Human Resource Management

1. Human Resource Management Compensation

2. Compensation • Compensation means what the employee receive in exchange for their work. It is the monetary plus non-monetary return paid to employees for the work done by them.

3. Objectives of compensation The objectives of compensation system is to create a system of rewards, so that the employee is attracted to work and is motivated to do a job for the employer.

4. Objective of compensation (Contd.) • To acquire qualified employees • To retain current employees • To ensure equity • To manage conflict • To generate motivation among employees • To reduce absenteeism • To enhance or improve productivity • To ensure continuity of sound working environment • To reduce turnover

5. Prerequisites for effective compensation An effective compensation should fulfill the following criteria: • Adequate Minimum governmental, union and managerial pay level position must be met by the compensation system.

6. Equitable Care should be taken so that each employee is paid fairly, in line with his or her ability, efforts, education, training, experiences. • Secure Employees security needs must be adequately covered by the compensation package.

7. Cost effective Pay must be neither excessive nor inadequate considering what the enterprise can afford to pay. • Acceptable to all employees All employees should understand the pay system well and feel it is reasonable for the enterprise and the individual.

8. The compensation system of an organization includes anything that an employee may value and desire and that the employer is able or willing to offer in exchange for employee contributions.

9. Financial Rewards • Base wages and salary From the perspective of many employees, the most important part of the compensation program involves determination of base wages and salaries. This varies from organization to organization and also from employee to employee.

10. Wages and salary Add-ons For many employers, this is the least critical of the five major components of the compensation system. It includes overtime pay, shift differentials, premiums for work in weekends and holidays and other add-ons forr for being on call or for other demands not normally required of workers.

11. Incentive payments Possibly the oldest part of the compensation package is payment for a specified output. Workers in certain kind of jobs have received a specific amount of money for a prescribed output.

12. Benefits and services This part of the compensation packages includes time off with pay, pay when employment has been terminated or suspended, pay when unable to work because of accidents and sickness, payments for medical protection, pay to dependents upon the death of the employees.

13. Perquisites A final set of compensation components may be grouped under the title of perquisites. This also known as “perks”. Perks are employee benefits, usually in addition to salary and standard employee benefits. The word perk or perks means extra bonuses or advantages.

14. Perks are only allowed to only top executives. Employees usually find them highly desirable. Some perks are tax free to employees. Examples: • Company cars • Club membership • Air travel (with family) • Low cost loans • Furnished house • Company sponsored tours • Special discount

15. Non- Financial Rewards Non- financial rewards are all the situation related rewards. The components of non financial rewards are most complex and difficult to classify and they are far more complex than the financial rewards.

16. Enhance dignity and satisfaction from work performed Possibly the least costly and one of the most powerful rewards an organization can offer to an employee is to recognize the person as an useful and valuable contributor. This kind of recognition leads to employee feelings of self worth and pride in making contributions. Every compensation and non-compensation package should carry this message “ we need you and appreciate your efforts”

17. Enhance physiological health A safe working environment has always been a thorny issue between an employers and employees. Provision of safe equipment , a work environment that is as risk free as possible, minimization of noxious fumes, avoidance of extreme heat, cold and elimination of contact with radiation- this conditions are expected by all empoyees.

18. Increase intellectual growth Organization should provide adequate training facilities to enhance intellelctual growth of an employees.

19. Promote constructive social relationships with co-workers The chance to communicate and interact with others is an inexpensive but valuable reward. The move toward team based operations is an example of what organizations are doing to improve social interactions among employees.

20. Allocate sufficient resources to perform work assignments According to this, all organization should provide sufficient time, equipment to the employees to perform the work assignments successfully otherwise the job related interest and satisfaction will break down.

21. Grant sufficient control over the job to meet personal demands Organization should grant enough opportunity to participate in organizational decision making process. One of the important decision being made by more and more workers is that of scheduling work activities and choosing the location of work assignments. Another change that make life easier is casual dress day. With this option , emloyees are granted the oportunity to wear clothing of a more relaxed and casual style.

22. Why does pay differs? • Kinds and levels of knowledge and skills • Kind of business • Size of business • Philosophy of management • Geographic location • Profitability of the firm • Experiences

23. Consequences of pay inequity • Change output (Performance and productivity) • Change input (attention, attendance, seriousness) • Leaving the field • Sabotage in production • Non co-operation • Involved in conflict • Making complaint against the leader to the higher management.

24. Job satisfaction • Job satisfaction is a sense of inner fulfillment and pride achieved when performing a particular job. • It is the extent to which a person’s hopes, desires and expectations about the employment is fulfilled.

25. Determinants of job satisfaction • The work itself • Pay • Growth and upward mobility • Co-workers • Supervision.