2. Compensation
Compensation is the total amount of the
monetary and non-monetary pay provided to an
employee by an employer in return for work
performed as required.
Compensation also includes payments such
as bonuses, profit sharing, overtime pay,
recognition rewards and checks, and sales
commission.
3. Compensation
According to Milkovitch and Newman in their 2005
book, Compensation, it is “all forms of financial returns and
tangible services and benefits employees receive as part of an
employment relationship.”
“Financial returns”: an individual's base salary, as well
as short- and long-term incentives.
“Tangible services and benefits”: insurance, paid
vacation and sick days, pension plans, and employee
discounts.
4. Objectives
The ultimate goal of compensation planning is to reward
and encourage employees to do well in their jobs. Some of
the objectives are sought to be achieved through effective
compensation planning like:
Entice the employees
Retain the best talent
Ensure equity
Reward new ideas and behaviors
Cost control
Compliance
5. How Is Compensation Used?
Compensation may be used to:
Recruit and retain qualified employees.
Increase or maintain morale/satisfaction.
Reward and encourage peak performance.
Achieve internal and external equity.
Reduce turnover and encourage company loyalty.
Modify (through negotiations) practices of unions.
6. Components Of A Compensation
System
Job description
Job analysis
Job evaluation
Pay structures
Salary surveys
Policies and regulations
7. Labor Legislations
The Employee’s Provident Fund And Miscellaneous
Provisions Act, 1952
The Employee State Insurance Act, 1948
The Equal Remuneration Act, 1938
The Industrial Disputes Act, 1947
The Factory Act, 1948
The Minimum Wages Act, 1948
The Payment of Wages Act, 1936
The Payment of Bonus Act, 1965
The Payment of Gratuity Act, 1972