend in recent variable-pay design is to combine the best of gain-sharing and profitsharing plans The plan must be self funding Along with having the financial incentive, employees feel they have a measure of control

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Success

sharing plan Employee base pay is constant Variable pay increases in successful years No reduction in base pay and no variable pay in poorly-performing years Risk sharing plan Employee base pay varies Base pay often reduced in poor performance years Shifts part of risk of doing business from company to employee

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Long-term incentives (LTIs) focus on performance beyond the one-year time line used as the cutoff for short-term incentive plans Recent explosive growth in long term plans is spurred in part by a desire to motivate longerterm value creation
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Employee Stock Ownership Plans (ESOPs) Performance Plans (Performance Share and Performance Unit)
Broad-Based Option Plans (BBOPs)
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Chapter:-12The Benefits Determination Process

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Employee Benefits are the part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments, e.g. life insurance, pension, workers compensation, vacation

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Employees:

Expect benefits as part of their total compensation Do not understand true value of benefits Often undervalue their benefits

Often take benefits for granted

Often cannot list all benefits received Have preferences regarding types of benefits they want

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Benefits Planning and Design Issues How to attract good employees How to deal with undesirable turnover Integrating benefits with other compensation components
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Who should be protected or benefited? Series of questions need to be addressed How much choice should employees have among an array of benefits? Concerns choice (flexibility) in plan coverage Standard benefit package Cafeteria-style, or flexible, benefit plans

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How issues associated with flexibility should benefits be financed? Noncontributory Contributory Employee financed Are your benefits legally defensible?

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Demographic differences Age Sex Marital status Number of dependents Blue collar vs. white collar Employee survey via questionnaire Flexible benefit plan
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Three Administrative Issues 1 Communicating about the benefits program 2 Claims processing 3 Cost containment
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Three elements of effective communications

Company must spell out its benefit objectives and ensure communications achieve the objectives Match the message with the appropriate medium

Use of intranet an internal organizational online

Content of communications package must be complete, clear, and free of complex jargon
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Web through which all forms of communication within the organization can be streamlined Streamlined call center operation

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Methods

of communication Employee handbook Personalized benefit statements Meetings with employees Multi-media presentations Intranet Streamlined call center operation
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Company Benefits

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Claims processor must: Determine whether the act has, in fact, occurred Determine if the employee is eligible for the benefit Calculate the payment level
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Prevalent Practices
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Probationary periods Benefits limitations Co-pay Administrative cost containment

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Probationary periods Benefit limitations

Co-pay
Administrative cost containment

Retaining strategic function internally

Significant movement to outsourcing
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Chapter 13 Statutory Benefit including Health Care, Employee Welfare And Retirement Benefits
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India has enacted various legislation and an ordinance to provide for social security for industrial workers:

Workmen Compensation Act 1923

Provides for workers or their survivors in case of industrial accidents and occupational diseases, resulting in disablement or death.
Provides for health care and cash benefit for in case of maternity, sickness and employment injury of workers.

The Employees State Insurance (ESI) Act,1948

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It was enacted to provide a kind of social security after retirement it mainly provides old age benefits It regulates employment of women before and after childbirth and provides for 12 weeks maternity leave and the act is not applicable to employees covered under the ESI Act 1948
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The Employees Provident Fund and Miscellaneous Provisions Act , 1952

The Maternity Benefit Act, 1961

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Provides for job and income security for workers covered under the Act- any retrenchment, closure or lay-off requires notice, consultation and prior administrative clearance from the competent authority

The Industrial Disputes Act

The Minimum wage Act and Payment of Wages Act

The Minimum wage Act guarantees minimum wages and the Payment of Wages Act guarantees that wages are paid as stipulated and in accordance with the norms on time limits for payment, payment for extra work, permissible deductions, etc

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The Payment of Gratuity Act, 1972

Provides for payment of Gratuity at the rate of half

months wages for every completed year of service or part thereof, in case of seven months

Employees Pension Scheme(EPS) was introduces in 1995 8.33% of covered earning upto Rs. 6,500 per month are diverted from employers contribution of 12% to EPS
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Pension

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Medical Care and Health Benefits for employees should provide for sickness, maternity, employment injury and occupational health/disease. This benefits are non statutory except in case of maternity, employment injury and occupational health/disease. The ESI Act provides for health care and cash benefits for employees covered by it in cases of employment injury, sickness and maternity
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Medical Care and Health Benefits:-

The important legislation in the area of occupational safety and health are the Factories Act1948,the Mines Act 1972 and The Dock Workers Act 1986

Occupational Health:-

Statutory welfare funds have been set up in the coal, mica, iron ore, manganese ore, limestone and mine sectors and in beedi and cine industries to supplement the efforts of employment and the government
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Welfare Funds:-

Accident Insurance Scheme Sick Leave Educational allowances House Building Advances Employment of dependent Death Relief/Benevolent fund

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Thank You
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