Compensation

Cash, Bonuses, Insurance,

Vacation, Holidays
Perks, Recognition
 COMPENSATION STRUCTURE –
VARIOUS PERSPECTIVES
Internationa
Historical/ Past Present
l
Basic Salary
Basic Salary
Dearness Allowance
Basic Salary Basic Salary
Special Allowance
Special Allowance
City Compensatory Allowance

Education Allowance Flexible Pay Plan

Car Facility/ Car Facility/
Conveyance Allowance Conveyance Allowance
Driver Allowance
Business Attire
Staff Welfare
House Rent Allowance House Rent Allowance
Leave Travel Allowance Leave Travel Allowance
Medical Reimbursement Medical Reimbursement
Hard Furnishing

Variable Pay Variable Pay Variable Pay Variable Pay

Bonus / Ex-Gratia
Retirals – PF, SA &
Retirals – PF, SA & Gratuity Retirals–PF, SA & Gratuity Social
Gratuity
Loans Loans Security
 PAY FOR JOB
For…
Day to day responsibilities & Determined by…
ongoing performance
Long-term contribution Market + Inflation +
Potential +
Skill/competency Performance
development & work style Rankings

AWARD FOR PERFORMANCE

For…
Special objectives & results Determined by…

“Above & Beyond” expected Results/Target

contributions achievement only
Consistent good performance –
year after year
 What does
compensation (what
you receive for your
services) mean to you?
 A Definition . . .
• All forms of
– financial return,
– tangible services and
– benefits
• that employees receive as part of their
employment relationship
TOTAL COMPENSATION

Fixed
Attractor Pay

Variable
Motivator Pay

Retainer Benefits
 Components of a Total
Compensation Program - 1
• Financial
• Direct
– wages, salaries, commissions, bonuses
• Indirect
– insurance plans
• life, health, dental, disability
– social assistance benefits
• retirement plans, social security, workers’ comp
– paid absences
• vacations, holidays, sick leave
 Components of a Total
Compensation Program - 2
• Non-Financial
• The Job
– interesting, challenging, responsible
– opportunity for recognition, advancement
– feeling of achievement
• Job Environment
– policies, supervision, co-workers, status symbols,
working conditions, flextime, compressed work week,
job sharing, telecommuting, flexible benefits programs
Compensation and Benefits
• In addition to a base salary, compensation includes:
– House rent allowance (HRA*).
– Medical allowance.
– Dearness allowance (DA*).
– Leave travel allowance (LTA*).
– Commuter allowance.
– * These allowances are frequently referred by their acronyms

• Several categories of leave (vacation) exist:

– Sick leave: 7 days (medical certificate required).
– Casual leave: 7 days (for personal and family
emergencies, requires prior permission of boss).
Employees can take maximum 2 days at a time
– Annual leave: 3 weeks (after one year of employment).
– Federal holidays: About 20 days.

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 Compensation and Benefits
• Retirement age:
– 55-60 years (private sector);.
– 60 years (public sector).
• Retirement Benefits: Employees receive two lump-sum payments when
they retire:
– Provident Fund (similar to 401(k))
• Typical contributions: 10-12 percent of base salary (employer and
employee).
• Payable on retirement, voluntary separation, death.

– Gratuity
• Only employer contributes (15 days salary per year of service).
• Tax-exempt for employees.
• Payable on retirement, voluntary separation, death.

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 Compensation and Benefits
• Organizations are seen as an extension of the family.

 Provide both short-term and long-term personal loans.

 Personal loans for housing, car, home maintenance and family

emergencies.

 Loan amounts vary by position and level in organization.

 All employees after their probation (confirmation) period are eligible.

• Many medium and large organizations have cafeterias with

subsidized lunch facilities.

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 Compensation and Benefits
• Executives receive special benefits to reflect status such as:

• Club memberships.
• Overseas training.
• Company housing.
• Company cars.
• Provided with drivers.
• International cars.
• Operational and maintenance costs.
• Phone bill reimbursements.
• Organizations provide business and cell phones.

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 Factors that Influence Wage
Levels
Conditions of
Labor Market Compensation
Policy of
Organization
Area Wage
Rates Worth of
Job
Cost of WAGE
Living
MIX Employee’s
Relative Worth
Collective
Bargaining
Employer’s
Legal Ability to Pay
Requirements
Indian Wages Laws
Payment of
Wages Act 1936

Minimum Wages
Act 1948

Equal
Remuneration Act
 Comparable Worth

The concept that male and female jobs

that are dissimilar, but equal in terms
of value or worth to the employer,
should be paid the same