REWARD

Q:1 What do you mean by rewards? Explain the types of rewards with examples.
Ans: Pay off for effective and efficient performance may be regarded as rewards. Organization use rewards to
motivate people.
Types of Rewards:
1. Intrinsic vs. Extrinsic Rewards:
Intrinsic Rewards: Are satisfactions that come from within the job itself. These are self-motivated, such as pride in your
work, a feeling of accomplishment, or being part of a team.
Extrinsic Rewards: Are external to the job, and come from an outside source, such as management. These include money,
promotions, and fringe benefits.
2. Financial vs. Nonfinancial Rewards:
Financial Rewards: Include things like salary, bonuses, and profit sharing.
Nonfinancial Rewards: Include things like recognition, praise, and opportunities for growth.
3. Performance-based vs. Membership-based Rewards:
Performance-based Rewards: Are given based on an employee's achievements and contributions.
Membership-based Rewards: Are given simply for being part of the organization, such as benefits packages or
retirement plans.
Q:2 what are the criteria based on which reward can be distributed by any organization?
Ans: Criteria on which rewards can be distributed by any organization:
1. Performance
2. Effort
3. Seniority
4. Skills held
5. Job difficulty
6. Requirement of Judgment
When organizations consider distributing rewards, they often evaluate various criteria to ensure that the rewards are fair,
motivating, and aligned with their goals. Here’s a breakdown of the criteria you mentioned, along with some additional
insights:
1. Performance:
 This is one of the most common criteria for rewards. It typically involves evaluating an employee's output,
quality of work, achievement of targets, and overall contribution to the organization. High performers may
receive bonuses, promotions, or recognition.

2. Effort:
 Recognizing effort acknowledges the hard work and dedication an employee puts into their role,
regardless of the outcome. This can be particularly important in roles where results are influenced by
external factors beyond the employee's control.
 3. Seniority:
 Seniority rewards recognize the length of service and experience an employee has within the
organization. This can manifest in the form of tenure-based bonuses, additional vacation days, or
promotions to higher positions.
4. Skills Held:
 Employees with specialized skills or certifications that are valuable to the organization may be rewarded
for their expertise. This can include financial incentives, training opportunities, or roles that leverage their
unique skills.
5. Job Difficulty:
 The complexity and challenges associated with a particular role can be a basis for rewards. Positions that
require a higher level of responsibility, technical knowledge, or emotional labor may warrant additional
compensation or recognition.
6. Requirement of Judgment:
 Roles that require significant decision-making, critical thinking, and problem-solving skills may be
rewarded to acknowledge the responsibility and impact of those decisions on the organization.
Q:3 Incentive systems: Incentive systems link compensation and performance by rewarding performance instead of
seniority or hours of worked.
the common incentive systems:
1. Piecework: Workers are compensated for each unit of output. Pay is calculated based on the rate per unit
produced.
o Example: Agricultural workers get paid for each bushel of produce picked.

2. Production Bonuses: Employees earn incentives for exceeding set output goals.
o Bonus structures are typically tied to the production standard, rewarding extra effort or time-saving
accomplishments.
3. Commissions: Payment is tied to sales or results achieved. This system is most common for sales roles where
earnings are proportional to the value of sales completed.
4. Pay for Knowledge/Pay for Skills: Employees are rewarded for acquiring new knowledge or skills.
o This incentivizes workers to upskill, increasing their value to the organization.

5. Profit Sharing and Stock Option Plans: Workers receive a share of the company's profits or are given stock
options.
o This creates a sense of ownership and alignment with the company's success.

6. Co-partnership: Employees become partners in the business, sharing in profits and decision-making
responsibilities.
o This fosters long-term commitment and collective responsibility.

7. Fringe Benefits: Non-monetary incentives provided to employees, such as health insurance, retirement plans,
paid time off, or company cars.
o These benefits enhance job satisfaction and attract talent.

***common incentive systems:

 1. Piecework: This system pays employees a fixed rate for each unit of work completed. It incentivizes productivity,
as workers can increase their earnings by producing more.
2. Production Bonuses: Employees receive bonuses based on achieving specific production targets or performance
metrics. This encourages higher output and efficiency.
3. Commissions: Common in sales roles, commissions are payments based on the sales generated by an employee.
This motivates employees to increase sales and improve customer relationships.
4. Pay for Knowledge/Pay for Skills: Employees are compensated based on their skills or knowledge level,
encouraging continuous learning and professional development. This can lead to a more skilled workforce.
5. Profit Sharing and Stock Option Plans: Employees receive a share of the company’s profits or the option to
purchase stock at a predetermined price. This aligns employees' interests with the company's success and
encourages long-term commitment.
6. Co-partnership: Employees are given a stake in the business, often through ownership shares. This fosters a
sense of ownership and responsibility, motivating employees to contribute to the company's success.
7. Fringe Benefits: These are additional perks provided to employees beyond their salary, such as health insurance,
retirement plans, paid time off, and other non-wage compensations. They enhance job satisfaction and can
improve employee retention.
Q:4 Payments for time not worked- explain with necessary evidence.
Ans: Payment for Time Not Worked, which includes:
Payment for Time Not Worked, which includes:
1. Hours of Work: Employees are compensated for standard working hours, often based on a weekly or monthly
structure. For example, 40 hours per week or 8 hours per day.
2. Paid Holidays: Employers pay employees for public holidays when they are not required to work. For example,
Christmas Day, Independence Day, or other recognized national holidays.
3. Shift Premium: Companies with second and third shifts pay a premium to workers working during odd hours.
4. Holiday Pay: Companies usually pay double the normal rate to employees working during holidays.
5. Paid Vacation: Employees are granted a certain number of days off with full pay for rest and leisure. Vacation
policies can be based on tenure, job role, or company policies.
Q:5 what is Fringe benefits? Types of Fringe benefits. / Briefly explain the types of fringe benefit offered by an
organization.
Ans: Fringe benefits are extra things that employers give to their workers in addition to their regular pay (salary or
wages).
Fringe benefits are non-monetary compensation that employers provide to employees in addition to their salary or
wages.
the various types of Fringe benefits:
1. Payment for Time Not Worked
These benefits ensure employees are compensated even when they aren't actively working:
 Hours of Work: Payments for regular working hours.
 Paid Holidays: Compensation for days declared as holidays.
 Shift Premium: Additional payment for working late shifts or irregular hours.
 Holiday Pay: Payments made when an employee is on holiday.
  Paid Vacation: Compensation during periods of leave.

2. Employee Security
Benefits provided to ensure financial stability during adverse employment conditions:
 Retrenchment Compensation: Payment to employees when they are terminated due to downsizing.
 Layoff Compensation: Financial support for employees temporarily dismissed due to lack of work.
3. Safety and Health
Programs or provisions aimed at ensuring a safe and healthy workplace environment.
4. Workmen's Compensation
Compensation provided for injuries or accidents that occur during work.
5. Health Benefits: Support for employees' health and well-being:
 Sickness Benefits: Payment during periods of illness.
 Maternity Benefits: Financial support and leave for pregnant employees.
 Disablement Benefit: Compensation for employees who are partially or fully disabled.
 Dependents' Benefit: Financial support for dependents of a deceased employee.
 Medical Benefit: Access to healthcare and medical facilities.

6. Welfare and Recreational Facilities: Amenities to improve employee morale and well-being:
 Canteens: Subsidized food facilities.
 Consumer Societies: Access to affordable goods and services.
 Credit Societies: Easy access to credit and loans.
 Housing: Employer-provided or subsidized accommodations.
 Legal Aid: Assistance with legal matters.
 Employee Counseling: Support for personal or professional issues.
 Welfare Organizations: Groups focused on employee welfare.
 Holiday Games: Recreational activities during holidays.
 Educational Facilities: Access to training or educational programs.
 Transportation: Subsidized or free commuting options.
 Parties and Picnics: Social gatherings for employees.
7. Old Age and Retirement Benefits
Financial security for employee post-retirement:
a). Provident Fund: Savings fund for retirement.
b). Pension Program/Gratuity: Regular payments or lump-sum benefits after retirement.
Each of these categories reflects the employer's commitment to employee well-being, boosting job satisfaction, loyalty,
and productivity.

The benefit determination process

Q:1 explain why employee benefit increase day by day.
Ans: Employee benefit increase day by day:
 Wage and price controls: When the government tries to keep wages and prices from rising too quickly,
companies sometimes offer more benefits instead of raising salaries. This helps attract and keep employees
without violating the controls.
 Unions: Labor unions often negotiate for better benefits for their members, leading to more benefits being
offered across the board.
 Employer impetus: Sometimes companies themselves want to offer better benefits to attract and keep good
employees. They may see it as a good investment.
 Cost effectiveness of benefits: Some benefits are actually cheaper for companies than giving employees
more money in salary. For example, health insurance may be a better deal for the company than paying
higher wages.
 Government impetus: The government sometimes encourages companies to offer certain benefits, like
retirement savings plans, through laws or tax breaks.
Q:2 what are the major administration issue arising in sitting a benefit package?

Ans: Four major administrative issues arise in setting up benefit package:

*Who should be protected or benefited?
When setting up a benefits package, several major administrative issues need to be addressed. First, it’s essential to
determine who will be eligible for the benefits. This involves deciding which employee classifications—such as full-time,
part-time, and temporary workers—will receive coverage, as well as whether to extend benefits to dependents like
spouses and children. It’s also important to consider equity and inclusion, ensuring that the benefits meet the diverse
needs of the workforce.

*How much choice should employee have among an array of benefits?

Next, the level of choice employees should have among the benefits is a critical consideration. Organizations must weigh
the advantages of offering a flexible benefits plan, which allows employees to select from various options, against the
simplicity of a standardized package that provides the same benefits to everyone. Effective communication and education
about the available options are vital, as employees need to understand the value of each benefit. Gathering feedback from
employees can also help tailor the benefits package to better suit their preferences.

*How should benefits be financed?

Financing the benefits is another significant issue. Organizations need to decide how costs will be shared between the
employer and employees, which includes determining premium contributions and out-of-pocket expenses. Establishing a
budget for the benefits package is crucial, as it involves analyzing current and future costs, particularly in areas like
healthcare and retirement. Exploring different funding options, such as self-funding or fully insured plans, can also
impact the financial sustainability of the benefits offered.

*Are your benefits legally defensible?

Finally, ensuring that the benefits are legally defensible is paramount. This means complying with various laws
and regulations, such as the Affordable Care Act and ERISA, to avoid potential legal issues. Implementing non-
discrimination policies is essential to prevent bias in benefits offerings, and maintaining thorough
documentation of policies and eligibility criteria is necessary to defend against any legal challenges.
Q:3 Identify the employee factors the influence the choice of benefit package.

Ans:
1. Relationship to Total Compensation Cost
• Employers must balance benefits with total compensation costs, ensuring that benefits are a cost-effective
component of overall employee rewards.
• Decisions on benefits impact the allocation of resources and overall profitability.
2. Cost Relative to Benefits
• Employers analyze the cost-effectiveness of benefits programs.
• They must ensure that benefits provide a good return on investment, whether through employee satisfaction,
productivity, or loyalty.
3. Competitor Offerings
• Benchmarking benefits against competitors helps employers remain competitive in the job market.
• Employers assess what similar organizations offer to attract top talent and prevent attrition.
4. Role of Benefits in Key HR Goals

a) Attraction
- Benefits serve as a tool to attract qualified candidates. A strong benefits package can be a differentiator in the recruitment process.

b) Retention

- Comprehensive benefits encourage employees to stay with the organization, reducing turnover costs.

c) Motivation
- Well-structured benefits motivate employees, enhancing productivity and engagement. Benefits like wellness
programs or bonuses contribute to morale and performance.
5. Legal Requirement
• Employers must comply with laws regarding mandatory benefits, such as social security, unemployment
insurance, workers' compensation, and healthcare mandates (depending on jurisdiction).
• Non-compliance can result in legal penalties and reputational damage.
"Employee Factors":
• Equity: Ensuring fairness in the distribution of benefits among employees, regardless of position or status.
 Personal Needs: Tailoring benefits to match individual circumstances, influenced by:
1. Age: Younger employees may prefer educational or career development benefits, while older
employees may prioritize retirement plans.
2. Sex: Benefits that address specific health or wellness needs may differ.
3. Marital Status: Married employees may prioritize family health coverage or childcare benefits.
4. Number of Dependents: Employees with dependents may value benefits like dependent care or
family medical plans.
Q:4 Describe "paternalistic, tax aspect and competitiveness as some key competitiveness” in setting a
benefit package/discuss the key consideration factor for determining the employee benefits.
 Paternalistic or Humanistic consideration: Many companies adopt a caring attitude towards their
employees, offering benefits that support health, education, and social activities. This approach is
particularly important in attracting skilled workers, especially in regions where industrial jobs are scarce. It
reflects a commitment to employee welfare that can set a company apart.
 Statutory requirements: Compliance with laws is non-negotiable. Certain benefits, such as maternity leave
and workplace facilities like canteens and rest areas, are mandated by law. Companies must adhere to these
regulations to avoid legal repercussions and maintain a positive reputation.
 Concern for security: As traditional family structures, employees increasingly seek financial security.
Benefits like provident funds, gratuity, and pensions provide essential support for employees and their
families, ensuring stability during retirement. This is especially crucial in a world where life expectancy is
rising and inflation can erode savings.
 hazards of industrial life: Industrial jobs often come with inherent risks. Providing health insurance and
compensation for workplace injuries is not just a legal obligation; it’s a moral responsibility. These benefits
protect employees and their families, fostering loyalty and trust in the organization.
 Tax aspect: Both companies and employees can benefit from tax savings by incorporating non-wage
benefits into compensation packages. However, it’s important to navigate these options carefully, as tax
authorities are increasingly scrutinizing claims. Companies must ensure compliance to avoid potential
penalties.
 Utilization of leisure time: With the trend of shorter work hours, employees have more leisure time.
Companies that recognize the importance of rest and recuperation can enhance employee well-being by
offering paid leave and travel reimbursements. This not only improves morale but also boosts productivity
when employees return to work refreshed.
 Competitive consideration: In a competitive job market, especially in challenging locations, offering
attractive benefits is crucial for attracting and retaining talent. Incentives such as housing assistance,
educational support for children, and special allowances can make a significant difference in an employee’s
decision to join or stay with a company.
Q: 5 what are the reason of growth in employee benefit. explain the current approaches of employee
benefit.
Ans: The reason of Growth in Employee Benefits are given below:
The landscape of employee benefits has evolved significantly over the years, driven by a combination of
economic, social, and regulatory factors. Understanding these influences provides insight into why benefits
have become a crucial component of compensation packages in today’s workforce.
 Wage and Price Control
Historically, wage and price controls have played a pivotal role in shaping employee benefits. During periods of
economic instability, such as wartime, governments have implemented controls to manage inflation and
stabilize the economy. These controls often limited the ability of employers to raise wages directly. As a result,
companies began to offer enhanced benefits as a way to attract and retain talent without violating wage
restrictions. This practice established a precedent for the inclusion of benefits in compensation packages,
which has persisted even after such controls were lifted.
 Unions
Unions have been instrumental in advocating for employee benefits. Through collective bargaining, unions
negotiate on behalf of workers to secure better wages, job security, and comprehensive benefits. The presence
of strong unions in certain industries has led to more robust benefits packages, as they empower employees to
demand better working conditions and compensation. The influence of unions has been particularly notable in
sectors such as manufacturing and public service, where collective agreements often include health insurance,
retirement plans, and paid leave.
 Employer Impetus
Employers have increasingly recognized the strategic importance of offering competitive benefits to attract and
retain skilled employees. In a tight labor market, benefits can be a deciding factor for candidates when choosing
between job offers. Companies understand that a well-structured benefits package can enhance employee
satisfaction, reduce turnover, and improve overall productivity. As a result, many organizations are investing in
diverse benefits, including flexible work arrangements, wellness programs, and professional development
opportunities, to create a more appealing workplace.
 Cost-Effectiveness of Benefits
The cost-effectiveness of employee benefits is a critical consideration for employers. As healthcare costs
continue to rise, companies are seeking ways to manage these expenses while still providing valuable benefits
to their employees. This has led to the adoption of more cost-effective health plans, such as high-deductible
health plans paired with health savings accounts (HSAs). Additionally, employers are increasingly
implementing wellness initiatives aimed at promoting healthier lifestyles among employees, which can lead to
lower healthcare costs in the long run. By focusing on cost-effective benefits, employers can maintain a
competitive edge while managing their overall compensation expenses.
 Government Impetus
Government policies and regulations significantly influence the structure and availability of employee benefits.
Mandates such as the Affordable Care Act (ACA) have established minimum standards for health insurance
coverage, compelling employers to offer certain benefits to their employees. Additionally, government
programs like Social Security and unemployment insurance provide a safety net for workers, further shaping
the expectations around employee benefits. As governments continue to evolve their policies, employers must
adapt their benefits offerings to comply with new regulations and meet the needs of their workforce.
Conclusion:
The growth in employee benefits is a multifaceted phenomenon influenced by historical, social, and economic
factors. Wage and price controls, union advocacy, employer strategies, cost considerations, and government
regulations all contribute to the development of comprehensive benefits packages. As the workforce continues
to evolve, so too will the nature and scope of employee benefits, reflecting the changing needs and expectations
of employees in a dynamic labor market.
The current approaches of employee benefits are given below:
Organizations today are increasingly aware of the importance of fringe benefits—additional perks and services
provided to employees beyond their regular salary. These benefits not only help meet legal requirements but
also enhance employee satisfaction and attract talent. There are three main approaches that companies are
using to improve their fringe benefits: Innovation, Flexibility, and Harmonization.
 Innovation involves expanding the types of benefits offered to employees. Companies are getting creative
by introducing new insurance options for health, life, and retirement. They are also addressing specific
challenges that employees face, such as job loss or relocation. For instance, if an employee is laid off, the
company might offer a "Golden Handshake" to provide financial support or help them find a new job
through training and job placement services. When employees need to move for work, companies are
providing assistance with moving costs, finding new homes, and even helping with school admissions for
their children. This innovative approach aims to meet the unique needs of employees and make their lives
easier.
 Flexibility is about allowing employees to choose how they want to receive their benefits. Instead of a
standard package that everyone gets, companies are offering flexible compensation plans. This means that
employees can negotiate their total pay and decide how to allocate it among different benefits, such as
housing allowances, transportation costs, or entertainment expenses. This flexibility helps employees tailor
their benefits to what matters most to them, making the overall compensation more valuable. While this
approach is common for managerial positions, there is a growing interest in extending it to other employee
groups as well.
 Harmonization focuses on creating fairness among all employees, whether they are blue-collar workers or
white-collar professionals. The goal is to ensure that everyone has access to similar working conditions and
benefits. This might include aligning working hours, attendance policies, and various fringe benefits like
transportation and medical care. By promoting equity, harmonization helps improve employee morale and
fosters a sense of belonging within the organization. It also simplifies the administration of benefits, making
it easier for human resources to manage.
In summary, these three approaches—Innovation, Flexibility, and Harmonization—reflect a modern
understanding of employee needs. By enhancing fringe benefits in these ways, organizations can create a more
supportive and engaging work environment, ultimately leading to happier and more productive employees.
Q:6 Employees very much concerned about the include the component in benefit package.
Ans: Wages just mean all the remuneration capable of being Expressed the terms of money, which would, if the
terms of employment expressed of implied, were fulfilled, be payable to workman in respect of his
employment or a work done in such employment in includes:
1. such allowances (including dearness allowances) as the workman is one time being in entitle to
2. the value of any house accommodation, or of supply of light, water, medical attendance or other amenities
call of any service or of any concessional supply of food gain or others article
3. Any travelling expenses
4. Any commission payable on the promotion of sale or business or both.
but does not include:
1. any bonus
2. any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of
the workman under any law for the time being in force.
3. any gratuity payable on the termination of his service.
Component of wages and benefit structure:
1. Basic Wages: This is the core component of an employee's salary and represents the fixed amount paid for
the work performed. Basic wages are usually determined based on the employee's role, experience, and market
standards. It does not include any additional allowances or benefits. differently in basic wages are normally
based on is that criteria which the fair wages committee suggested me take into account:
• the degree of skill
• the strain of work
• the experience involved
• responsibilities undertaken
• the disagreeableness of the task
• the training required
• the mental and physical requirements
2. Dearness Allowance (DA): Dearness Allowance is a cost-of-living adjustment allowance paid to employees
to mitigate the impact of inflation. It is typically calculated as a percentage of the basic wages and is adjusted
periodically based on changes in the All-India-Consumer-Price Index (AICPI). DA is common in many countries,
especially in public sector jobs, to ensure that employees maintain their purchasing power. There are four
major patterns to calculate DA. Here':
1. the central DA: 1. basic of DA 2. Rate of DA.
2. the industrial DA: 1. DA system in bank in LIC 2. double linkage
3. Allowances: Allowances are additional financial benefits provided to employees for specific purposes
beyond the basic salary. Common types include:
• House Rent Allowance (HRA): Compensation for housing expenses.
• Transport Allowance: Reimbursement for travel costs related to the job.
• Medical Allowance: Financial aid for healthcare expenses.
These additions are often tailored to individuals need and can vary significantly between organizations.
Q:7 most of the organization a new offering more benefit rather than increasing direct salary and
wages.