Compensation

And
Benefits

Presented By: Apurv Kumar

Aradhya Srivastava
Aditi Singh
Deepak Kapoor
Deepika Gupta
Dipannita Banerjee

Introduction
Human Resource is the most vital resource for any

organization.
It is responsible for each and every decision taken, each
and every work done and each and every result.
Employees should be managed properly and motivated
by providing best remuneration and compensation as per
the industry standards.
The good compensation will also serve the need for
attracting and retaining the best employees.

Compensation
Compensation is the remuneration received by an employee in
return for his/her contribution to the organization.
It is an organized practice that involves balancing the workemployee relation by providing monetary and non-monetary
benefits to employees.

Needs For Compensation

When managed correctly, it helps the organization

achieve its objectives and obtain, maintain, and retain a

productive workforce.
Compensation is a key factor in attracting and keeping the
best employees and ensuring that your organization has
the competitive edge in an increasingly competitive world.
Without adequate compensation, current employees are
likely to leave and replacements will be difficult to recruit.
The outcomes of pay dissatisfaction harm productivity
and affect the quality of work life.

Compensation System
Indirect
Protection Programs
Medical

Insurance
Life Insurance
Disability Income
Pension
Social security

Direct
Base Pay
Salary
Wage

Merit Pay

Cont..
Indirect
Pay For Time Not

Worked
Vacations
Holidays
Sick Leave
Jury Duty

Direct
Incentive Pay
Bonus
Commission
Piece

Rate
Profit Sharing
Stock Option
Shift Differential

Cont..
Indirect
Services And

Perquisites
Recreational
Facilities
Car
Financial Planning
Low-Cost or Free
Meals

Direct
Deferred Pay
Savings

Plan
Stock Purchase
Annuity

Employee Satisfaction And Motivation

Issues In Compensation Design
People have no basic or Instinctive need for money, A

commodity that is important only if it can satisfy others

needs.
Organization frequently overestimate the value workers
place on monetary reward.
For example : If money were the primary motivation for

working why would hourly employees object to over time,

given the premium rate of pay associated with it???

The EQUITY and EXPECTANCY theories can help

explain employees reaction to compensation systems

Equity Theory
Equity is balance between the inputs an individual brings

to a job & the outcomes he or she receives from it.

Employees inputs includes experience, education, special
skills, efforts and time worked.
Outcomes includes pay, benefits, achievement,
recognitions, and any other rewards.
Inputs and outcomes are in different units, and are hard to
compare to each other directly.
Equity theory suggest that individuals determine whether
they are being fairly treated by comparing their own
inputs/outcomes ratio to the input/outcome ratio of others.

Cont
Person
Comparison Others
My Rewards(outcomes)
Others Rewards
My Contributions(inputs)
Others Contribution

Equity

My Rewards(outcomes)

Others Rewards

My Contributions(inputs)

Others Contribution

Inequity
(under reward)

Action to restore equity from Under reward Inequity

Person could ask for a raise in salary.
Person could reduce contributions (work less hard)
Person could try to get others to increase contribution(work harder)
Last resorts : quit or choose another comparison other.

Cont..
My Rewards(outcomes)
My Contributions(inputs)

Others Rewards
Others Contribution
Inequity(over reward)

Action to restore equity from Over Reward Equity

Person could increase contribution
Person could ask for a pay cut
Person could attempt to get other a raise
Person could attempt to get other to reduce his or her
contribution
Last restore quit the job or choose another comparison

Designing equitable compensation

system
Three element of equity can be distinguished as external,

internal and individual.

External equity refers to comparison of similar jobs in

different organizations.
Internal equity refers to the relationship among the jobs
within a single organization.
Individual equity refers to comparison among the individual
in the same job with the same organization

Internal equity
To measure the value of jobs in relation to organizational
objectives rewards are usually based on important
components to make one job worth more than other these
aspects called compensable factors.
The five most frequently used job evaluation methods
are:
Job ranking
Job grading
The points method and
Factor comparison

Job evaluation methods..

The major purpose of job evaluation is to determine relative worth of the jobs
within an organization.
Basis for job hierarchy
Non quantitative

Job v/s job

Job ranking

Job v/s scale

Job grading

Quantitative

Factor comparison

Point method

External equity
There is no absolute way to rate pay for a job
Setting pay rates, organization seek to integrate the

external information with what they have learnt through

internal evaluation of jobs this process is called pricing the
wage structure.
Wage and salary surveys
Identifying key jobs
Selecting organization to survey
Collecting data
Pay level policy

Individual equity
Wage grades are established and all the jobs within the

grade are paid identically.

Designing pay ranges
Establishing pay ranges
Broad branding
Above and below range employees

Setting individual pay

Seniority
Merit pay
Skilled based pay

Linking pay to performance

Employers believes that reward in general and incentives in
particular influence performance.
Reason to link pay to performance
Motivation

Expectancy
Instrumentality
Valence

Retention
Productivity
Cost savings
Organizational objectives

Benefits
The major reason for the increased attention in benefits is
costs.
Role of benefits:
To attract new employees
To retain the customers

Types of benefits:
Mandatory protection programs
Social security
Unemployment compensation
Workers compensation

Cont..
Types of benefits
Compensation for time not work

Holidays
Vacations
Sick leave
Personal days
Other leave

Other benefits
Child care assistance
Wellness program
Educational assistance
Insurance benefits
Workers
Retirement benefits
Social security
Pension plan
Cash balance pension plan
Early retirement plan

Examples of different organizations

compensation and benefits plan
Google
Procter & Gamble
Apollo
Wipro

Google
Health care , plus on-site physician and dental care
Vacation days and holidays, and flexible work hours
Maternity and parental leave
Adoption assistance
Google Child Care Center
Fuel Efficiency Vehicle Incentive Program
Employee discounts
Onsite dry cleaning

Procter & Gamble

Financial Benefits & Compensation
Health & Family-Friendly Benefits
Vacation & Personal Time-Off
Employee Engagement.
Community Involvement

Apollo Hospitals
Benefits include the traditional medical and dental.
401k, company-paid life insurance.
Child care subsidies
Flex time
Educational assistance and
Professional development programs.

Wipro
Flexible Benefits.
Medical Assistance Plan and Medical claim benefits.
Group Life Insurance Program and Employee Deposit

Linked Insurance (EDLI) Program.

Wipro Cares Mitr
Kids @ Wipro (fun way of learning)
Fit for Life.
Eco Eye.