Reward

Group 9
Remgrant Abad
Paul Regyll Alba
Earvin Andaya

Formulating a Company
Compensation Policy
A company must formulate a sound
company compensation policy on which
basis the nature , and frequency of
administration of its cash, near-cash
compensation, and benefits would be
strategically positioned, developed, and
reviewed.

Dimension of a Compensation
Philosophy
Pay

for performance

Many companies have some kind of

pay for performance compensation
policy. As one company would say, : We
reward outstanding performance with
outstanding pay.

 Market

competetiveness

This can be seen through the manner by which a

company approaches its market: market rates will
be expressed in terms of total compensation
whenever possible.

Degree in which employees are engaged

in the success of a company

Communication link to corporate

performance

Total Compensation
A simplistic of viewing compensation is through
this equation
A+B+D+E

A.

Guaranteed cash
Regular salary
Fixed and guaranteed allowance
Fixed/guaranteed bonuses
(13th month pay)

B. Variable or discretionary compensation

(e.g. commission, profit share, performance
bonus, management incentive)

C. Total Cash (A+B)

D. Benefits

E. Total remuneration (C+D)

Basic Salary
Regular salary = basic salary + fixed and
guaranteed allowance
Guaranteed cash = regular salary + fixed and
guaranteed bonuses
Total cash = guaranteed cash + variable or
discretionary compensation

Basic salary is adjusted through various methods

including:
1.
2.

Merit Increase
Promotion

Variable Compensation
There are various forms of variable
compensation. The amount of variable
compensation depends on results of pre-established
targets. It is good to remember not only the obvious
factor that this is potentially additional income to
the employee but that it is also compensation at
risk. Some are individual variable compensation,
others are team-based, and still others are
company wide

Sales incentive Plans

Sales employees are almost always provided a
compensation package with a variable
compensation component.

Management Incentive Plans

Management incentives that provide variable
compensation are effective tools in shaping and
directing behaviors to support company objectives.
While not everything rests on the incentive plan, it
still serves as an effective tool.

Benefits
Social Security
The Social Security System of the Philippines,
created by Republic Act No. 1161, as amended, was
established on September 1, 1957. Its purpose is to
render assistance to workers and families in case
the source of their income is terminated, reduced,
or interrupted because of sickness, disability, death
or old age.

 Health

Insurance/ Health Plan

A health plan is an important and valued
protective benefit. It is considered a basic
component of any benefits package today.
Differences would be in coverage and method of
delivering the service

 Life

Insurance
Providing employees with life insurance
coverage, as a protective form of benefit, is a
common practice. Policies are usually fully paid by
company, and this benefit is acknowledge as a
supplement to the government-mandated and
limited Employees Compensation Commission
insurance coverage.

The usual terms of a life insurance coverage

benefit are:
1.
2.
3.

Coverage
Premium
Beneficiary

Retirement
Security and protection benefits are crucial in the
compensation package of employees in the
Philippines. In this country, providing security and
protection for aging employee is supported by law
and is joint undertaking between the Social Security
System, the employer and in some cases, the
employee.

Elements of a Retirement Plan

Type of plan
Tax qualification
Eligibility Requirements
Benefits under other conditions
Vesting schedule
Funding and sharing
Investment management
Tax exemption
Cost effectiveness
Professional management
Ease of administrative burden
Protection

Car and Car-related Benefits

Car benefits are more narrowly defined in terms
of eligibility. In many cases, eligibility would be
defined in terms of management rank or nature of
work. In one company, a car benefit is given only to
the head of the organization and his/her direct
reports or the executive team

The other provision of a car

benefit program may be
Car

make/model
Acquisition
Replacement period
Personal usage
Related Expenses
Purchase option and price
Tax impact of car benefit

Other Benefits
Allowance
Companies could provide to selected employees
various forms of allowances to compensate for
extraordinary circumstances based on certain
conditions.
a. Overtime/ Transportation Allowance

Recognition
Companies use recognition programs and
contests to focus on tactical objectives and
celebrate the success of teams and individuals.
There are various forms of recognition----financial,
and non financial; individual and team.

Social Security System

Benefits
Sickness Benefit
The sickness benefit is daily cash allowance paid
to a member for the number of days the member is
unable to work due to sickness or injury for at least
four days.
2. Maternity Benefit
The SSS Maternity benefit is a daily cash
allowance granted to a female member who is
unable to work due childbirth or miscarriage.
1.

Disability benefit
The SSS Disability benefit is to paid to a member
who becomes permanently disabled, either partially
or totally
3.

Retirement Benefits
The SSS retirement benefit is paid to a member
who can no longer work due to old age (60 years).
This can take the form of either a monthly pension
or lump sum amount.
4.

Death Benefits
The death benefit is paid in cash to the
beneficiaries of a deceased member.
5.

National Health Insurance

Program Benefits(Mediocare)
This is a health insurance program for
SSS members and their dependents
whereby the healthy subsidize the sick
who may find themselves in need of
financial assistance when they get
hospitalized. The program aims to provide
medical care to residents of the country in
an evolutionary way.

Death Benefits
The benefits under Mediocre are:

Loans
The principal mandate of the SSS is to give social
security protection. For this reason, it funds and
programs are geared towards the retirement, death
and disability programs. However, at the same
time, the SSS provides various loans programs from
which member can borrow for various purposes
including: dependent education, increase in
savings, housing, and investment.

Salary Loan
A loan intended to meet the members short-term
credit needs can be made through SSS. The loanable
amount is based on the highest salary credit of the
last two monthly contributions of the member that
are posted in the SSS master file. An annual interest
of 8% applies. The loan is payable within two years.

Privatization Fund Loan Program

The Privatization Fund Loan Program is lending
program with an original allocation of Php.2 billion
which enables members to increase their savings
or investments through the purchase of privatized
shares of stocks on an instalment basis and to
provide them with an additional source income.