Submitted by: Submitted by rajkumarshahu
Views: 713
Words: 3127
Pages: 13
Category: Business and Industry
Date Submitted: 07/19/2011 05:30 AM
Compensation and compensation policy
Table of Contents
Introduction2
1.Compensation2
1.1 Direct Compensation2
1.2 Indirect Compensation2
2. Significant factors affecting Compensation Policy3
2.1 External factors affecting compensation policy4
2.2 Internal factors affecting compensation policy 4
3. Why compensation management5
4.Compensation strategy5
Literature review7
Examples9
Critical analysis11
Conclusion13
References14
Introduction:
1. Compensation
Employees look for reward before they do anything. They need their efforts compensated. Compensation can be understood as different types of rewards received by employees in return of their contribution to the organization during their period of employment (e.g. salary, )or after the retirement (e.g. Pension). It occupies an important place in the life of the employee. It is cost to the employer.
Dissatisfaction arising from compensation policy can lead to
* frequent absence
* fail to retain skilled employee
* dissatisfaction
* decreased performance
* strikes and
* grievances
Majority of labour-management disputes relate to compensation.
Compensation can be direct and indirect:
1.1 Direct compensation:
It consists of:
a) Pay: It is monetary reward in the form or wages and salaries given to employees for accomplishing the allocated job. It is basically two types: base pay and merit pay.
Base pay: Employees receive base pay hourly, weekly or monthly in return of the work they had done.
Merit pay: It is performance based pay. Employees who perform better receive merit pay along with the base pay.
b) Incentives: Incentives are provided to those employees who perform extremely well. They can be in the form of commission, piecewage, bonus, providing share, stock option etc.
1.2. Indirect compensation: (Fringe Benefits)
It consists of:
a) Benefits: They are usually based on non financial rewards and awarded in addition to pay. Employees receive...