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Module 7

This document discusses compensation and benefits administration. It defines compensation as money and benefits received by employees in exchange for their services. Compensation management refers to payment systems that attract, retain, and motivate employees. An effective compensation package is needed to motivate employees, attract talent, and ensure employee retention. The objectives of compensation management are to attract and retain personnel, motivate personnel, and optimize compensation costs. Wages refer to payments made to hourly workers, while salary refers to periodic payments made to salaried employees. The goals of wage and salary administration are to establish fair pay, attract competent workers, improve productivity, control costs, and improve employee retention.

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Suvojit Banerjee
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488 views

Module 7

This document discusses compensation and benefits administration. It defines compensation as money and benefits received by employees in exchange for their services. Compensation management refers to payment systems that attract, retain, and motivate employees. An effective compensation package is needed to motivate employees, attract talent, and ensure employee retention. The objectives of compensation management are to attract and retain personnel, motivate personnel, and optimize compensation costs. Wages refer to payments made to hourly workers, while salary refers to periodic payments made to salaried employees. The goals of wage and salary administration are to establish fair pay, attract competent workers, improve productivity, control costs, and improve employee retention.

Uploaded by

Suvojit Banerjee
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Module-7

Compensation and Benefits Administration

By Suvojit Banerjee
MBA,VTU
Meaning and Definition of Compensation

• The literal meaning of compensation is to counter


balance. In the case of HRM, compensation is
referred to as money and other benefits received by
an employee for providing services to his employer.
• According to Cascio, “compensation includes direct
cash payments, indirect payments in the form of
employee benefits and incentives to motivate
employee to strive for higher levels of productivity”.
Definition of Compensation Management

• According to I.Kessler, “Compensation Management


refers to payment systems, which determine
employee wages or salary direct or indirect
rewards”.
• According to Tapomoy Deb, “Compensation
Management is a system of compensating
individuals for the work they perform in such a way
that the organization is able to attract,retain,and
motivate them to perform well-keeping in view
organizational and market factors”.
Need of Compensation Management
1. A good compensation package is important to
motivate the employees to increase the
organizational productivity.
2. Unless compensation is provided no one will
come and work for the organization. Thus,
compensation helps in running an organization
effectively and accomplishing its goals.
3. Salary is just a part of the compensation system,
the employees have other psychological and self-
actualization need to fulfill. Thus, compensation
serves the purpose.
Need of Compensation Management

4. The most competitive compensation will help


the organization to attract and sustain the
best talent.

Motivation

Compensation
Mgmt.

Employee Need
Retention satisfaction
Objectives of Compensation Management

1. Attracting and Retaining Personnel


2. Motivating Personnel
3. Optimizing Cost of Compensation
4. Consistency in Compensation
Wages and Salary Administration
 Wages and salary administration refers to the
establishment and implementation of sound policies
and practices of the employee compensation. It
includes areas such as job evaluation, surveys of
wages and salaries, development and maintenance
of wage structure, establishing rules for
administrating wages, wage payments, incentives,
profit-sharing, wage changes and adjustments,
supplementary payments, control of compensation
costs and such other related areas.
Definition of Wages
• According to Yoder and Heneman, “Wages are
the compensation of wage earners, the
numerous employees who use the tools and
equipments for their employers to produce
goods and services that are sold by their
employers.”
• According to Benham, “Wages means the
amount paid to the labor for his services to the
employer.”
Definition of Salary
• According to Tapomoy Deb, “Salary is the
monetary compensation paid by an employer
to his clerical and managerial employees in
exchange for their work, expertise, skills and
contributions in attaining the goals and
objectives of the organization.”
Wages vs. Salary
• Wages is compensation to the employees for
services rendered to the organization. In case
the quantum of services rendered is difficult to
measure, then the payment is called salary.
• Payment made to labor is generally referred as
wages. Money paid periodically to persons
whose output cannot be easily measured such
as clerical staff as well as supervisory staff, is
generally referred to as salary.
Need for sound Wage and Salary
Administration
The main requirements of a sound structure of
base compensation are as follows:
1. Internal Equity
2. External Competitiveness
3. Built-in Incentives
4. Link with Productivity
Objectives of Wage and Salary
Administration
A sound wage and salary administration seeks to
achieve the following objectives:
1. To establish a Fair and Equitable Remuneration.
2. To attract competent personnel.
3. To improve Productivity.
4. To control costs.
5. To improve union management relations.
6. To retain the present employees.
7. To improve public image of the company.
Thank you

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