Module 8 HRM nmims mostme hshhshhssssssss

human resource management , hrm, xlri, business

1. Module 8

2. Compensation & Benefits

3. Nature of Compensation Types of Rewards Intrinsic : Intangible, psychological and social effects of compensation Opportunity for achievement Giving of challenging responsibility Opportunity for growth in stature and peer recognition Praise Each of these must be Timely, appropriate, worthwhile, offered sincerely Extrinsic : Tangible, monetary and nonmonetary effects of compensation Pay Working environment or conditions Security Trophies/ awards

4. Components of a Compensation System The employer exchanges monetary rewards for work done Employer-provided benefits that are given employees for being a member of the organization

5. Direct compensation Base Pay : The basic monetary compensation that an employee receives, usually as a wage or salary Wages : Payments calculated on the amount of time worked. Salary : Consistent payments made each period regardless of the number of hours worked in the period. Variable (merit) Pay : Compensation linked to individual, team, or organizational performance

6. Indirect compensation Health/ medical insurance : Provides cover against loss from illness or bodily injury. Can pay for medicine, visits to the doctor, hospital stays, other medical expenses and loss of earnings. It depends on the conditions covered and the benefits and choices of treatment available on the policy. Life/ disability insurance : Insurance providing for the payment of a stipulated amount to a designated beneficiary upon the death of the insured Paid time off : A feature in some employee agreements that provides a "resource" of hours that an employee can draw from to take time off Retirement/ Pension plans : An arrangement to provide people with an income when they are no longer earning a regular income from employment Educational assistance : Allowance for education of the employee's children

7. Influences on compensation Pay

8. Influences on compensation Pay

9. Types of Incentives

10. Individual Incentives Piecework plans Management incentive plans Behavior encouragement plans Referral plans Advantages: Helps relate pay to performance Promotes equitable distribution of compensation Helps retain best performers

11. Group Incentives Rewards employees for their collective performance Use has increased in industry Team - based or small group Allocation Methods: Equal incentive payments Differential payments based on contribution to goals Differential payments according to base pay

12. Profit Sharing Current profit sharing plans Deferred profit sharing plans Formulas: Fixed-first-dollar-of-profits Graduated first-dollar-of profits Probability Threshold Formula

13. Gain Sharing As performance improves, employees share financially in the gain Gains and resulting payouts are self-funded based on savings generated by improved performance Gain Sharing commonly applies to a single site, or stand-alone organization Many plans often have a year-end reserve fund to account for deficit periods Employees often are involved with the design process

14. Compensation Approaches

15. Determining Pay Increases Seniority Time spent in an organization or on a particular job that is used to determine eligibility for organizational rewards and benefits. Cost-of-Living Adjustments (COLA) A percentage increase in wages to maintain real wages in a period of economic inflation. Adjustments are tied to changes in an economic measure (e.g., the Consumer Price Index). Lump-Sum Increases (LSI) A one-time payment of all or part of a yearly pay increase that does not increase base wages.

16. Strategic Compensation Objectives of a Strategically Supportive Compensation System: Legal compliance with all appropriate laws and regulations Cost effectiveness for the organization Internal, external, and individual equity for employees Performance enhancement for the organization

17. Transfers and Promotions

18. Definition of Transfer: According to Dale Yorder, “ A transfer involves shifting of an employee from one job to another without special reference to change in responsibility or compensation”

19. Why to Transfer Employees? To meet the organizational requirements To ensure respect for human beings. To identify and satisfy the needs of individuals . To provide the organization with well-trained and well-motivated employees.

20. To inculcate the sense of team spirit, team work and inter-team collaboration. Better utilization of employees . Making employees versatile. To correct inter-personal conflicts. Avoidance of overstaffing. Disciplinary action Relief

21. Types of transfer: Employee transfer may be classified into 3 types based on purpose: Transfer that are effected for the training & development of the employees. Transfer made for adjustment of varying volumes within the organization. Transfers designed to correct the problem of poor employees placement.

22. The common types of transfer are as follows: Production Transfers Replacement Transfers Rotation Transfers ( Versatility Transfer) Shift Transfers Remedial Transfers Penal Transfers

23. A letter informing approval of an employee’s Transfer

24. TRANSFER POLICY A good transfer policy should satisfy following condition: It should state the type of transfer. Authority to order transfer. Effect on pay and seniority. Facility available to transferred employee. Personal request. Transfer decision should communicated to employee in writing. Opportunity to appeal for employee. Override all other benefits while making a transfer.

25. Definition of Promotion: In the opinion of Wendell French, “A promotion is a type of transfer involving the reassignment of an employee to a position that is likely to offer higher pay and greater responsibilities, privileges and potential opportunities.”

26. Why to promote employees? Serves as an incentive to employees. Recognition of the efficiency of an employee and his performance. Boosts employee morale. Enhances employee commitment and loyalty. Job satisfaction. Helps to retain skilled and talented employees. Develops a competent internal source of employees for higher level jobs.

27. Instills a competitive spirit among the employees. Effective use of knowledge and skills of an employee. Attract competent and suitable employees to join the organization. Organizations are able to minimize the discontent and unrest among the employees.

28. Bases of Promotion Promotion can be based on following: Promotion Based on Seniority Promotion Based on Merit Promotion Based on Seniority-Cum-Merit

29. Promotion Based on Seniority: Relative length of service. Preference in various aspects of employment. Merits of using seniority as the bases of promotion: Simplicity Objectivity Reward Reduces employee turnover. Union approval. In line with Indian culture.

30. Promotion based on seniority has been criticized on the following: Faulty assumption. Ignores performance. Efficiency suffers. Demotivates. Promotion Based on Merit: Stresses on the ability Best performing employees is promoted.

31. Merits of using this system: Enhances efficiency. Motivates. Limitations of a promotion system based on merit are as follows: Subjective. Favoritism. Opposition of unions. Insecurity.

32. Promotion Based on Seniority-Cum-Merit: Combination. Before using this system, it is essential that the Management clearly state the following details: Minimum length of service. Relative weightage assigned. Minimum performance & qualifications.

33. Types of Promotion Vertical Promotion. Horizontal Promotion.

34. PROMOTION POLICIES: Policy Statement Basis of Promotion

35. Promotion Charts

36. Communication of Policy Career Planning

37. Detailed Records Employee Training Consistency

38. Fair and Impartial Decision Making Authority Appeal Mechanism

39. Difference between transfers and promotions: Meaning Objects Policy

40. meaning Job rotation refers to a management tool in which an individual, usually a trainee, is taken from one department to another over a period of years. This allows the individual to train on different aspects of the job.

41. Introduction Job rotation involves an employee changing positions within the same organization and eventually returning to the original position Job rotation is the best way to keep the employees away from boredom Job rotation helps trainees to apply their: - knowledge - abilities - Interests

42. Definition : A job design technique in which employees are moved between two or more jobs in a planned manner Job rotation is a management technique that assigns trainees to various jobs and departments over a period of few years

43. Task rotation It takes place in jobs that involve a high degree of physical demands on the body or extremely tedious job Employees are periodically removed from these mentally stressful or physically demanding tasks to a less demanding task for a while to give them a break. Eg; A spot welder on a production line working 10 hrs. shift for 4days a week is shifted to the maintenance or tool shop

44. Process rotation It is the process of laterally moving an employee to different geographical location The purpose behind this type of rotation is to personally professionally developing the employee by exposing her to new knowledge, skills and perspectives. Eg; a junior executive at a multinational consulting firm sent as the company's advance executive training program to different geographical location

45. Job rotation in constructing agency