Compensation

management
SAURABH JAIN
 COMPENSATION
MANAGEMENT
• Objective .
• Definition.
• An Integral Part of Human
Resource Management.
 TYPES OF
COMPENSATION
• Direct
• Indirect
• Variable
• Executive.
 TRENDS IN INDIA
• Compensation trends in India
changed with liberalization in
1991.
• Government was the biggest job
creator
• Guaranteed pay determined by
agreement between employee
unions and Government
• Private sectors made
government pay scales as
CURRENT TRENDS
Factors that influenced
compensation post
liberalization
§ Increase in productivity gains
§ Fast growth in real wages
§ Faster GDP growth
§ IT and Outsourcing services
§ Average salary increases over
2005-06 ranged from 10% to
40%
FACTORS DEVISING PAY
STRUCTURE
• Job evaluation.
• What must be paid to
attract right people
• Affordability of the
organization
• Requirements to meet
organizational goals
• It must have 2 components-
base rate and scope for
THE CONCEPT OF WAGE
AND SALARY
Compensation
administration.
The principles governing
compensation
administration.
• a)Maintaining equity.
• b)Maintaining
competitiveness.
• c)Matching employee
expectations.
• e)Devising a most efficient
THE PURPOSE OF WAGE
AND SALARY
ØAttracting a talented
resources.
ØRetaining and motivating
employees.
ØFinancial management.
ØLegal requirements.
 CONCEPTS OF
DIFFERENT WAGES.
üMinimum wage (The six
norms).
üFair wage .
üLiving wage.
BASIC WAGE PLANS

ØTime wage plan.

ØPiece wage plan.
ØSkill-based wage plan.
ØCompetency based pay.
ØBroad banding.
Types Of Incentive Plans

Halsey Plan
Long
Annual Bonus

term
Rowan
Plan
Plans
Profit Sharing

Barth Gain
Sharing
Short
System

Term
Point Rating Employee Stock
Option
Plans
system

Progressiv
e Bonus
 NON MONETARY
INCENTIVE
• Recognisation
• Assigning challenging
assignment.
• Giving additional
responsibility.
• Giving non cash rewards.
• Awards for exceptional
performance and valuable
 GUIDELINES
• Linked to employee’s
performance
• Communicated
• Suggestions should be
valued
• Not affected by external
factors
• Should not add negative
WAGES POLICY IN INDIA
• Minimum Wages Act, 1948..
• Payment of Wages Act,
1936..
• Payment of gratuity 1972
• Industrial Dispute Act, 1947.
• Payment of Bonus Act,
1965..