Componsation concepts and policies of history
- 2. COMPANSATION • Compensation is defined as the total amount of the monetary and nonmonetary pay provided to an employee by an employer in return for work performed as required. • It's a combination of the value of your pay, vacation, bonuses, health insurance, and any other perk you may receive, such as free lunches, free events, etc.
- 3. Purpose of Compensation • Attracting the talent • Motivating the employees • Retaining the talent
- 4. CLASSIFICATION • Base or direct compensation • Supplementary or indirect compensation • Incentive compensation
- 6. Components of Base Compensation • Basic Pay – Wage and salary • Dearness Allowance • House Rent allowance • City Compensatory Allowance • Transport allowance • Other Allowances
- 8. Factors affecting Compensation • Demand for and supply of labour • Ability to Pay • Cost of living • Productivity of workers • Wage Laws • Trade Unions • Prevailing wage rates • Job Requirements
- 9. Supplementary Compensation • Over and above the base Compensation • FRINGE BENEFITS • Fringe benefits are additions to compensation that companies give their employees. • monetary and non monetary benefits • Also termed golden hand cuffs • Some fringe benefits such as social security and health insurance are required by law, while others are voluntarily provided by the employer. • Examples of optional fringe benefits include free breakfast and lunch, gym membership, employee stock options, transportation benefits, retirement planning services, childcare, education assistance, etc.
- 10. Objectives of Fringe Benefits • To create and improve sound industrial relations. • To boost up employee morale. • To motivate the employees by identifying and satisfying their unsatisfied needs. • To provide qualitative work environment and work life. • To provide security to the employees against social risk like old age benefit and maternity benefits • To protect the health of the employees and to provide safety to the employees against accidents • To promote employees welfare by providing welfare measures like recreation facilities • . To create sense of belongingness among employees • To meet requirements of various legislations relating to fringe benefits
- 11. Factors influencing Fringe Benefits ❑ Absolute and per capita cost of fringe Benefits ❑ Organization financial ability to provide the benefits. ❑ The bargaining strength of trade unions. ❑ Employee's significance to the organization. ❑ Tax benefits to the organization and individual employees. ❑ Need for building public image for the Organization. ❑ Organization's awareness and policy towards social responsibility.