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- NARAYAN A MURTHY
CHIEF MENTOR OF INFOSYS
Salary
Wages
Compensation
Significance
ImageBuilding
EnsureEquity
Legal
Compliance
Institutional
effectiveness
Effective
Compensation
Attracttalent
Motivate&
RetainStaff
Administratively
Efficient
RewardValued
Behavior
Employee
Management
Piece rated
Skill based
Time based
Characteristics of Effective
Compensation Plan
Effective compensation plans build an
allowance for company profit at the high end
of the range of profitability appropriate to the
market stage
Effective compensation plans focus on
motivating salespeople to meet both tactical
and strategic company needs: profit, growth,
market share, volume, etc.
Effective compensation plans include both fixed
and variable elements that are easily managed
by the company and quickly understood by the
salesperson
CTC
Components
Monthly component
Quarterly component
One time and annual component
Advance component
Deferred component
Attendance linked component
Seniority linked component
Performance linked component
Statutory component
Monthly component
Basic salary
Dearness allowance (% of basic salary)
system of payment:
linked with price index- flat rate and graduated rate
Not linked with price index
a)
b)
c)
d)
Conveyance allowance
Food coupons
Housing or HRA
Special allowance
allowance to meet expense incurred while performing
duties:
Daily allowance
Helper allowance
Academic allowance
Uniform allowance
a.
b.
c.
d.
QUATERLY COMPONENTS
PERQUISITES
BONUS
INCENTIVES
ADVANCE COMPONENTS
THESE ARE THE MONEY GIVEN
TO THE EMPLOYEES TO MEET CERTAIN
PERSONAL EXPENSES MOSTLY AS A LOAN
Deferred components
Seasonal allowance
Separation allowance
Attendance linked
components
These components are linked
with the attendance of the employees
Seniority linked
components
IMORTANCE
Limitations
Performance is not rewarded
Competent employees will not prefer this
system
Fails to differentiate between efficient and
inefficient workers
No self motivation to excel
A hurdle in attracting capable persons
Importance
limitations
Motivation cannot be guaranteed
Dependency on performance management
Proper training of managers
Disputes of performance measurement
Statutory components
Provident fund
Gratuity
pension
Advantages of CTC
CONTROL OVER REMUNERATION COST
CAN CONTROL LABOUR COST MORE
EFFICIENTLY
INTERNAL EQUITY
EMPLOYEE SOCIAL SECURITY IS SEEN
Terminology
Compensation
Benefit
Salary
Pay
Basic pay
Wage
Allowance
Incentive
commission
Reward
Recognition
Perquisite
Fringe benefit
an extra benefit supplementing an employee's money wage
or salary, for example a company car, private health care, etc.
Subsistence allowance
Reimbursement
Consolidated pay
Stipend
Service charge
Pay scales
Severance pay
an amount paid to an employee on the early
termination of a contract.
Terminal benefit
are final entitlements of an employee upon termination
of an employment contract.
Bonus
Joining bonus
Retention bonus
Relocation pay
Increment
Stagnation increment
IS IT INCREMENT GIVEN TO EMPLOYEES WHO COULD
NOT BE PROMOTED AND HENCE BEING COMPENSATED
MANAGEMEN
T
COSTS
COMMUNICATION
COSTS COMMUNICATION
CHANGE
CHANGE
Strategy
A fundamental business decision that an
organization has made in order to achieve
its strategic objectives e.g., what business
to be in, how to gain competitive advantage
The greater the alignment, or fit, between
the organizational strategy and the
compensation system, the more effective
the organization
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Strategic Perspectives
Toward Total Compensation
Strategic Perspectives
Toward Total Compensation
(1 of 2)
Medtronic
Objectives
Emphasis on
innovation
Commitment to cost
containment
Recognize
contributions
Attract and reward
the best
Focus on customers
Fully present at work and in
personal lives
Recognize personal
accomplishment and share
success
Attract and engage top
talent
Control costs
Internal
Alignment
Minimize hierarchy
Everyone wears
several hats
Emphasize
collaboration
Strategic Perspectives
Toward Total Compensation
(2 of 2)
Google
Medtronic
Externally
Competitive
Employee
Contributions
Recognize individual
contributions
Unrivaled stock programs
Management
240
Starbucks Approach
De-emphasize differences.
Use equity based pay structures, cross-train
employees to handle many jobs, and call
employees partners.
Contributions
Management
3. Implement Strategy
Design System to Translate Strategy
into Action
Choose Techniques to Fit Strategy
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246
Best Practices
Assumptions
A set of best-pay
practices exists
Practices can be
applied universally
across all situations