OBJECTIVE OF MONOGRAPH :

The aim is not to measure income actually received by

workers, but the value which labor contributes to net output
along with other factors of production.

How employees works in an industries for its better
performance and getting the promotion in the industries , we all
group members think that, if theres good compensation system
in the organization, then automatically employees work
smoothly for the companies goals, and because of this company
achieve the targets and ultimately profit.





Cont.

The primary purpose of the monograph is to collect and
analyze current compensation data and develop guidelines for
employee compensation so that rural and small urban transit
managers have a meaningful resource to use when making wage
and benefit decisions.

The secondary purpose of monograph is to provide transit
managers with information that can be used to attract and
retain employees in the unique environment and with the
challenges faced by rural and small urban transit managers.

INTRODUCTION :

Compensation is an integral part of human resource
management which helps in motivating the employees and
improving organizational effectiveness.

When most people hear the term "employee compensation,"
they think about wages. Wages are a major part of
compensation, but compensation goes beyond
wages. Compensation consists of all of the tangible things that
employees get in return for working.


Cont.

Word - "all" and "tangible." Compensation does not include
intangible things like job satisfaction and pride.


However, it does include all of the various tangible things that
employees get for working. This would include things such as
health insurance, life insurance, paid vacations and paid sick
days. It would even include things like the value of any employee
discounts that the employee receives.


Cont.

Employee compensation can also be looked at as either a
tangible benefit or intangible. Good examples of tangible benefits
include insurance, holiday packages, maternity leaves, pension,
bonuses and share of profits. Intangible compensation is in form
of promotions, letters of appreciation and being provided with
nice looking offices.

In some organizations, employees receive annual increases
in their compensation both to cover increased cost of living and
also to enhance their employee compensation package
Modern organizations are making very significant changes
in their compensation systems in order to better fit the dynamic,
highly competitive business environment.

Employee compensation is the essence of human resource
management. Different organizations establish different types of
payment schemes to satisfy their workers. Some rely to
introduce monetary benefits along with other types of fringe
benefits. Monetary or non- monetary, provided to employees in
exchange of their contribution and service to the organization.
but compensation does not refer to intrinsic reward. it comprises
only the extrinsic rewards.


Cont

employee compensation often includes other benefits and
services.
In the United States, for example, health insurance is a very
common employee benefit and is often a significant part of an
employee compensation package. Companies may also offer
employees other types of insurance, including life insurance and
both short- and long-term disability insurance. Some companies
also offer compensation in the form of child-care services,
educational reimbursement, and employee discounts.
Direct compensation :

Direct compensation refers to monetary benefits
offered and provided to employees in return of the
services they provide to the organization.

Indirect compensation :

Indirect compensation refers to non-monetary
benefits offered and provided to employees instead of
the services provided by them to the organization.
Types of compensation :

1.Base compensation for the job.
2.Incentive compensation.
3.Supplementary compensation.

1.Base compensation for the job.

Base compensation is the basic pay fixed to various
categories of jobs, posts or position. This can be based on the job
, job content , job importance , job skill , etc . Thus, base
compensation is based on the job or the factors related to the
job. Most compensation is considered as monetary
compensation.

Monetary compensation is therefore, the most important
component of compensation. Determination of salary or is an
important function of the manager who manages the human
resource.




















2.Incentive compensation :

Among the various purposes of an attractive compensation
plan, a good base compensation enable the organization to
attract and retain capable people, to put in their best effort to
perform well . Incentive schemes are commonly used to
motivate people at work, though there are many non-monetary
incentive like appreciations, awards, publicity, participation , and
so on , money has remained the best motivator, and no other
motivator could take the place of money. Hence, monetary
incentives can primarily be used to motivate potential people to
perform in the best manner.

Supplementary compensation :

This is an additional monetary compensation provided to a
group. Additional annual wage ,employee profit sharing(present
day bonus), production sharing plans, employees equity
participation as an additional bonus etc, in every human
resource manager must plan for supplementary compensation
which are the employee will certainly appreciate. And
supplementary compensation is an additional compensation
package given to the employee annually, so that the employee
would be motivated to renew his commitment to work.

Cont.

As organizations continue to face mounting competitive
pressures, they seek to do more with less and do it with better
quality. As goals for sales volume, profits, innovation, and quality
are raised, employment growth is often tightly controlled and in
many cases, substantial cuts in employment have been made. To
accomplish more with fewer employees calls for effective
management of human resources. Typically, the employee
compensation system, plays a major role in efforts to manage
human resources better.

METHODOLOGY :

Secondary data :

We have collected secondary data with the help
internet ,and various books. This helped us to analyze
compensation system in the industries in a better way and
more specifically that- how the workers are actually work
in the industries and what kinds of changes are required in
the compensation systems.

literature :

Importance of compensation :

Compensation often includes an employees base salary and
additional benefits, such as health insurance, retirement plans
and performance bonuses.

The compensation packages a business offers to employees
affects the companys recruitment rate, retention rate and
employee satisfaction.

Cont..


Cognizant, India maintains employee benefit plans that
cover substantially all India-based employees. The employees
provident fund, pension and family pension plans are statutory
defined contribution retirement benefit plans. Under the plans,
employees contribute up to 12% of their base compensation,
which is matched by an equal contribution by Cognizant India.
Objective of Compensation :

Definition :
As compensation expert Richard Henderson notes, To develop a
competitive advantage in a global economy, the compensation
program of the organization must support totally the strategic
plans and actions of the organization.


Cont.

1.Adequate :
Minimal governmental, union, and managerial levels should
be met.

2.Equitable :
Each person should be paid fairly, in line with his or her
effort, abilities, and training.

3.Balanced Pay :
benefits, and other rewards should provide a reasonable
total reward package.












Cont.

4. Cost-effective :
Pay should not be excessive, considering what the
organization can afford to pay.

5.Secure Pay :
should be enough to help an employee feel secure and aid
him or her in satisfying basic needs.

6.Incentive :
providing Pay should motivate effective and productive
work.


Cont.

7.Acceptable to the employee :
The employee should understand the pay system and feel it
is a reasonable system for the enterprise and himself or her self.
The most important compensation objective guiding the
respondents 2012 decisions was Retaining Top Employees,
which was chosen by 66% of respondents.


Strategic Compensation:

Strategic compensation is determining and providing the
compensation packages to the employees that are aligned with
the business goals and objectives.

In todays competitive scenario organizations have to take
special measures regarding compensation of the employees so
that the organizations retain the valuable employees. The
compensation systems have changed from traditional ones to
strategic compensation systems.
Cont.

Compensation strategy is derived from the business
strategy . The business goals and objectives are aligned with the
HR strategies.

Then the compensation committee or the concerned
authority formulates the compensation strategy. It depends on
both internal and external factors as well as the life cycle of an
organization.

Change in Compensation Systems

With the behavioral science theories and evolution of
labour and trade unions, employees started asking for their
rights. Maslow brought in the need hierarchy for the rights of the
employees.

He stated that employees do not work only for money but
there are other needs too which they want to satisfy from there
job, i.e. social needs, psychological needs, safety needs, self-
actualization, etc.

Cont.

Now the employees were being treated as human resource.

Their performance was being measured and appraised
based on the organizational and individual performance.

Competition among employees existed.
Employees were expected to work hard to have the job security.
The compensation system was designed on the basis of job work
and related proficiency of the employee.

Importance of employees compensation or reward
system :


Compensation or reward system of the organisation is most
influencing factor for employee motivation, must remember.

If we observe history of causes of industrial disputes, employee
compensation and reward system issues were the main reason in
most cases.




Cont.

Good compensation system of rewards system in the
organisation will minimise industrial disputes and helps in
maintaining peace and harmony within the organisation.
Compensation system plays a key role in employee attrition.

Effective compensation system makes employee to put his full
efforts for achievement of organisation's goals and objectives.

Effective compensation system builds initiative towards work,
which in turn enhances the productivity of organisation.



Cont.

Effective compensation makes employees feel belongingness
towards the organisation.

Compensation system mostly influences retention of employee in
the organisation.

Most of employee satisfaction depends upon compensation a
reward system of organisation.

Effective compensation system builds employer brand, which
plays a key role in attracting talent.


Compensation systems are designed keeping in minds the
strategic goals and business objectives. Compensation system is
designed on the basis of certain factors after analyzing the job
work and responsibilities.

The survey of Compensation was conducted in November
and December of 2012. the results were analyzed several ways,
creating comparisons between -
Cont.


In small companies there less than 100 employees,
In medium-sized of companies like 100 - 1,000 employees and
In large companies there are more than 1,000.

1.Traditional Compensation Systems:





2.Todays Modern Compensation Systems:





1.Traditional Compensation Systems:

In the traditional organizational structures, employees were
expected to work hard and obey the bosses orders.
In return they were provided job security, salary increments
and promotions annually.
The salary was determined on the basis of the job work and
the years of experience the employee is holding.
Some of the organizations provided for retirement benefits
such as, pension plans, for the employees.
It was assumed that humans work for money, there was no
space for other psychological and social needs of workers.

Todays Modern Compensation Systems:

Today the compensation systems are designed aligned to
the business goals and strategies.
The employees are expected to work and take their own
decisions. Authority is being delegated. Employees feel secured
and valued in the organization.
Organizations offer monetary and non-monetary benefits to
attract and retain the best talents in the competitive
environment. Some of the benefits are special allowances like
mobile, companys vehicle; House rent allowances; statutory
leaves, etc.

Compensation structure :

Although the CEO is primarily responsible for setting
compensation budgets, the head of HR is primarily responsible
for setting compensation structures.

Almost 50% of respondents reported the head of HR sets
compensation structures at their organization, compared to only
42% of CEOs.

This pattern is seen across all industries and medium to ,
however, for small companies the CEO is typically the one who
sets compensation structures (56%).




The likelihood of conducting a compensation analysis at least
once a year increases with company size. The following lists the
percentage of respondents who conduct market and
compensation analysis annually or bi-annually:

o Small Companies: 46%
o Medium Companies: 49%
o Large Companies: 63%

EMPLOYEE ATTITUDES AND BEHAVIOR :

The higher the compensation rate, the greater the
satisfaction.

One would expect that an individual's satisfaction with
his or her compensation would simply be a function of the
amount of compensation received.

Issues of compensation :

Modern organizations are making very significant changes in
their compensation systems in order to fit the dynamic, highly
competitive business environment.
Firms increasingly are using things such as skill-based pay,
which compensates employees for the number and types of
skills they possess instead of the type of job they have.
Under this system, the employee's bonus does not become
part of his or her base pay. the bonus must be re-earned each
year. These changes, and numerous others, are designed to
help offset.
Employee compensation are basically divided into four
categories:

Guaranteed pay :
monetary [cash] reward paid by an employer to an
employee based on employee/employer relations. The most
common form of guaranteed pay is the basic salary.

Variable pay :
monetary [cash]reward paid by an employer to an
employee that is contingent on discretion, performance or
results achieved. The most common forms are bonuses and sales
incentives.




Benefits :
Programs an employer uses to supplement employees
compensation, such as [paid time off], medical insurance,
company car, and more.

Equity-based compensation :
A plan using the employers share as compensation. The
most common examples are stock option.

Compensation Given by MNCs to their Employees(Genuine
Data):

Google:

Google Inc. typically pay its employees 19% above the
market.

Google has given all of its employees $1,000 cash "holiday
bonuses" and salary thereafter increase by around 10%.


Cont.

The average intern at Google makes $5,787 monthly, while
software engineer interns can see monthly earnings as high as
$6,432, according to data on the best companies for internships
from job rating company Glassdoor.


Rohan Shah, a 20-year-old Google intern, gushed to
Business Insider earlier this month about his time with the
technology behemoth. In addition to his $6,100 per month pay
Shah said he had free access to 24 in-office cafes, a fully-
equipped gym and on-site massages.

Cont.

That's quite a chunk of change -- enough to put Google in
second place for highest intern salaries, according to Glassdoor.
Only research interns at Microsoft get better pay, pulling in
$7,050 per month.

The lowest wages among these top internships come from
Merrill Lynch, which pays $1,554 per month, and Scottrade,
which offers $1,715. Glassdoor's data comes from self-submitted
intern ratings of their experiences working at the organizations,
with no clarification as to whether salary numbers are reported
before or after taxes.

Facebook:

Mark Zuckerberg tasks some of his best engineers on this and
pays them $129,136 for it, to ensure the website attracts users,
according to Business Insider.
Three roles - research scientist, engineering manager and
machine learning engineer - all command about $123,000 a year.






Facebook pays its interns a little more than most other tech
companies, in an effort to attract young talent that may
otherwise choose a more established company like
Google. Software engineering interns, for example, earn
$74,700.



BIBLIOGRAPHY :

WWW.TRB.ORG

WWW.NATIONAL-ACADEMICS.ORG

WWW.IJAIEM.ORG

WWW.PAYSCALE.ORG