Professional Documents
Culture Documents
It refers to wide range of financial and non-financial rewards to employees for their services rendered to the organization.
Compensation
Financial
wages salaries
Employee benefits
Non- Financial
Family Picnic
Paid vacations
Insurance
Free travel facilities
Maternity leave
Company car
Retirement benefits
HRA
Consistency in compensation
Compensation policy
Perquisites
Components of Compensation
Incentives
Fringe Benefits
Wages
Salary
Incentives
Fringe benefits
Additional payment Linked with productivity Individual or group basis Variable pay
Provided to managerial personnel To facilitate job performance or to retain them Perquisites It includes
Car Club membership Free residential accommodation
Components of Compensation
Incentives
Fringe Benefits
Deferred income
Loss of job
Spouse(family) continuation
Dimensions
Enhance dignity and satisfaction from work performed Leads to self worth and pride in making a contribution Allocate sufficient resourced to perform work assignments Provide necessary information and skills Maintain job related interest and satisfaction Offer supportive leadership and management Skills and interests in coaching and counseling Praise for the job well done Constructive feedback Flexible policies, rules and regulations
Grant sufficient control over the job to meet personal demands Opportunity to participate in decision making process Scheduling work activities 2 part time employees to share one full time job Casual dress day
Nature of HR market
Cost of living Trade union Legal framework
Union bargains with management Weapons-strikes, gheroes etc. Guidelines given by laws about Eg. wages act 1936
Productivity
Nature of HR market
Cost of living
It determine the organizational attitude and hence its remuneration compensation depends upon earning Difficult job higher compensation Job evaluation is done
Ability to pay
Nature of jobs
Nature of personnel
They are supplementary compensation over and above base compensation and consists of incentives and variable payments according to individual or group output.
They are tangible benefits either in the form of cash or other kinds Eg: housing, traveling allowance, facility of refreshment and lunch etc
Statutory Benefits
Mandatory and provided by all the organizations E.g.: paid holiday leaves
Voluntary Benefits
Determined by the individual organizations on their own E.g.: transportation facilities, child care,
Compensation benefits
Injuries during the course of employment Death during the course of employment
Insurance Benefits
1.
Indian industries have recognized the importance and are also providing such benefits but progress in this area has not been very encouraging.
Reason- industrial development started late here in comparison to developed nations i.e only after 1947 and most of the industries are still not in position to offer a great benefits due to low profits
INCENTIVE PLANS-Incentive wages relate earnings to productivity and may use bonuses, premiums or a variety of rates to compensate for superior performance.
Salary
Commission
Combination
Group incentive
Individual incentive
Piece wage
Time wage
Group incentive
Individual incentive
Copartnership
ESOP
Profit sharing
Cafeteria
compensation
Based on time
Based on productivity
Halsey plan
Rowan plan
Gantt plan
It
is the right given to employee to purchase a fixed number of shares of company stock at a specified price for a limited period of time.
It
gives the employees an ownership of the company due to which he can participate in the companys affaires
It offers an option to purchase a certain of stock in the future at a stated price or in the present at a price lower than the market price. Makes the employee a part owner of company Mutuality of interest is created between the individual and the company Stocks are held in an employee stock ownership trust until the employee chooses to withdraw from the plan or wants to leave the company
Esos i.e. employee stock option scheme, is a voluntary scheme on the part of the company to encourage employees participation in the company Suitable percentage of reservation can be made by the issue of the employees of the company Under existing guidelines- 5% of the new issue may be reserved for the esos subject in a maximum limit of 200 shares per employee who agree to participate the esos Membership of the esos should be restricted only to the permanent employees of the company
1.
Profit sharing means a system to distribute a portion of the profits of the organization to employees.
It is an agreement by which employees receive a fixed portion of profit.
2.
1. 2.
3.
Agreement between employers and employees for sharing of profit Bonus paid to employees in addition to their wages and profit as an incentive for higher performance Workers share only profits not the losses Criteria for distribution of profits is decided well in advance-based on the position of an employee in an organization
4.
1.
Industry basis- profits of a number of industrial units in the same industry may be group together to determine the share for the laborers. Unit basis- simplest way of giving a labourer a share in the profits of individual undertaking in which he is employed
2.
3.
Department basis- workers in a particular department share in the profits made by that department.
Locality basis- industrial units in particular locality may pool their profits to determine labours remuneration by profit sharing. Individual basis- a worker receives a proportion of the profit which may have been earned by a business through the effort of that individual worker.
4.
5.
Gainsharing is a system that includes: (1) A financial measurement and feedback system to monitor company performance against an agreed benchmark and distribute gains in the form of bonuses when appropriate, and (2) A focused involvement system to eliminate barriers to improved company performance.
1.
organization by promoting awareness, alignment, teamwork, communication and involvement whereas in profit sharing the purpose is to share the financial success of the total organization and encourage employee identity with company success. facility, site, or stand-alone organization whereas in profit sharing The plan typically applies organization-wide
2.
3.
measures (productivity, quality, spending, service) whereas in profit sharing Payout is based on a broad financial measure of the organizations profitability.
4.
Funding- in gain sharing Gains and resulting payouts are self-funded based on savings generated by improved performance whereas in profit sharing Payouts are funded through company profits Employee eligibility- in gain sharing Typically all employees at a site are eligible for plan payments whereas in profit sharing Some employee groups may be excluded, such as hourly or union employees
5.
Principle
Employees are allowed to select their own incentives schemes from a variety of possibilities this arrangement is known as smorgas Board This program requires more information to be provided to employees by management.
A smart compensation plan with right mix of monetary and non-monetary compensation can motivate the employees to stretch their limits and perform beyond expectation leading to higher productivity and profits Good communication and uniformity of procedure is the key to success of such plans