Compensation mgt of Huma resource Management.pptx

HR management includes Compensation package helpful for Management students at ug and pg like bcom bba mba mcom and msw

1. 5/13/2011 1 COMPENSATION MANAGEMENT JSW COMPENSATION MANAGEMENT

2. 5/13/2011 2 COMPENSATION MANAGEMENT JSW What is Compensation ? Compensation is the process of directly and indirectly rewarding employees on a current or delayed basis, for their performance of assigned tasks. OR Compensation is the reward, wage, or salary, given by an organization to a person or group of persons in return to a work done, service rendered, or a contribution made towards the accomplishment of organizational goals.

3. 5/13/2011 3 COMPENSATION MANAGEMENT JSW Compensation can be given in monetary or non-monetary terms , or a special reward For a specific type of accomplishment, achievement or contribution. Such as; Monetary Compensation – Wage, D.A, Bonus & other allowances. Non – Monetary Compensation - good accommodation, children's’ education, transport facilities, etc.

4. 5/13/2011 4 COMPENSATION MANAGEMENT JSW Compensation Types

5. 5/13/2011 5 COMPENSATION MANAGEMENT JSW Base Compensation: It is the basic pay fixed to various categories of jobs, posts or positions (Basic pay or scale of pay for the job or post). This can based on the job, job content, job importance, job skill, etc. Base compensation is usually given in monetary terms hence it is considered in monetary compensation.

6. 5/13/2011 6 COMPENSATION MANAGEMENT JSW Variable Pay: (Bonus, Incentive etc) Among the various purposes of an attractive compensation plan, a good base compensation enables the organization to attract & retain capable people. Incentive is best motivating factor. Benefits (Supplementary Compensation): This is an additional monetary compensation provided to a group. This compensation will be given indirectly i.e in the form of employee insurance, medical insurance, pension, etc.

7. 5/13/2011 7 COMPENSATION MANAGEMENT JSW WAGE & SALARY ADMINIDATRATION Wage & Salary administration is accepted as an integral part of personnel management. Wage is the monetary compensation given to Blue collars employees. Where as - Salary is the monetary compensation given to White collars employees.

8. 5/13/2011 8 COMPENSATION MANAGEMENT JSW SALARY BREAK UP What is Gross Salary, Net salary & CTC? Gross Salary: It is the monetary pay which includes Basic + DA+HRA+TA+other special allowances Net Salary / Take home Salary: It is the monetary pay given to an employee in hand after deducting PF, ESI, & PT from his gross salary. Cost to Company (CTC) : It is monetary pay which includes gross salary + other fringe benefits given to an employee such as laptop, mobile, internet connection, car etc.

9. 5/13/2011 9 COMPENSATION MANAGEMENT JSW Conti…. How to determine the salary break up? Basic +DA should fixed 40 to 50% of CTC or Gross Salary. HRA should be fixed 40% of the Basic +DA (in case if it is metropolitan city then it should be 50% of Basic +DA ). TA should be given Rs.800 per month or approximately Rs.9600 P.A Medical Allowance should be given Rs.1250 per month or Rs.15000 P.A Leave Travel Allowance (LTA) should be fixed 10 to 20% of the CTC.

10. 5/13/2011 10 COMPENSATION MANAGEMENT JSW Conti…. After fixing the above 5 components of the salary the remaining amount can be fixed as special allowance & other allowances which is fully taxable amount.

11. 5/13/2011 11 COMPENSATION MANAGEMENT JSW How to Determine the Salary? For Example; CTC break up for Rs.3,50,000 P.A as per the offer letter for employee ‘A’ Salary components Amount in Rs / p.a 1) B+DA (40% of CTC) 1,40,000.00 2) HRA (40% on B+DA) 56,000.00 3) TA (800X12) 96,000.00 4) Medical All (1250X12) 15,000.00 5) LTA (10% on CTC) 35,000.00 6) Sodex vocher (Rs50 per dayX296 working days ) 14,800.00 7) Gratuity (4.8% on B+DA) 6,720.00 8) Special All (reaming amt) 72,880.00 Total CTC 3,50,000.00

12. 5/13/2011 12 COMPENSATION MANAGEMENT JSW “Employee Stock Option Plan” (ESOP)

13. 5/13/2011 13 COMPENSATION MANAGEMENT JSW What is a Employee Stock Option Plan? “A stock option is the opportunity, given by your employer, to own a certain number of shares of your company's common stock at a pre-established price, known as the grant price, over a specific period of time, known as the vesting period”.

14. 5/13/2011 14 COMPENSATION MANAGEMENT JSW Why Do Companies Opt for Employee Stock Option Plan? Companies who issue stock options to their employees are, in effect, issuing the right to own a portion of the company. Employees who are granted stock options have a vested interest in the performance of their company's stock. An increase in performance by the employees can be reflected in the profitability of the firm, which in turn, benefits the price of the stock. Stock options tend to be granted in regular schedules, with vesting periods at intervals in the future, stock options increase employee commitment to their company.

15. 5/13/2011 COMPENSATION MANAGEMENT JSW 15 Conti… More and more employers are awarding stock options to employees as part of their compensation programs. Careful management of the opportunities offered by the stock options may help in building an investment portfolio or improve financial situation of the employee

16. 5/13/2011 COMPENSATION MANAGEMENT JSW 16 THANK YOU