2. WHAT IS COMPENSATION
• Compensation is the remuneration received by
an employee in return for his/her contribution
to the organization
• Compensation is an integral part of human
resource management which helps in
motivating the employees and improving
organizational effectiveness.
3. Con…….
• Compensation provided to employees can
direct in the form of monetary benefits and/or
indirect in the form of non-monetary benefits
known as perks, time off, etc.
• Compensation does not include only salary but
it is the sum total of all rewards and
allowances provided to the employees in return
for their services
4. Compensation Objectives
To reward employees’ past performance fairly, in line
with efforts, skills and competencies
To attract and retain competitive high performing
Employees
To remain competitive in the labor market
To align employees’ future performance with
organizational goals
To communicate the employees their worth to the
organization
To provide employee social status
5. Compensation Policy Issues
Pay for performance
Pay for seniority
Salary increases and promotions
Overtime and shift pay
Probationary pay
Paid and unpaid leaves
Paid holidays
Geographic costs of living differences
6. Need for Compensation Management
. Motivatio
n
Compensation
Packages
Employee Need
Retention Satisfactio
n
Good compensation package will motivate the employees to
increase the organizational productivity.
Salary is just a part of the compensation system ,the employees have
other psychological and self-actualization needs to fulfill.
It will help the organization to attract and sustain the best talent
7. Component of Compensation
Management
• 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
9. Factors affecting Salaries and Wages
Cost of living
Supply and demand of labor
Government requirements (minimum wage rates)
Competitor wage scales
Trade Union influences
Labor productivity
10. Types of Compensation Management
• Direct compensation
• Indirect compensation
• Nonfinancial Compensation
11. Direct compensation
Medical
. Reimbursemen
Basic t Special
Salary Allowances
Direct
House Compensatio
Rent n Bonus
Allowances
Conveyanc Leave
e Travel
Allowances
12. .
Indirect Compensation
. Overtime
policy
Leave Hospitalizatio
Policy n
Indirect
Flexible Compensati
Timing on Insurance
Holiday
Leave
Homes
Retiremen travel
t Benefits
14. BENEFITS OF COMPENSATION
• An ideal compensation system will have positive
impact on the efficiency and results produced by
employees
• Sound Compensation/Reward System brings peace in
the relationship of employer and employees
• It will enhance the process of job evaluation. It will
also help in setting up an ideal job evaluation and the
set standards would be more realistic and achievable
• The system provides growth and advancement
opportunities to the deserving employees