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By:
PriyankaSaluja.
RanuChidwal.
MayurVerma.
NijitaKhode.

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3. Compensation is what employees
receive in exchange for their
contribution to the organization.
Generally, services are offered for
three types of rewards(also known as
COMPONENTS), that are-
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1.Pay or Guaranteed Pay.
2.Incentives or Variable Pay.
3.Benefits.

4. •Base wages and salaries employees normally
receive.Pay
•Bonuses, commissions and profit sharing
plans are designed to encourage employees
to produce results beyond expectations.
Incentives
•Insurance, medical, recreational, retirement,
etc.Benefits
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Compensation
Direct
Base Pay
Variable pay
Indirect Benefits

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The most important objective of any pay
system is fairness or equity.
The term equity has three dimensions:
Internal
•This insures that more difficult jobs are paid
more.
External
•This ensures that jobs are fairly compensated in
comparison to similar jobs in the labor market.
Individual
•It ensures equal pay for equal work.

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Other
objectives
1. Attract
Talent
3.Ensure
Equity
2. Retain
Talent
6. Comply
with legal
rules
7. Ease of
operation
5. Control
Costs
4. New &
desired
behavior
Ultimate goal is to
reward desired
behavior and
encourage people to
do well in their jobs

8. ForEMPLOYER ForEMPLOYEE
Brandimage for attracting
candidates.
Worklife balance.
Motivating employees for higher
productivity and performance.
Recognition.
Retaining talent. Self esteem.
Consistency in compensation. Planning for better quality of life
Provoking healthy internal
competition.
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9. The PS of a company depends on several factors
such as,
Labor market conditions,
Company’s paying capacity,
Legal provisions.
The two essential components of pay
structure are:-
1.Basic Wage.
2.Dearness Allowance.
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10. The basic wage in India corresponds with what
has been recommended by the Fair Wages
Committee (1948) and the 15
th
Indian Labor
Conference (1957).
While deciding the basic wage, the following
criteria may be considered:
i.Skills needs of the job;
ii.Experience needed;
iii.Difficulty of work: mental as well physical;
iv.Training needed;
v.Responsibilities involved;
vi.Hazardous nature of job.
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11. It is the allowance paid to employees in order
to enable them to face the increasing
dearness of essential commodities.
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12. DA in India is linked to three factors:
•The Labor Bureau, Shimlacomputes
AICPI.
•Base 1960=100 points
AICPI(All India
consumer
price index)
•Linked to AICPI in a related period,
instead of linking it to fortnightly or
monthly fluctuations in index.
Time
factor
•DA rises in line with a rise in the
number of index points above a
specific level.
Point
factor
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•Attendence
•Books
•Car
•Card(credit card)
•City compensatory
•Club membership
•Computer
•Deputation
•Driver
•Education
•ESIS
•Family
•Group insurance
•Leave travel
•Lunch
•Medical
•Night shift
•Overtime
•Paternity
•Pension
•Provident fund
•Relocation
•Servant
•Tiffin
•Transport
•Telephone
•uniform

14. Workmen’s Compensation
Act,1923
Payment of Wages Act,1936
Payment of Wages Act, 1948
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16. It is administration of Employee
Compensation.
It is a systematic approach to providing
monetary value to employees in exchange
for work performed.
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Wages -It implies to the remuneration to workers doing manual
work.
Salaries -It is compensation to office, managerial, technical and
professional staff.

17. It denotes the process of managing a
company’s compensation programme.
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The goals of wage and salary
administration are to design a cost-
effective pay structure that will:
i.Attract ;
ii.Motivate and
iii.Retain competent employees.

18. According to D.S.Beach-
It refers to the establishment and implementation of
sound policies and practices of employee
compensation.
According to Bewathand Reins-
It is essentially the application of a systematic
approach to the problem of ensuring that
employees are paid in a logical, equitable, and
fair manner.
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19. The ultimate goal of wage determination process is to
establish & maintain an equitable wage structure that
enhances the employee commitment to the
organization.
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20. Job analysis Job evaluation Wage survey
Preparation of
wage structure
Designing pay
ranges
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•To establish a fair and equitable remuneration
•To retain present employees.
•To attract qualified and competent personnel.
•To improve motivation and morale of employees.
•To project a good image of the company.
•To control labor cost.

22. Wage and salary plans should be sufficiently
flexible.
Job evaluation must be done scientifically.
Wage and salary plans must be always
consistent with overall organizational plans.
Wage and salary plans being responsive to
changing local and national conditions.
Wage and salary plans should simplify and
expedite other administration processes.
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23. Wage and salary systems should have a
relationship with:
of an INDIVIDUAL
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Wage and
salary
system
Performance
Satisfaction
Attainment

24. HENDERSON identified the following elements of
a wage and salary system:
1. Identifying the available:
and communicating them to employees.
2. Relating salary to needs and goals.
3. Developing quality, quantity and time
standards related to work and goals.
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Salary
opportunities
Their
costs
Estimating worth of
its members

25. 4. Determining the effort necessary to achieve
standards.
5. Measuring the actual performance.
6. Comparing the performance with the salary
received.
7. Measuring the job satisfaction of the
employees.
8. Evaluating the unsatisfied wants and
unrealized goals aspirations of the employees.
9. Finding out the dissatisfaction arising from
unfulfilled needs and unattained goals.
10. Adjusting salary levels.
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26. Job needs.
Ability to pay.
Cost of living.
Prevailing wage rates.
Unions.
Productivity.
State regulation.
Demand and supply of labor.
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SALARY
Paid to white
collared
employees.
Paid monthly,
or bimonthly.
Contribution of
work can not be
easily measured.
WAGE
Paid to blue
collared
employees.
Daily, weekly or
monthly work
paid.
For jobs which
can be measured
in terms of
money.
COMPENSATION
It is a
comparative
term.
It includes wage
and all other
allowances and
benefits like
allowances, leave
facilities, housing,
travel, and non cost
such as
recognition,
privileges and
symbols of status.

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Thank you 