Compensation and Benefits.pptx- important requirements

Human Resources Management

1. Compensation and Benefits BBA-HO&M

2. What is the difference between compensation and benefits? The main difference between compensation and benefits is that compensation is a financial form of remuneration, while benefits are non-financial. Compensation is the money an employee receives in exchange for their labor, which could be a salary, wages, commission, and bonuses. This money is subject to taxation. HR uses compensation to attract top talent and boost retention rates.

3. Benefits…. Benefits are extra perks or rewards that an organization provides to an employee, and they may have a financial value, but the employee doesn’t receive any cash directly. This includes health insurance, stock options, gym memberships, flexible working hours, “summer Fridays,” learning and development opportunities, and retirement savings plans. Some benefits are exempt from taxation. HR utilizes benefits to motivate employees, increase engagement and performance, and accommodate the different needs that different candidates and team members have.

4. Types of compensation Direct compensation Direct compensation is the financial compensation, or cash, given from the employer to the employee for their services. Base pay (Basic Salary) Base pay (also known as basic salary or base salary) refers to the fixed financial amount that an organization pays its employees in exchange for the services they perform. This amount is negotiated during the hiring process and agreed upon before the employment contract begins. It is typically an annual or monthly salary or an hourly rate.

5. Overtime pay Overtime pay is the amount of extra pay an employee receives for working extra hours on top of their scheduled contract hours. Every company should establish a set of normal working hours to clarify overtime. For example, if the normal working week hours are 30, then an employee who works 40 hours is eligible for overtime pay for those additional 10 hours.

6. Variable compensation Variable compensation (also known as variable pay) is compensation given to an employee that is based on performance. The aim of variable compensation is to reward and encourage a specific behavior or result. These pay programs are typically implemented with sales teams and are often given in the form of bonuses and commissions. For example, if an individual employee achieves a professional milestone, an entire team meets a goal, or the entire company meets a specific target, then those people are rewarded accordingly.

7. In India… Basic salary The basic pay is the basic salary withdrawn by an employee in an organization. It depends on the company’s policies and the laws of the company. It is that part of the salary that is taxed. House rent allowance (HRA) Few companies provide their employees with accommodation or home rent allowances. This is in addition to the paid salary. It is generally calculated based on the basic salary obtained by an employee. Dearness allowance (DA) In some places where there is an inflation in the price of goods and services, dearness allowance helps curb the impact of the price difference. This component of employee compensation helps the employees adapt to the changes in standard of living.

8. Travelling allowance Specific organizations provide travel allowances when an employee needs to travel. It may or may not be included in the basic salary. Its calculation differs from company to company and requires proof of travel. Often employees use their funds to travel, which is later reimbursed by the company. Other special allowances Other special allowances are the monetary benefit given to the employee above the basic salary to meet specific requirements. The employers offer these additional benefits for the meeting expenditures, etc. Variable pay Variable pay is that portion of the salary determined based on employee performance. When an employee hits a target or does overtime, variable pay is given in incentives, bonuses, or commissions. It is given out for the additional contribution beyond an employee’s workload.

9. Stock options It is a part of employee compensation where companies employees and executives of the company are granted equity. These shares are issued by the company and cannot be sold. It is generally associated with a new company and is awarded to the employees as an incentive for working hard towards the company’s growth. In other words, it can also be said that the employees own a part of the organization.

10. Components of employee benefits

11. Components of employee benefits Paid time off It is an essential component of employee benefits where employees can still receive a salary when they take leave or vacation. Also, according to the employee’s position, they can receive a privilege leave. Medical insurance It is another part of employee benefits and compensation and includes health insurance, family health insurance, hospital cover, etc. A few companies also cover the death of an employee and provide financial assistance to the family members of the deceased employee. Fringe benefits It is a non-monetary benefit and covers educational assistance, childcare, flexible healthcare expenditures, etc. It may include benefits such as a company car, gym membership, etc. Fringe benefits may also provide entertainment allowances, discounted travel tickets, family vacation packages, etc. Loyalty and retirement benefits A retirement plan as part of the employee benefits package is an essential factor in employee loyalty. By offering retirement benefits, an organization maximizes their success rate; it can become easy to get top talents on the door and retain them in the company.

12. Trends in compensation Microsoft’s innovative compensation strategy emphasizes equity and long-term benefits, aligning employee and company success. By offering stock-based compensation and long-term rewards like retirement plans, Microsoft fosters employee loyalty and commitment. This approach helps them build a dedicated workforce motivated to drive sustainable company growth.

13. Facebook provides four months of parental leave for parents within the first year of birth or adoption and reimbursement for egg-freezing and adoption fees.

14. Employee Wellness Programs Employee wellness programs are initiatives implemented by employers to enhance the health and well-being of their employees. These programs aim to prevent illness, improve overall health and wellness, and promote healthy lifestyles among employees. They typically include a variety of offerings such as smoking cessation programs, weight loss initiatives, stress management, gym memberships, and health screenings. Wellness programs can also encompass emotional, mental, financial, and occupational well-being, addressing various dimensions of employee health.

15. The wellness industry in India is poised for significant growth, with various sources indicating its substantial size and potential. By 2024, the Health & Wellness Coaching market in India is projected to reach $1,916.00 million. In fact, India’s wellness market was valued at nearly $78 billion in 2020 and is set to cross $72 billion by 2025, growing at a CAGR of 28%.

16. What Are Employee Wellness Programs? Employee wellness programs, also known as workplace wellness programs, are initiatives implemented by employers to promote and support the health and well being of their employees. The scope of employee wellness programs encompasses a wide range of initiatives aimed at enhancing the well-being of employees within organisations .

17. These programs typically include elements such as routine check-ins with employees to monitor their mental and emotional wellness, an overview of employer-sponsored wellness programs designed to support employees, short learning programs focused on increasing employee well-being, and studies evaluating the effectiveness of such programs on productivity within the civil service. Employee wellness programs have been shown to have a significant impact on productivity, healthcare cost reduction, and the cultivation of a positive work culture.

18. Components of Employee Wellness Programs Here are the key components of a good workplace wellness program: Physical Wellness: Prioritising employee health and fitness, encouraging healthy behaviours like exercise and proper nutrition. Emotional Wellness: Focusing on mental health, providing resources for stress management and emotional support. Intellectual Wellness: Nurturing continuous learning, creativity, and critical thinking through workshops, seminars, and professional development opportunities.

19. Social Wellness: Building connections and fostering a sense of community through team-building activities and open communication. Spiritual Wellness: Nurturing inner peace, helping employees find purpose and connect with something larger than themselves through mindfulness practices and self-care. Work Environment Adaptations: Creating a healthy physical workspace with ergonomic setups, good lighting, and stress-reducing design. Flexible Work Options: Offering flexible work hours, remote work options, and supportive policies for work-life balance.

20. Mental Health Programs: Providing mental health support, counselling, and resources for employees. Fitness and Health Initiatives: Promoting physical activity, fitness classes, and wellness incentives. Financial Well-being Initiatives: Educating employees on financial health, offering classes, seminars, and matching retirement plans.