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Welcome To The New Session on Compensation

Learn about the definition, objectives, and importance of compensation in human resources, as well as the different types of rewards and factors that determine wages. Explore the challenges and problems associated with compensation and discover the Islamic perspective on wage policy.

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Welcome To The New Session on Compensation

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  1. Welcome To The New Session on Compensation

  2. Chapter- Compensation of Human Resources

  3. Definition of Compensation The dictionary meaning of the word ‘compensation’ is ‘reward for service’, ‘amends for loss sustained, ‘the neutralization of opposing forces.’ The first synonym has a positive significance but the last two are negative in character. Dale Yoder, “Compensation is paying people for work.”

  4. Definition of Compensation Edwin B. Flippo, “The function of compensation is defined as the adequate and equitable remuneration of personnel for their contributions to the organizational objectives. If the abilities of employees have been developed to the point where they meet or exceed job requirements, it is now appropriate that they be equitably compensated for their contributions.”

  5. Objectives of Compensation To be legal: It must get approval from the govt. or top management in the organization. To be adequate: Compensation must be sufficient so that needs of the employees are fulfilled substantially. To be motivating: Compensation must increase the level of motivation and job satisfaction of the employees.

  6. Objectives of Compensation To be equitable: Compensation policy should be declared in such a way so that no discrimination can be shown. To provide security: Employees must have guarantee of getting wages or compensation regularly without any break. To be cost-benefit effective: The organization must make a balance between cost for giving compensation and benefits to be accrued from the employees.

  7. Importance of Compensation Structure To employees To the company To the society

  8. Problems of Compensation Ownership Frequent change Market condition Union pressure External influence

  9. Problems of Compensation High ambition of employees Discrimination in the pay scale Lack of control Expansion of corruption

  10. Types of Employee Rewards Intrinsic rewards: Intrinsic rewards are the personal satisfactions one gets from the job itself. These are self-initiated rewards, such as having pride in one’s work, having a feeling of accomplishment, or being part of a work team. Extrinsic rewards: Extrinsic rewards, on the other hand, include money, promotions and benefits.

  11. Types of Employee Rewards Financial rewards: Rewards may or may not enhance the employee’s financial well-being. If they do, they can do this directly, for instance, through wages, bonuses, or profit sharing, or directly, through employer-subsidized benefits such as retirement plans, paid vacation, paid sick leaves, and purchase discounts. Non-financial rewards: Non-financial rewards cover some of desirable extras that are potentially at the disposal of the organization.

  12. Types of Employee Rewards Performance-based rewards: Performance based rewards are exemplified by the use of commissions, price work pay plans, incentive systems, group bonuses, merit pay, or other forms of pay for performance plans.

  13. Types of Employee Rewards Membership-based rewards: Membership-based rewards include cost-of living increase, benefits, and salary increases attributable to labor market conditions, seniority or time in rank, credentials (such as a college degree or a graduate diploma), a specialized skill, or future potential (e.g. the recent MBA out of prestigious university). The key point here is that membership-based rewards are generally extended regardless of an individual’s group’s or organization’s performance.

  14. Difference between Intrinsic Rewards and Extrinsic Rewards

  15. Difference between Intrinsic Rewards and Extrinsic Rewards

  16. Difference between Intrinsic Rewards and Extrinsic Rewards

  17. Factors Determining Wages Collective bargaining: Company ability: Labor market: Relative worth of the job: Changes in price level: Government legislation

  18. Factors Determining Wages State of competition: Ability of worker Nature of work Working time: Facilities of the jobs Scope of additional income Preferred work: Possibility of career development

  19. Methods of Wage Payment Time rate method Piece rate method Increase piece rate method Measured day work method Time saving method

  20. Methods of Wage Payment Emerson’s efficiency bonus plan Group plan Halsey plan Rowan plan Boudreaux plan

  21. Methods of Wage Payment Differential piece rate system Gantt’s task plan Differential peace rate system Scanlon plan Share of production plan

  22. Methods of Wage Payment Profit sharing plan Sliding plan Employee Stock Ownership Plans (ESOP) Modern income security plans Suggestions system.

  23. Wage Policy: Islamic Point of View In Islamic Economies, there is on excellent wage/compensation/remuneration policy. The policy guidelines have been taken form the Holy Quran and the Hadiths. We have selected 7 (seven) points only for discussion: Contract: A control (oral/written) must be signed between the employee and employee. And the employer and employee must follow the terms & conditions of the contract.

  24. Wage Policy: Islamic Point of View Rate of wages: In the contract, the rate of wages must be fixed. The rate is changeable in consultation between the parties. Co-operation: Both employer and employee will cooperate each other for performing concerned activities. Facilities: In addition to regular salary employees should get some facilities and benefits for doing better performance.

  25. Wage Policy: Islamic Point of View Responsibilities: Responsibilities of employees must be expressed in the agreement and they should be intimated properly. Rights: Besides responsibilities, the employees are intuited with some rights also. They must not be deprived form the rights.

  26. Wage Policy: Islamic Point of View Accountability: Both employer and employee must cherish the sense of accountability. Fear of almighty help them to be accountable to their duties and responsibilities.

  27. Difference between Islamic and Other Economics Regarding Wages

  28. Difference between Islamic and Other Economics Regarding Wages

  29. Difference between Islamic and Other Economics Regarding Wages

  30. Difference between Islamic and Other Economics Regarding Wages

  31. Difference between Islamic and Other Economics Regarding Wages

  32. Difference between Islamic and Other Economics Regarding Wages

  33. Difference between Islamic and Other Economics Regarding Wages

  34. Thank You

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