compensation and benefit

Topics: Employment compensation, Wage, Employee benefit Pages: 35 (1747 words) Published: April 17, 2015
Chapter 1

Books for reference
• George T Milkovich, Jerry M Newman, C S
Venkataratnam.  Compensaton, Tata McGraw - Hill
Educaton, 9th editon, 2009
• Dewakar Goel. Performance Appraisal And
Compensaton Management: A Modern Approach,
PHI, 2nd editon, 2012
• Compensaton & reward management by B.D singh.

Module coverage
• Module 1: Compensaton – an overview      (
• Objectve of compensaton - External
influences on compensaton - Internal
influences on compensaton - Compensaton
and motvaton - Compensaton decisions

Meaning of compensaton
• It does not mean the same to everyone.
• For some it’s a return in an exchange between
their employer and themselves
• For some it’s a measure of justce
• For some its an enttlement, or Reward.
• For some its their return on their investments
and contributons

Meaning of compensaton..
• In English Compensaton means something
that counterbalances, offsets or makes up for
something else.
• We can conclude – Compensaton refers to all
forms of financial returns and tangible services
and benefits employees receive as part of an
employment relatonship.

What is compensaton ?
• "Compensation includes direct cash
payments, indirect payments in the form of
employee benefits and incentives to motivate
employees to strive for higher levels of

Two types of compensaton
• Direct compensaton : is the financial
remuneraton received by the employee, in the
form of cash. This may in general include
elements like Basic, DA, overtme, shift
allowance, commissions, incentves, bonus,
profit sharing etc.
• Indirect pay : supplements direct pay , consists
of PF, pension, canteen services, mediclaim,
paid holidays , sick leave and other benefits.

Remuneraton & Rewards


• Salaries
• Incentves
• Bonuses

• Insurance
• Holidays
• Medical and
• Child care
• Employee

• Interestng
• Challenge
• Responsibility
• Recogniton
• Advancement

• Good policies
and practces
• Competent
• Congenial
• Safe and
healthy work
• Fair treatment

Meaning of compensaton management
• Compensaton means the gross earnings of an
employee in the form of financial rewards and
benefits and nonfinancial benefits provided to an
employee in exchange of services provided by the
• Compensaton management, also known as wage
and salary administraton, remuneraton
management, or reward management, is concerned
with designing and implementng total
compensaton package

Compensaton management- Defn by Beach
• “Wage and salary administration refers to the
establishment and implementation of sound policies
and practices of employee compensation. It includes
such areas as job evaluation, surveys of wages and
salaries, analysis of relevant organisational problems,
development and maintenance of wage structure,
establishing rules for administering wages, wage
payments, incentives, profit sharing, wage changes
and adjustments, supplementary payments, control of
compensation costs and other related items"

Definiton of CM
Compensaton management is a process of
determining cost-effectve pay structure,
designed to attract and retain, provide an
incentve to work hard and structured to
ensure that pay levels are perceived as fair.
-Stephen P. Robbins, David A DeCenzo, Robin Stuart-Kotze and Eileen B. Stewart

Objectves of an Effectve Compensaton System:
• Impacts an employer’s ability to attract and retain employees. • Ensure optmal levels of employee performance in meetng
the organizaton’s strategic objectves
• Legal compliance with all appropriate laws and regulatons • Cost effectveness for the organizaton
• Internal, external, and individual equity for employees
• Performance...
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