Compensation Introduction

Front 1

4 contrasting perspective of compensation

Back 1

1) Society

2) Stakeholders

3) Managers

4) Employees

Hint 1

SSME

Front 2

Society Perspective

Back 2

1) Pay as Measure of justice

2) Benefits as reflection of justice in society

3) Belief that as pay increases Price Increases.

4) Job losses/gains- differences in compensation

Front 3

Stakeholders

Back 3

1) Stock as method of payment creates sense of ownership

2) linking executive pay with company's performance, supposedly increases stock prices.

Hint 3

(Shareholders+ creditors )

Front 4

Managers

Back 4

1) Expense : should be controlled

2) as a tool for motivation

Front 5

Employees

Back 5

1) financial security

2) return in exchange of services provided

3) Entitlement for being part of the company

4) Reward for the job well done

Front 6

Define Compensation

Back 6

Refers to all form of

Financial returns

Tangible services

Benefits

Employees receive as part of employment relationship

Front 7

Total return

Back 7

Total compensation + Relational returns

Front 8

Total compensation

Back 8

Cash components

Benefits components

Front 9

Relational returns

Back 9

Recognition and status

Employment security

Challenging work

Learning opportunities

Hint 9

4 components

Front 10

3 components of Benefits Return

Back 10

1) income protection

2) allowance

3) work life balance

Front 11

4 components of Cash Compensation

Back 11

1) Basic Pay

2) merit (good work, performance of the past)

2.1) COLA/DA

3) Short term incentives

4) Long term incentives

Front 12

Long term incentives

Back 12

ESOP = Employee Stock option plans

Employee Stock ownership plan , that is (pension plan)

Front 13

COLA/DA

Back 13

Directly proportional to Consumer Price Index

Front 14

Components of pay model

Back 14

1) Compensations objectives

2) Policies that make up the foundation of Compensation System

3) Techniques that make up the compensation system.

Front 15

Purpose of Compensation objectives

Back 15

1) they guide the design of the past system

2) they serve as the standards to judge the success of pay system

Front 16

Compensations objectives

Back 16

1) improve employees performance

2) fairness of the pay system

3) procedural fairness

4) Compliance to law

5) ethics

6) retention

Front 17

Compensations policy

Back 17

1) internal alignment

2) external competitiveness

3) employees contribution

4) management and administration of payment system

Front 18

Reward effort ratio

Back 18

>1 then good compensation

Front 19

Back 19

Front 20

Pay structure components

Back 20

1) Salary

2) Allowances and reimbursement

3) Social amenities and benefits

4) Retirement benefits

5) Performance related pay

Front 21

Basic Pay

Back 21

Is the part of the compensation that an employer gives for the work performed. It tends to reflect the value of work or skills.

Front 22

Increment

Back 22

Periodic upward adjustment of basic pay

Front 23

Basic pay =

Back 23

Pay in the pay band + grade pay

Front 24

D.A

Back 24

To prevent the erosion of your basic pay.

Front 25

Specific rate of D.A

Back 25

Everyone in the organisation is paid same amount of D.A.

Front 26

Indexed rate of D.A.

Back 26

It follows some index price number.

Front 27

types of Indexed D.A

Back 27

1) Graded system

2) flat system

Front 28

Flat system

Back 28

Everyone is paid at the same rate. Hence, higher the salary, higher absolute amount of D.A.

Front 29

Graded system

Back 29

As the grade go up, the rate of D.A fall down or, the person with the lower grade will get the higher rate of D.A.

Front 30

Piece rated plan

Back 30

Number of units produced, per hour.

Front 31

Standard hour plan

Back 31

Total time needed to complete a job.

Front 32

Roman plan

Back 32

Similar to Halsey plan. In it employees and employer, split the savings arising out of work done, in less than standard time.

Bonus rises as the time taken to finish the job decreases.

Front 33

Gantt plan

Back 33

Standard time is fixed at a high level. If you achieve that, you get a bonus.

Front 34

Gain sharing plan

Back 34

Based on cost sharing. Meaning if you're able to reduce the cost of production, you get bonus out of that amount. Not profit sharing.

Front 35

Scanlon plan

Back 35

Wage bill or payroll cost÷sales value of production.

Aims. How much excess wage is there.

Front 36

Rucker plan

Back 36

Labour cost÷value added

Aims. How much excess production has been done.

Front 37

Output worth =

Back 37

Productivity ratio × wages paid to the worker.

Front 38

Productivity ratio =

Back 38

1 ÷ {value added × value added from labour}.

Front 39

Improshare =

Back 39

Actual hours worked ÷ total standard work hours.