CRITERIA IN COMPENSATION

Law of supply & demand

Prevailing wages

Ability to pay

Governmental factor

Standard & cost of living

Productivity

Bargaining power

Job requirements

DIVERGENT POLICIES HELP

To pay minimum wages

To pay more than prevailing wages

To pay higher wages

To pay competitive wages

COMPENSATION SCENARIO IN IT

SECTOR-POLICIES

The growth rate of recruitment is 14.5%

The average increase in the salary in 2006 was 16%

Salary offered based on

education,experience,position & skill

AVERAGE SALARY OFFERED IN

IT SECTOR BASED ON

EXPERIENCE

0 5 151

0

105

5

5

Salary(in

lakhs)

0-22-55-7

7-10

10+Years

TOP TEN HIGHEST SALARY

PRAYERS IN INDIAN IT SECTOR

• HCL Infosystems Limited

• Hexaware Technologies

• RMSI Private Limited

• Cadence Design Systems

• Tata Consultancy Services

• Aztecsoft Limited

• Nucleus Software

• Induslogic

• Kanbay International Inc

• Cybage Software Private Limited

COMPENSATION

POLICIES IN

INSURANCE SECTOR Policies cover the following

Accidental Insurance

Medical Insurance

Medi claims

Family health Insurance

Diabetes Insurance etc

Policies involve

Basic salaries

Perks

Allowances

Accomodation etc

AVERAGE SALARY OFFERED IN

INDIAN INSURANCE SECTOR

BASED ON EXPERIENCE

0 2 4 6 8

0-1

1-3

4-9

12+

Years

Salary(in lakhs)

TOP PLAYERS OF THE

INSURANCE SECTOR

• Life Insurance Corporation

• New York Life

• Prudential

• Met Life

• Birla Insurance

• Kotak Mahindra

• ICICI

• HDFC

COMPENSATION POLICY AT

ENTRY LEVEL-INSURANCE

SECTOR

00.5 1 1.5 2 2.5

3

Birla Insurance

Met Life Insurance

New York Life

Insurance

ICICI Prudential

LIC

In lakhs

COMPENSATION POLICY AT

MANAGERIAL LEVEL-INSURANCE

SECTOR

0 5 10 15 20 25

3-5Years

6-8Years

8-10Years

10+Years

In lakhs

COMPENSATION POLICY IN IT

ENABLED SERVICES

Policy is designed to attract young talents

Policy considers high attriition rate

High average salary

Compensation is target based

Compensation don’t cover job security.

Average salary offered by top players at entry level is

from 1.5 to 3 lakhs

For top management lucrative monetary & non

monetary benefits are offered.

IT ENABLED INDUSTRIES WITH

BEST COMPENSATION POLICY

Microsoft

Oracle

IBM

HCL

Infosys

Satyam

Sify

Wipro

LG

Samsung

COMPENSATION POLICIES IN

TELECOMMUNICATION SECTOR

Policies cover the following

Annual bonus

House rent allowance

Mobile allowance

Transportations

Paid vacations

Travel leaves etc

Average salary at entry level ranges from 0.5 to 2.5 lakhs

Average salary at managerial level ranges from 5 to 40 lakhs,based on experience.

TELECOMMUNICATION SECTOR

WITH BEST COMPENSATION

POLICY

Tata Teleservices

Reliance Communications

Bharti Airtel

Ericcson

Motorola

PHILOSOPHY OF COMPENSATION

PRODUCTIVITY PHILOSOPHY

PURCHASING POWER PHILOSOPHY

PRODUCTIVITY PHILOSOPHY-

ASSUMPTIONS

Use of updated tools,techniques & machineries

Optimum production

Minimising the unit cost of production

Lower price of goods

Expanded market

Increased income from sales

Profit sharing with employees

Utilising profit to regenerate process

PURCHASING POWER

PHILOSOPHY-ASSUMPTIONS

Good compensation to workers

Increased purchasing power of the large work force.

Effective demands for goods & services

Stimulation of future production.

GROWTH OF SERVICE INDUSTRY

Tourism sector is growing at the rate of 8%

Good compensation encourage tourists pouring into

holiday spots.

Average income of people have improved a lot

It helped to attain national prosperity

People expect quality service & they are ready to

pay for it

EXAMPLE

o Distribution of Compensation is as follows

Roadways-19%

Railways-19%

Airlines-27%

Desire for

more pay

Grievances

Search for a

higher paying

jobs

Absenteeism

Turnover

Pay dissatisfaction Lower

Attractivene

ss of job

Absenteeism

Job

dissatisfaction

Poor mental

healthHealth

Check up

NON IMPLEMENTATION OF PHILOSOPHY- CONSEQUENCES OF PAY

DISSATISFACTION

Strike

Psychological

withdrawal

Employee sets

Expectations

& goals

Performance is

rewardedEmployee considers

Equity in

compensation

Feedback

Employee sets new goals & expectations

Based on performance

COMPENSATION & PERFORMANCE MODEL

MINIMUM WAGE

It is provided for maintenance of life plus for

preservation of the efficiency of worker

MINIMUM WAGE PAID TO

Workers working in

• Agricultural sector

• Cement working establishments

• Bakery,Dairy products

• Chemicals

• Construction activities

• Transport Corporation

• Ice factories,cold storages

• Laundry sevice

• Textile Industry

• All shops & other establishments

MINIMUM WAGE IN INDIA

Applicable to labourers & workers

The Minimum Wage Act,1948 prevents labour exploitation.

It varies from state to state.

Change in wage rate-(per day)

Rs 35 in 1996

Rs 40 in 1998

Rs 45 in1999

Rs 66 in 2004

Rs 80 in 2007

MINIMUM WAGE IN DIFFERENT

STATES-W.E.F. JUNE,2008(Per

day)

Delhi 156 140

Uttar Pradesh 143.87 113.70

Rajasthan 91 83

Orissa 100 80

Tamil Nadu 158 29

West Bengal 100 81

Gujarat 115 50

Punjab 125 96

Manipur 79.40 72.40

Madhya Pradesh 101 93

FAIR WAGE

Equal to the rate prevailing in the same trade

& in the neighbourhood & equal to the

predominant rate for similar work throughout

the country,

LIVING WAGE

Higher than fair wage,provides for bare

essentials plus frugal comforts.

Living wage is concerned with

The needs of the workers & their families

Cost of living

Social security benefits.

WAGE DIFFERENTIAL

An element that works as wage scale

reflecting the average schedule of worker’s

pay that takes into account the performance

of related tasks or services

WAGE DIFFERENTIALS

• Occupational differentials

• Inter-firm differentials

• Regional differential

• Inter-Industry differentials

• Personal differentials

OCCUPATIONAL

DIFFERENTIAL

Wages are fixed based on different

occupations & various degrees of skill.

FUNCTIONS

Inducing workers to undertake more demanding jobs

Encouraging people to develop skills

Performing social function

INTER-FIRM DIFFERENTIALS

It reflects the relative wage level of workers in

different plants in the same area & occupation

INTER FIRM DIFFERENTIAL-THE

MAIN CAUSES

Difference in the quality of labour employed by firms

Imperfections in labour market

Difference in technological advance

Financial capacity of the firm

Size of the firm

INTER-AREA OR REGIONAL

DIFFERENTIALS

It occurs when workers in the same idustry or

same occupational group,but living in different

geographical areas are paid different wages.

REGIONAL DIFFERENTIAL-THE

MAIN CAUSES

Different rate of payment

Difference in cost of living

Availability of manpower

INTER-INDUSTRY

DIFFERENTIALS

It occurs when workers in the same industry

or in the same area but in different industries

are paid different wages

INTER-INDUSTRY DIFFERENTIAL-

THE MAIN CAUSES

Extent of unionization

Capacity to pay

Labour capital ratio

Stage of development

Supply-demand of needed skill

PERSONAL DIFFERENTIAL

It refers different payment made to different

individual working in the same plant or same

occupation

PERSONAL DIFFERENTIAL-THE

MAIN CAUSES

Merit

Individual output

Experience

JOB EVALUATION & WAGE

SURVEYPhase 1

Identify & study jobs

Phase 2

Internal equity

Job analysis

Job evaluation

Job ranking Job grading Factor comparison Point system

Phase 3

External equityWage survey

Department

Of labour

Employer

associations

Professional

associations

Self conducted

surveys

Phase 4

Matching Internal & external worthPricing jobs

Job evaluation worth Match Labour market worth