module7-compensationandbenefitadministration-101123192908-phpapp01

7/28/2019 module7-compensationandbenefitadministration-101123192908-phpapp01

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Compensation

Definition 1

Generally, something received in return for

something else.

Definition 2

Wages and otherfinancialbenefits earned

from labor.
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Compensation

Compensation includes

Basic Pay and DAVariable Pay or Allowances

Incentives or Beneifts


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Objectives

Internal Equity: Difficult job paid more

External Equity: Similar job in different industry

Individual Equity:

Equal pay equal work Attract Talent

Retain Talent

Ensure Equity

New and Desired Behavior

Control Costs Comply With Legal Rules

Ease of Operations


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Examples of Job Evaluation Factors

Skill Effort

Education Mental Effort

Experience Problem Solving

Communication Concentration

Complexity

Responsibility Working Conditions

Financial Responsibility Mental Demand

Supervision Physical Effort

Freedom to Act Visual Demand Decision-making

Contacts with others

Operational Latitude


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Factors Affecting Wages

Remuneration in Comparable Industries

Firms ability to pay

Employees Relative Worth

Cost of Living Productivity

Union pressure and Strategies

Government Legislations Demand and Supply of labour

Job needs


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Need for Compensation

Most of the employees satisfaction and work

performance are based on pay

Internal inequalities in pay are more serious to

certain employees Employees compare their pay with that of others

Employees act only to gross external inequities

Employees compare the pay of differentemployees with their skill


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Concept of Compensation

Wage: hourly services

Salary: Monthly services

Earnings: Total earnings

Nominal Wage: Received in monitory terms

Real Wage: Defines Purchasing power

Take Home Salary: Net Salary


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Minimum Wage: to meet nominal needs

Statutory Minimum Wage:

Living Wage:

includes amenities Fair Wage:

equal work

Incentive Wage: Over and above

Wage Rate: Time Rate method

Standard Wage: It is fixed on job evaluation standards


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Job Evaluation

It is a process to determine the value of jobsto fix appropriate compensation

It determines relative worth of a Job

ILO Defines As attempt to determine andcompare demands which the normalperformance of a particular job makes on normal

workers without taking into account theindividual abilities or performance of the workersconcerned


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Objectives of Job Evaluation

To gather data about Job description and

available job

To compare duties and responsibilities

To determine hierarchy

To determine ranks

To ensure fair and equitable pay To minimize wage discrimination


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Procedure of Job Evaluation

Analyze and Prepare Job Description

Select and Prepare a Job Evaluation Plan

Classify Job Install the Program

Maintain the Program


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Job Evaluation Technique / Methods

Non Quantitative Techniques

Ranking Method

Simple Ranking

Ranking the Key Jobs

Paired Comparison

Single Factor Ranking Method


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Job Classification and Grading Method

A predetermined number of job groups or job classes are

established

Jobs are assigned to these classifications.

This method places groups of jobs into job classes or job

grades.

Separate classes may include office, clerical,

managerial, personnel, etc


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Examples Classification Method

Class I - Executives: Further classification under thiscategory may be Office manager, Deputy officemanager, Office superintendent, Departmentalsupervisor, etc.

Class II - Skilled workers: Under this category maycome the Purchasing assistant, Cashier, Receiptsclerk, etc.

Class III - Semiskilled workers: Under this categorymay come Stenotypists, Machine-operators,

Switchboard operators, etc. Class IV - Semiskilled workers: This category

comprises Daftaris, File clerks, Office boys, etc.


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Quantitative Techniques Point Rating Method

Point Method A set ofcompensable factors areidentified as determining the worth of jobs. Typicallythe compensable factors include the major categoriesof:

Skill Responsibilities

Effort

Working Conditions


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Assigning Points

The analyst divides each factor to be used into levels

and defines and assigns points to each. For example, he could define the "experience" factor

into 5 levels with points distributed as follows:

No experience (entry level) = 10 points

1-3 years experience = 30 points



Over 10 years experience = 100 points


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Salary Structure

Basic Wages

Dearness Allowances

Other Allowances


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In India different acts include different itemsunder Wages, Though Basic and DA areincluded compulsory Workmans Compensation Act 1923 Section 2m

wages for leave period, holiday pay, overtime pay,bonus, attendance bonus and good conduct bonusform part of wages

Payment of Wages act 1936 any award of settlement

and production bonus, if paid constitutes wages Minimum wages Act 1948 retirement compensation

payment in lien of notice and gratuity payable ondischarge constitute wages


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Basic Wage

Basic Salary

Dearness Allowance

All india price consumer index

Time Factor

Point Factor


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Legislations in India

Minimum Wages Act 1948

Payment of Wages Act 1936

Payment of Bonus Act 1965 Equal Remuneration Act

Workmen Compensation Act 1923


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Wage and Salary Survey

It is the survey of the wages paid in an

organization

It is in comparison with Market Local,

Regional or National depends on the job

Labour market is the place from where

employees are obtained


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Salary Fixation

Skill needs of the job

Experience needed

Difficulty of Work: mental and physcial Training needed

Responsibilities involved

Hazardous nature of job


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Wage and Salary Surveys

Published Reports

Reports of Ministry of labor

Pay commission reports

Reports of wage boards

Reports of employees and employers

organizations

Trade journals of industry


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Incentives Plan

Taylor Piece Rate

Two slabs, one is lower and one is higher

Halsey Piece Rate

If the job is done less in standard time bonus

of 50% of time saved at time in addition to

normal wages

Total Earnings = Time Taken * Hourly RatePlus Bonus

Bonus = 50% of time saved


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Rowan Plan

Bonus = Time Saved----------------------------- * Time taken * Hourly Rate

Time Allowed

Gantt Plan

Wages are guarnteed

If worker reaches standard, he will be paidtime wage plus fixed bonus


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Health Provision

Cleanliness

Wastes

Ventilation and Temperature

Dust and Fumes Artificial Humidificatin

Overcrowding

Lighting

Drinking Water Laterines and Urinals

Spittoons


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Effective safety management

Safety Policy

Top management support

Safety committee

Safety discipline motivation Safety engineering

Safety training and communications

Accident investigation and research

Ealuation safety effort

Governmental support


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Legal provision for Safety (Sec 20 to 40)

Fencing of machinery

Work on near machinery in motion

Employment of young persons

Striking gear and devices for cutting offpower

Self acting machines

Casing new machinery

Employment of women and children


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Hoists and lifts

Lifting machines chains and ropes

Revolving machinery

Pressure plant

Floors, stairs and means of access

Pits sumps opening in floors

Excessive weights

Protection of eyes


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Profit Sharing

Seager profit sharing is an arrangement

by which employees receive a share fixed

in advance of the profits

The percentage to be shared is

determined in advance at the beginning of

the work period and is communicated tothe workers


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Features of Profit Sharing

Agreement is Voluntary on joint consultation

Payment may be in cash or stock

Employee should have minimum qualification

Agreement is mutually accepted

Sharing Formula is pre set

Distribution depends on the profit

Proportion of profit is predetermined


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Objectives of Profit Sharing

Better employee relations

Mutual acceptance

Co operation and unity


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Benefit Administration

Benefi ts adm inist rat ion invo lves the

creat ion and management ofemployee

benefi ts, as wel l as p rov iding a means

for employees to be trained in

understand ing how the benef its wo rk,

and what types o f standards employees

mus t meet in order to quali fy for thebenefi ts
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Benefits administration involves spending

a lot of the day making sure benefit plans

are running smoothly. This will often

include review of accumulation of personaldays, vacation days, and sick days

Benefits administration often involves

overseeing the health insurance coveragefor qualified employees


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Benefit program includes an investment or

retirement program

Benefit Program includes wherein employee

should be able to meet with an administrator andobtain the latest information regarding the status

of his or her benefits.

Benefits administration is involved in not only

seeing to the welfare of the employee, but also

the well being of the company
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