This document discusses compensation and its different types. It defines compensation as benefits employees receive in exchange for their services, including cash compensation like wages and salaries. The main types of compensation covered are cash compensation, retirement plans, paid leaves, life insurance, and disability insurance. The document notes compensation affects employee motivation, an organization's ability to attract new talent, and its cost effectiveness. It provides a formula for calculating cost effectiveness ratios to compare new versus current compensation strategies.

1. Compensation
Muhammad Adeel & Fakhar Husnain

2. Agenda
❏What is Compensation
❏Different Types of compensation
❏Weight & Effect of Compensation
Policy for an organization

3. What is Compensation ?
❏Employee compensation refers
to the benefits (cash, vacation,
etc.) that an employee receives
in exchange for the service
they provide to their employer.

4. Types of Compensation
❏Cash Compensation
❏ wages or Salaries
❏Retirement Plans
❏Paid Leaves
❏Life Insurance
❏Disability insurance

5. Cash Compensation
❏Cash Compensations are all cash
payments earned by an employee in the
form of wages , salaries, overtimes Etc.
❏TCC (Total Cash Compensation)
❏ Cash Payments earned within a year of full-time
employment

6. Retirement plans
❏A retirement plan is a
financial arrangement
designed to replace
employment income
upon retirement.
These plans may be
set up by employers,
insurance companies,
trade unions, the
government, or other
institutions.

7. Paid Leaves
❏ Paid leaves are generally a pre-
determined number of paid leaves an
employer offers to employees, every
year. This leave is treated more like a
benefit from the employee's point of
view.

8. Life Insurance
❏sum of money either on the death of
the insured person or after a set
period.

9. Disability Insurance
❏ periodic payments of
benefits when a disabled
insured is unable to work
❏ The insurance product is
designed to replace
anywhere from 45 to 65% of
your gross income on a tax-
free basis

10. Effect on Organization
❏Employee Motivation
❏Effectiveness in attracting new Talent
❏Cost Effectiveness

11. Cost Effectiveness Ratio
Costnew strategy - Cost Current Practice
❏ Cost Effectiveness Ratio = -------------------------------------------------
Effectnew strategy - EffectCurrent Practice

12. Questions ?

13. References
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