CONCEPT, ELEMENTS AND PRINCIPLES OF COMPENSATION

1. PRESENTED BY: PUMMY SINGHANIA RENUKA CHANDRAKAR CONCEPT,ELEMENTS AND PRINCIPLES OF COMPENSATION

2. INTRODUCTION MEANING AND DEFINATION OBJECTIVES OF COMPENSATION FACTORS AFFECTING COMPENSATION IMPORTANT COMPENSATION ISSUES TYPES OF COMPENSATION ELEMENTS OF COMPENSATION PRINCIPLES OF COMPENSATION CONTENTS

3. The literal meaning of compensation is to counter balance. In HR management, compensation refers to as money and other benefits received by an employee for providing services to his employer. “Compensation is a systematic approach to providing monitory value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance and job satisfaction.” MEANING & DEFINATION OF COMPENSATION

4. To acquire qualified competent personnel To retain the present employees To secure internal and external equity To ensure desired behavior To protect in public as progressive employees To pay according to the content & difficulty To facilitate pay role To simplify collective bargaining. To promote organization & Goodwill. OBJECTIVES OF COMPENSATION

5. Remuneration in comparable industries. Firms ability to pay Cost of living Productivity Union pressure and strategies Govt. legislation Job requirement Supply and demand factor FACTORS AFFECTING COMPENSATION

6. Amount of compensation:- The manager must be sure that the amount of compensation paid to employees according to the services they rendered. He must seek to pay a fair wage-fair to the employees, the customer and the investors. BASIC COMPONENTS IN DECIDING HOW MUCH WORKERS SHOUL BE PAID: The relation of his wages to those being paid by other workers in the area for the same kind of work. The difficulty and importance of his job compared with other jobs in the company. The quality of performance by the individual in this job IMPORTANT COMPENSATION ISSUES

7. Relation of wages with market:-Most companies seek to follow a policy of paying competitive wage rate High wages:-some companies deliberately pay their workers a higher wage level than that prevailing in the industry in an effort to secure the “cream of the crop”. Low wages:-some companies pay comparatively low wages because satisfactory results can be secured from workers. Industry rates:-in some industries,primarily as a result of labour union pressure the industry wide wage level is more important than the wage level in the local labour market. The relation of his wages to those being paid by other workers in the area for the same kind of work……

8. METHODS OF PAYMENT

9. 1.Use of time rates 2.Problem of installing incentive rates 3.Combined piece and time rates Continue……

10. TYPES OF COMPENSATION

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12. WAGE AND SALAY. INCENTIVES FRINGE BENEFITS PERQUISITES ELEMENTS OF COMPENSATION

13. Wage is refers to as remuneration to workers particularly hourly rated payment. Salary refer to as remuneration paid to white collar employees including managerial person. They are paid on the basis of fixed period of time. Two types of wages:- Nominal wages:-wages paid in terms of money are called money wages or nominal wages. Real wages:-in addition to nominal wages the extra benefits which the employee gets is real wages. WAGE AND SALARY

14. Incentives are the additional payment to the employees besides the payment of wages and salary incentives are the gains which motivates the workers to a better performance. . 2. INCENTIVES

15. CLASSIFICATON OF INCENTIVES: A. Positive and negative:- positives refers to reward for better work and negative refers to penalties. B.Individual and collective:-it is also called direct and indirect incentives. individual incentives benefits the worker individually while collective incentives accrue to the group C.Monetary and non-monetary incentives: Monetary incentives are paid in terms of monetary and non-monetary incentives includes merit certificates etc Conti………

16. Fringe benefits includes which are provided to the employees either having long term impact like: provident fund,gratuty,pension,or occurrence of certain events like medical benefits, canteen ,recreation, accident leave, health and life insurance etc. 3.FRINGE BENEFITS

17. These are generally provided managerial personnel either to facilitate their job performance or to retain them in the organisation.such perquisites includes: Company car Club membership Free residential accommodation Paid holiday trips. Stock option etc 4.PERQUISITES

18. There should be definite plan to ensure that differences in pay for jobs are based upon variations in job requirements , such as skill effort , responsibility or job or working conditions, and mental and physical requirements. The general level of wages and salary should be reasonably in line with that prevailing in the labour market. The plan should carefully distinguished between jobs and employees-a job caries a certain wage rate, and a person is assigned to fill at the rate. exceptions sometimes occur in very high level jobs in which the job holder may make the job large or small ,depending on his ability and contribution. Equal pay for equal work. PRINCIPLES OF COMPENSATION

19. An equitable practice should be adopted for the recognition of the individual differences in ability andcontribution. There should be clearly established procedure for hearing and adjusting wage complaints. The employees and the trade union ,,should be informed about the procedure used to establish wage rates. The wage rate should be sufficient to ensure for the workers and his family reasonable standard of living The wage and salary structure should be flexible. Conti…

20. CONT….. • Prompt and correct payments of the dues of the employees must be ensured and arrears of payment should not accumulate. • For revision of wages , wage committee should always be preferred to the individual Judgment • The wage and salary payments must fulfill a wide variety of human needs , including the need for self actualization .

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