COMPENSATION

AND BENEFITS
Submitted by:
Akash Malviya (11465)

INTRODUCTION
Compensation

is a systematic approach to
providing monetary & non monetary value
to employees in exchange for work
performed.

Compensation

and benefits program have

several fundamental purpose and
objectives.

OBJECTIVES
To

recruit & retain

qualified employees.
To increase or maintain
morale.
To determine basic
wage & salary.
To reward for job
performance.

COMPENSATION
Compensation

is a set of rewards that

organizations provide to individuals in
return for their willingness to perform
various jobs and tasks within the
organization.

BENEFITS
Benefits

generally refer to various

rewards, incentives, and other things of
value that an organization provide to its
employees beyond their wages, salaries,
and other forms of direct financial
compensation

DEVELOPING A
COMPENSATION
STRATEGY

Compensation should never be a result of random

decisions but instead the result of a careful and
systematic strategic process.

Basic Purpose of Compensation:Internal Equity:

In compensation refers to comparisons made
by employees to other employees within the same
organization.
External Equity:
In compensation refers to comparison made
by the employees to other employed by different
organization performing similar jobs.
Pay Surveys:
They are the surveys of compensation paid
to employees by other employer in a particular
geographical area industry or occupational group.

WAGES VERSUS SALARIES

Wages: Generally refers to the hourly
compensation paid to operating employees, the
basis for wages is time.
Salary: Is income paid to an individual on the
basis of performance

COMPONENTS OF REMUNERATION

o
o
o
o
o

Wages And Salary.

Incentives.
Fringe Benefits.
Perquisites.
Non-monetary benefits.

TOURNAMENT THEORY OF
COMPENSATION
This theory can be explained by taking the
analogy of a simple tournament played between
two players.
In a typical tournament both skill and chance
factors take their roles in determining the win or
loss of the match.
As in a tournament, in an organization also
employees may not know each other beforehand.

STRATEGIC OPTIONS FOR

COMPENSATION
Skill based pay or pay for knowledge.
Based on seniority.
Performance based.
Pay rates on the basis of market rates.
A maturity curve is a schedule specifying amount
of annual increase a person will receive.

DETERMINING WHAT TO PAY

Job-Evaluation Methods:is a method for determining the

relative value or worth of a job to the
organization so that individuals who perform
that job can be compensated adequately and
appropriately.

Classification system:-For the job evaluation

attempts to group sets of jobs together into
cluster, which are often called grades.
Point System:-The point system for a job
evaluation requires managers to quantify, in
objective terms, the value of the various elements
of specific jobs.

PAY FOR KNOWLEDGE AND SKILLBASED PAY

PAY FOR KNOWLEDGE involves compensating

employees (usually managerial, service, or
professional employees) for learning specific
material.
Skill Based Pay:- Rewards employees for
acquiring new skills that may increase their
market value if they choose to seek another job.

WAGE AND SALARY

ADMINISTRATION
Wage and salary administration is the on going
process of managing a wage and salary structure.
It Includes:
Pay Secrecy: refers to the extent to which the
compensation of any individual in an
organization is secret or the extent to which
information on compensation is formally made
available to other individuals.
Pay Compression:- occurs when individuals with
substantially different levels of experience,
performance, abilities or both are paid wages or
salaries that are relatively equal.

THANK YOU