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Seminar on Compensation Management

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EMPLOYEE APPRAISAL. Goals of Compensation Administration ... How much should companies pay to attract, retain, and motivate employees? ... – PowerPoint PPT presentation

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Title: Seminar on Compensation Management


1
Seminar on Compensation Management
  • Insight to HRs Perspective in Managing Pay
  • S.M. Farid Zafar

2
Compensation defined
  • Refers to the methods of maintaining balance
    between interests of company attracting,
    developing, retaining, and rewarding high quality
    staff through wages and salaries
  • Compensation is a systematic approach to
    providing monetary value to employees in exchange
    for their work performed.
  • Compensation includes all forms of wages,
    salaries, incentives, commissions, and bonuses

3
Background
  • Compensation is one of the main functions of HR.
    It is closely linked with the following
  • EQUITY
  • MOTIVATION
  • EMPLOYEE APPRAISAL

4
Goals of Compensation Administration
  • To design pay systems that elicit desired
    behaviors by employee at work
  • To motivate employees to join, stay and perform
    at high levels
  • For the organization to remain ethical and legal
    in its compensation programs.

5
You can please some of the people some of the
time
But you cant please all of the people all of the
time.
6
How is Compensation used?
  • Compensation may be used to
  • Recruit and retain qualified employees.
  • Increase or maintain morale/satisfaction.
  • Reward and encourage peak performance.
  • Achieve internal and external equity.
  • Reduce turnover and encourage company loyalty.
  • Modify (through negotiations) practices of
    unions.

7
Development of Compensation Plan
  • Develop a program outline
  • Designate an individual to oversee the
    compensation program
  • Develop a compensation philosophy
  • Conduct a job analysis and Evaluation program
  • Determine grades
  • Establish grade pricing and salary range
  • Determine an appropriate salary structure
  • Develop a salary administration policy
  • Obtain top executives' approval of the program
  • Communicate the final program to employees and
    managers
  • Monitor the program

8
Components of a Compensation System
  • Job Analysis
  • Job descriptions
  • Job evaluation
  • Pay Structures
  • Salary Surveys
  • Policies and Regulations
  • ORDINANCE of 1961.doc
  • Current Minimum Rates of Wages.doc

9
The Concept of Total Compensation
10
Protection Programs- Do they work..
11
Main Issues In Compensation
  • How much should companies pay to attract, retain,
    and motivate employees?
  • Should they pay salaries or variable rewards?
  • Should they provide benefits, and if so, to what
    extent?
  • What's an appropriate discrepancy between the pay
    for high and low performers?
  • Organizations have to consider for job seekers
    it's not just getting a job that matters - it's
    getting a job that can fulfill them both
    financially and personally.

12
Main Issues In Compensation Internal Equity..
13
Factors affecting levels of pay
  • Intrinsic value
  • Responsibility, employee owns his / her
    contribution
  • Greater the responsibility, span , scope of job
    more the pay
  • Dependent on the Knowledge, Skills and
    competencies
  • Internal relativities
  • In an organization, job values are determined by
    perceptions of the worth of one job compared with
    others
  • An added certification, qualification, skill will
    make the difference

14
Factors affecting levels of payContd
  • External relativities
  • External value of a job market rate is
    determined by the laws of supply and demand
  • Individual rates and differentials have to be
    adjusted according to changing market pressure
  • Employable individual has a price which other
    organizations are willing to pay for services
  • Inflation and market movement
  • Organizations have been accustomed to taking into
    account inflation when adjusting their pay
    structures
  • CPI Index, Growth Rate, Inflation Rate,
    increasing / decreasing trends

15
Factors affecting levels of payContd
  • Business Performance / financial circumstances
  • Strategic aims and plans of organization provide
    the basis for developing pay strategies
    policies
  • Business performance of the organization will
    influence the amount it can pay to employees
  • Trade union pressures
  • Depending on bargaining power trade unions
    pressurize to increase pay at least inflation

16
Some Facts about Compensation practices
  • Similar in many respects to developing plans for
    any employee.
  • More emphasis on paying on ability
  • Salary is taxable to an individual at a high
    individual rate.
  • In a typical modern corporations top executives
    are paid with a mixture of cash and shares of the
    company.
  • More complex
  • Fixed or variable
  • Pay for performance doesnt work

17
Future trends in Compensation
  • Link to business performance, cost control, flexi
    compensation
  • According to Haygroup survey worldwide
  • 13 of organizations planned to bring team pay
  • 30 were making changes in benefits structure
  • 17 planning to introduce a broad banded pay
    structure
  • 40 intended to introduce a formal performance
    management process
  • Well developed career management program, well
    validated salary surveys, strong information
    management systems.
  • Treating employees stakeholders, use variable
    pay, employee benefits scheme

18
Conclusion
  • Principle of Compensation
  • Compensation will be perceived as fair if it is
    comprised of a system of components developed to
    maintain internal and external equity.

19
Thank you
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