Transcript of Remunerations and incentives
- 1. Remunerations and Incentives
- 2. REMUNERATION Remuneration is a payment or compensation
received for service or employment. This includes the base salary
and any bonus or other economic benefits that an employee or
executives received during employment. Remuneration is
traditionally seen as the total income of an individual and may
comprises a range of separate payments determined according to
different rules. For instance the total remuneration of medical
staff may comprise a capitation fee and a fee for services mot is
may include a salary and shared financial risk. A remuneration
strategy therefore is the particular configuration of building of
payments that go make up an individuals total income
- 3. Types of Remuneration Compensations a) Executives Pay :
Executive pay is the total pay or financial compensation an
executive offer within the co-corporation salary, and all bonuses,
shares, options and any other company benefits. Executives pay is
an important part of corporate governance and is often determined
by companies board of director. b) Deferred Compensation : It is an
arrangement in which a portion of an employees income is paid out
at a date after which that income is actually earned. Example of
deferred compensation includes pensions, retirement plans and stock
options.
- 4. EMPLOYEE BENEFITS : Employee benefits are various non-wage
compensation provided to employees in addition to their wage and
salaries, where an employee exchange (cash) wages for some other
forms of benefits, this is generally referred to as salary
sacrifice arrangement. Some of these benefits are housing (
employer provided or employer- paid ) , group insurance ( health,
dental, etc), disability income protection, retirement benefits,
tuition reimbursement, sick leave, vacation ( pad and not paid),
social security, profit sharing, funding of education and other
specialized benefits. The purpose of employees benefits also is to
increase
- 5. COMISSION : The payment of commission as remuneration for
service rendered or product sold in a common way to reward sales
people. SALARY : A salary is a form an employee to an employee
which may be specified in a employment contract. It is contracted
with piece wages, where each job, hour or other unit is paid
separately rather than on a periodic basis. From a point of
business salary can also be viewed as the cost of acquiring human
resources for running operation it is the termed personnel expenses
or salary expenses. In accounting salaries are recorded in payroll
account.
- 6. PERFORMANCE LINKED INCENTIVES (PLI) : A performance linked
incentives is a form of payment from an employer to an employees
which is directly related to the performance output of an employee
and which may be specified on an employment contact. PLI may be
either open handed ( does not have fixed ceiling) or closed handed
( has an upper ceiling which is normally stipulated in the
employment contacts). Open handed incentives are normally
applicable revenue generating activities (e.g. sales) and close
handed are associated with support functions ( e.g. operation,
human resources, administration etc)
- 7. INCENTIVES Incentive is a reward monetary or non-monetary
which is given to a worker for his efficiency and hard work. If a
worker has raised production by hard work then there must be
increase in wage corresponding to an increase in output. Any firm
earning high profits give bonus at high rate as incentives. So the
workers exert themselves to produce any where near their full
capacity and try to increase the profit of the firm because their
income increases with the increase in the firms profit. An
incentive motivates and encourages a worker to produce more and
better and are prevalent in the fixed salary method. Incentives
help in increasing the interest of the worker in the production and
are in addition to the job hourly rate and in some proportion to
the workers contribution towards production. Incentive and
production are closely related with each other. Incentives
stimulate the worker for increased production and help to create
better efficiency
- 8. TYPES OF INCENTIVES Incentives may be classified in to the
following two groups: a) financial incentives b) non- financial
incentive
- 9. FINANCIAL INCENTIVES Financial incentives involve direct
monetary payments or benefits to workers for better productivity
and performance. Besides incentives for the immediate work
contribution, workers may receive additional financial benefits in
the form of; i) bonuses ii) profit sharing METHOD OF FINANCIAL
INCENTIVES i) Piece rate system vi) Emersons effiency bonus system
ii) Cent percent premium vii) Gantt task and bonus system iii)
Halsey system viii) Taylors differential piece rate system iv)
Rowan system ix) Merricks multiple piece rate system v) Bedaux or
point system x) Weir premium plan vi) Barth system
- 10. NON-FINACIAL INCENTIVES The financial incentives must be
supported by the non-financial incentives. Only cash wages cannot
help in solving the problems of the workers. So there must also be
some non-financial incentives. Non financial incentives include
good working conditions, amenities and social benefits in the
organization. Non financial incentives play an important role in
maintaining better production and efficiency in an organization.
With this type of incentives workers create interest for greater
and better output and will also enjoy richer and fuller life. At
last the say that the non-monetary reward given to the worker for
the better productivity and performance, is called nonfinancial
incentives. Some of the chief Non-financial incentives are: 1.
Security of service. The service of the trained person should be
secure in the industry. A worker knows that the he is not going to
be dismissed, suspended or discharge unless he behaves wrongly or
creates indiscipline or shows carelessness against the work. He
will have security of his service. 2. Opportunity for training.
There should exist a suitable arrangement for the training the
workers of different levels and thus offering them opportunities
for improving their knowledge and skill. 3. Chances of Quick
Promotion. There is no back door entry of the worker. Every worker
is likely to be promoted to a higher rank when the opportunity
arises. There fore it is necessary for every worker to increase his
efficiency and show his skill what he has. Only then he gets the
chances of promotion. 3. Chances of Quick Promotion. There is no
back door entry of the worker. Every worker is likely to be
promoted to a higher rank when the opportunity arises. There fore
it is necessary for every worker to increase his efficiency and
show his skill what he has.
- 11. 4. Personal Reward. The rewards like certificates of merit,
appreciation for good work, good conduct and attendances etc. also
increase the efficiency of the workers. Respect of recognition in
the organization in also is itself a reward to the workers. 5.
Welfare Measures. Some of the necessary welfare measure like
provision of medical facilities, transportation, housing, food
services, recreational and educational facilities to workers and
their families has a sound effect on the workers. In the factory
some facilities like drinking water, shelters, canteen, rest room,
latrines and urinals etc must be provided to the increase the
efficiency of the workers. 6. Sympathetic Attitude of the
Management. For increasing the efficiency of the worker it is
necessary for the management that fair and sympathetic treatment is
given to a worker. A faith in their individuality is not ignored
and their grievances