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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