Comp Mgt Slides

8/6/2019 Comp Mgt Slides

1/28

B.G. Venkatesh PrasadB.E.,MBA.,-(HRM &Marketing) M.Phil.,AMIETE., MIE., (Ph.D.)

FACULTY-MBA DEPARTMENT

PLACEMENT CO-ORDINATORSAGAR BUSINESS ACADEMY

BANGALORE-560078

CELL NO - 9986954255


2/28

COMPENSATION MANAGEMENTCOMPENSATION MANAGEMENT


3/28

Sufficient income should beSufficient income should beprovided to permit a person toprovided to permit a person to

Perform the WorkPerform the Work----------TawneyTawney


4/28

Compensation is the Renumeration paidCompensation is the Renumeration paidby the management to an employee forby the management to an employee for

his contribution to the organization whichhis contribution to the organization whichhelps in motivating the employees andhelps in motivating the employees andimproving organizational effectiveness.improving organizational effectiveness.


5/28

COMPENSATION RESPONSIBILITIESCOMPENSATION RESPONSIBILITIES

To attractCompetent EmployeesTo attractCompetent Employees To ensure Stable Earnings and growth ofTo ensure Stable Earnings and growth of

the Employeesthe Employees

To develop Trust and Confidence in theTo develop Trust and Confidence in theEmployeesEmployees

To Eliminate DisputesTo Eliminate Disputes To Retain TalentsTo Retain Talents


6/28

Need of CompensationNeed of Compensation

ManagementManagement ToTo motivate the employeesmotivate the employees to increase theto increase the

organizational productivity.organizational productivity.

In running an organization effectively andIn running an organization effectively andaccomplishing its goals.accomplishing its goals.

Psychological and selfPsychological and self--actualization needsactualization needsto fulfill.to fulfill. Thus, compensation serves theThus, compensation serves the

purpose.purpose.

To attract and sustain the best talent.To attract and sustain the best talent.


7/28

Objectives of CompensationObjectives of Compensation

To Acquire qualified competent personnelTo Acquire qualified competent personnel To Retain the present employeesTo Retain the present employees

To ensure desired behaviorTo ensure desired behavior To Pay according To The Content AndTo Pay according To The Content AndDiffucultyDiffuculty

To facilitate Payroll & Pay SystemTo facilitate Payroll & Pay System To simplify collective bargainingTo simplify collective bargaining Control costsControl costs Comply with legal regulationsComply with legal regulations


8/28

Nature of CompensationNature of Compensation

Basic Pay to match the JobBasic Pay to match the JobSpecification and DescriptionSpecification and Description

Variable Pay to link it with extraVariable Pay to link it with extrawork or better performancework or better performance

Benefits to boost morale and provideBenefits to boost morale and provide

comfort as rewards to Loyaltycomfort as rewards to Loyalty


9/28

Types of CompensationTypes of Compensation

DIRECT COMPENSATIONDIRECT COMPENSATION ------------------(Monetary benefits)(Monetary benefits)

INDIRECT COMPENSATIONINDIRECT COMPENSATION----------------------(Non(Non--monetary benefits)monetary benefits)


10/28

DIRECT COMPENSATIONDIRECT COMPENSATION

Direct compensation refers to monetaryDirect compensation refers to monetarybenefits offered and provided tobenefits offered and provided toemployees in return of the services theyemployees in return of the services theyprovide to the organizationprovide to the organization


11/28

Direct CompensationDirect Compensation

Basic salaryBasic salary House rent allowance (HRA)House rent allowance (HRA)

ConveyanceConveyance Leave travel allowanceLeave travel allowance Medical reimbursementsMedical reimbursements

Special allowancesSpecial allowances BonusBonus Pf/GratuityPf/Gratuity


12/28

Direct CompensationDirect Compensation


13/28

INDIRECT COMPENSATIONINDIRECT COMPENSATION

Indirect compensation refers to nonIndirect compensation refers to non--monetary benefits offered and provided tomonetary benefits offered and provided toemployees in lieu of the services providedemployees in lieu of the services providedby them to the organization.by them to the organization.


14/28

INDIRECT COMPENSATIONINDIRECT COMPENSATION

Leave PolicyLeave Policy Overtime PolicyOvertime Policy--OTOT Car policyCar policy Hospitalization, InsuranceHospitalization, Insurance

Leave travel AssistanceLeave travel Assistance

Retirement BenefitsRetirement Benefits Holiday HomesHoliday Homes


15/28

Approaches of compensationApproaches of compensation

management:management:The 3P system ensures that humanThe 3P system ensures that humanresources management plays a centralresources management plays a central

role in management decision making androle in management decision making andthe achievement of business goals.the achievement of business goals.

Paying for PositionPaying for Position

Paying for PersonPaying for Person Paying for PerformancePaying for Performance


16/28

Legislations to Compensation ControlLegislations to Compensation Control

Statutory LegislationStatutory Legislation

Benefit ProtectionBenefit Protection


17/28

STATUTORY LEGISLATIONSTATUTORY LEGISLATION-- To Protect Employment SecurityTo Protect Employment Security Fair Compensation PaymentFair Compensation Payment Gratuity PaymentGratuity Payment Old Age BenefitsOld Age Benefits


18/28

BENEFIT PROTECTIONBENEFIT PROTECTION

PF SchemePF Scheme Payment of Bonus ActPayment of Bonus Act ESI ActESI Act Maternity Benefit SchemeMaternity Benefit Scheme


19/28

Compensation PhilosophyCompensation Philosophy

A pay philosophy is a company's commitment toA pay philosophy is a company's commitment tohow it values employees. A consistent payhow it values employees. A consistent payphilosophy gives the company and the employeephilosophy gives the company and the employeea frame of reference when discussing salary in aa frame of reference when discussing salary in anegotiationnegotiation

For companies in the private sector, this usuallyFor companies in the private sector, this usuallyrequires a competitive pay philosophy. Forrequires a competitive pay philosophy. Forcompanies in the public sector, this means acompanies in the public sector, this means awellwell--rounded philosophy, with a focus onrounded philosophy, with a focus onbenefits and work life.benefits and work life.


20/28

INTERNATIONAL COMPENSATIONINTERNATIONAL COMPENSATION

Attract and retain qualified employeesAttract and retain qualified employees Facilitate transfers between foriegnFacilitate transfers between foriegn

affiliates and home countryaffiliates and home country

Be cost effectiveBe cost effective Establish reasonable relationshipEstablish reasonable relationship

compensation for all employees whethercompensation for all employees whetherposted in home or abroadposted in home or abroad


21/28

BENEFITS OF INTERNATIONAL REMUNERATIONHousing AllowanceFree AccommodationServants/ Security guardsClub subscriptionEducation ExpensesSocial Security Pension schemes, health insurance


22/28

INTERNATIONAL REMUNERATION HOLIDAYSINTERNATIONAL REMUNERATION HOLIDAYS

Annual LeaveAnnual Leave 2525--30 Working Days30 Working Days Public HolidaysPublic Holidays HostCountry PracticesHostCountry Practices

__ Expatriate Country Holidays in AdditionExpatriate Country Holidays in Addition

Home HolidaysHome Holidays ------ Company pays forCompany pays forExpatriate and his family to fly back HomeExpatriate and his family to fly back Homeat leastOnce a Yearat leastOnce a Year

RestHolidaysRestHolidays


23/28

EMPLOYEES STOCKOPTION PLANEMPLOYEES STOCKOPTION PLAN

ESOP are common in many countries. ThisESOP are common in many countries. This

Scheme allows the employees to purchaseScheme allows the employees to purchasethe shares of the company at a reducedthe shares of the company at a reduced

Price. Employees are motivated when thePrice. Employees are motivated when thecompany allows them to purchase thecompany allows them to purchase theshares at the concessional prices.shares at the concessional prices.


24/28

Advantages of ESOPAdvantages of ESOPEnsures Adequate MotivationEnsures Adequate MotivationFlexible in DesignFlexible in DesignCreates sense ofOwnershipCreates sense ofOwnershipPromotes Team workPromotes Team work

Inculcates Performance drivenCultureInculcates Performance driven

CultureEncourages the employees to work even betterEncourages the employees to work even better

Retention of EmployeesRetention of EmployeesEncourages Employees CommitmentEncourages Employees Commitment

Supplement Retirement/Social Security BenefitsSupplement Retirement/Social Security Benefits


25/28

Team RewardsTeam Rewards

Enhances ProductivityEnhances Productivity Improves QualityImproves Quality Improves Employee MoraleImproves Employee Morale Helps in Recruiting EmployeesHelps in Recruiting EmployeesAids in Retaining of EmployeesAids in Retaining of Employees


26/28


27/28

EXECUTIVE COMPENSATIONEXECUTIVE COMPENSATION

Executive Compensation is a CollectiveExecutive Compensation is a CollectiveTerm for all the Components that make upTerm for all the Components that make upthe Remuneration Package ofChiefthe Remuneration Package ofChiefExecutive Officers and Top LevelExecutive Officers and Top LevelManagers of a Business Corporation.Managers of a Business Corporation.


28/28

ComponentsofExecutiveCompensationComponentsofExecutiveCompensation

Base salaryBase salary LongLong--term Incentivesterm Incentives ShortShort--term incentives/bonuses,term incentives/bonuses, Shares and optionsShares and options Employee benefitsEmployee benefits

Documents

Comp Mgt Slides