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46 views20 pages

Presentation 1

Uploaded by

Satyendra Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHALLENGES AFFECTING THE

COMPENSATION MANAGEMENT.

To, By,
Prof. Sumita Vyas Satyendra singh chouhan
ISBE-A 10-12
Compensation management is more than
providing a paycheck and cost of living increases.
In many organizations, employee performance
relative to organizational goals serves as the
basis for compensation. Whether brought on by
economic difficulties, changes in technology or
other business factors, compensation remains a
human resources challenge.

2
FORMS OF PAY

 Employee pay begins with a cash base and bonus


pay, but may also contain non-cash forms of
compensation. The valuation of non-cash
compensation is often most difficult for
employees to appreciate, but it offers the most
opportunity for creativity on the part of the
organization.

3
PAY PHILOSOPHY

 Compensation programs must consider and value


the work of those who provide internal support to
the organization as well as those who directly
impact financial results. An organization's
compensation strategy will dictate the rate and
timing of pay increases, which jobs are eligible
for bonuses, and the level of competitiveness with
similar organizations

4
EMPLOYEE INCENTIVE

 Pay-for-performance has become increasingly


popular. Companies use compensation to reward
and boost the morale of high-performing
employees, but also to motivate underachievers.

5
PRESENTATION OF COMPENSATION

 How a manager speaks regarding pay can


inadvertently create ill will when the intention
was to deliver good news. It is important to use
specifics when speaking with employees rather
than categorize any pay increase as "good",
"significant" or some other qualifier. Employee
perceptions of compensation are based on
individual values, needs and expectations.

6
PAY COMPETITIVENESS

 Businesses wishing to compete for the best of the


available talent pool must offer a competitive
compensation program compared to other
companies within their industry and at large

7
AUTOMATION AND OUTSOURCING

 Automating compensation, including outsourcing


some compensation functions, enables businesses
to standardize its system throughout the
organization, eliminate paperwork and help
departments to communicate more effectively. It
minimizes payroll errors and makes it easier to
compensate performance based on quantifiable
measures. Organizations may also use technology
to benchmark jobs and survey employees.

8
GENERATIONAL DIFFERENCES

 People are living longer, and thus, working


longer. In a look at physician compensation, Max
Reibolt of The Coker Group noted a difference in
work ethic and expected compensation that fell
along generational lines. Older workers were
more likely to work longer hours in exchange for
their pay while younger workers expected high
levels of pay even when their productivity was
aided by technology.

9
MULTINATIONAL OPERATIONS

 Multinational corporations must balance the


needs and expectations of employees from
various countries. Compensation must balance
conformity with local laws and customs against
global corporate policies.

10
CONTROLLING LABOR COSTS

 Labor costs often constitute the largest line in a


corporation's budget. In a tight economy,
companies are faced with a flat, if not shrinking,
pool of funds. The cost of labor is broader than
the amount paid to employees, taking into
account recruitment, training, turnover,
infrastructure and overhead, and the impact of
these things on productivity.

11
 In order to effectively strike a balance among all
the above mentioned influences, the HR
professional must be aware of the following:

12
CULTURE:
 Cultural differences necessitate understanding
that the value of compensation and benefits
programs is in “the eye of the beholder”. A benefit
highly valued in one country may be
comparatively worthless in another. Differences
are often rooted in subconscious beliefs, attitudes
and values.

13
ECONOMIC FACTORS:
 Many differences subsist from country to
country, in terms of the:
I. Influence of politics and power
II. Distribution of wealth across country’s
citizenry
III. Unpredictability of events (i.e., sometimes
rapid changes in rates of inflation, currency)

14
TAXATION:
 Tax regulations vary extensively from country to
country. Some countries have no income tax,
while others have income tax in excess of 50%.
Some benefits that are taxable in one country are
not taxable in the geographically adjacent
country or vice-versa.

15
COMPETITIVE LABOR MARKET:
 At a broader level, the compensation and
benefits required to magnetize and sustain talent
are determined by the aggressive demand for
that talent. However, the nature of the
competition for talent may differ across countries
and regions, depending on factors such as:
I. Type of talent sought
II. Geographic scope of the talent market
III. Industries in which the talent may be found
IV. Mix of remuneration components

16
LAWS AND REGULATIONS:
 Laws and regulations impact the remuneration of
employees in many areas, such as:
I. Work hours and compulsory time-off (paid and
unpaid)
II. Minimum wage
III. Overtime
IV. Compulsory bonuses
V. Employment at will
VI. Acquired rights

17
FACTORS INFLUENCING COMPENSATION
LEVELS

 The amount of compensation received by an


employee should reflect the effort put in by the
employee, the degree of difficulty experienced,
the competitive rates offered by others in the
industry and demand and supply position within
the country. These are :-
1. Job needs.
2. Ability to pay.
3. Cost of living.
4. Prevailing wage rates.
18
5. Productivity.
6. State regulation.
7. Demand and supply of labour.

19
THANK YOU

20

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