Componsation concepts and policies of history

Compensation concepts and policies refer to the various elements and practices involved in determining and managing employee pay and benefits within an organization. Here are some key compensation concepts and policies:

Base Salary/Wage:
The fixed, regular payment an employee receives for their role and responsibilities.
It is typically based on factors like job scope, skills, experience, and market rates.
Variable Pay:
Additional compensation that is tied to individual, team, or organizational performance.
Examples include bonuses, commissions, profit-sharing, and incentive plans.
Benefits:
Non-wage compensation provided to employees, such as health insurance, retirement plans, paid time off, and other perks.
Benefits are often used to attract and retain talent.
Pay Structures:
The framework used to determine salary ranges and progression for different job roles and levels within the organization.
Common structures include pay grades, pay bands, and salary scales.
Job Evaluation:
The process of assessing the relative value of different jobs within the organization.
It considers factors like job complexity, required skills, decision-making authority, and impact on the organization.
Market Competitiveness:
Aligning compensation levels with industry standards and market rates to remain competitive in attracting and retaining talent.
Performance Management:
Linking compensation, especially variable pay, to individual, team, and organizational performance.
Helps incentivize and reward high performance.
Compensation Policies:
The documented principles, guidelines, and procedures that govern how an organization manages compensation.
Policies ensure consistency, fairness, and compliance with labor laws.
Total Rewards:
The combination of monetary (salary, bonus) and non-monetary (benefits, recognition) rewards provided to employees.
Helps create a compelling and comprehensive employee value proposition.
Effective compensation management is crucial for attracting, motivating, and retaining a talented workforce. Organizations must carefully design and implement their compensation concepts and policies to support their business strategy and culture.

1. Componsation
concepts and policies
By-LAXMI

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

5. COMPANSATION
BASE
BASIC PAY ALLOWANCE
SUPPLEMENTRY
FRINGE
BENEFITS\PERQUITIES

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.