Compensation and Benefits in HRM PDF

COMPENSATION AND BENEFITS IN HRM Prepared by: Engr. Xymel Pearl Sombrio Source: Azmi, n.d. What is Compensation and Benefits in HRM Objectives, Examples. https://www.startuphrtoolkit.com/compensation-and-benefits-in-hrm/; https://www.termsco...

COMPENSATION AND BENEFITS IN HRM Prepared by: Engr. Xymel Pearl Sombrio Source: Azmi, n.d. What is Compensation and Benefits in HRM Objectives, Examples. https://www.startuphrtoolkit.com/compensation-and-benefits-in-hrm/; https://www.termscompared.com/compensation-vs-benefits/ COMPENSATION AND BENEFITS  Compensation and benefits are two critical elements of human resource management.  They are both part of the remuneration package provided to employees in return for the services they provide to the organization.  They serve as the key motivators for carrying out the job. It is important for a company to offer an attractive remuneration package made up of both monetary and non-monetary elements so as to attract a skilled and competent workforce. COMPENSATION AND BENEFITS OBJECTIVES  The employer’s and employees’ views are pretty different concerning compensation and benefits.  The employers want to pay the amount as minimum as they can to save the company’s cost.  On the other hand, the employees want to get as much as they can.  Therefore, the objectives of the compensation management are formulated for addressing and fulfilling the needs of the employers and the employees to come to a common point. MULTIPLE OBJECTIVES ARE ASSOCIATED WITH COMPENSATION AND BENEFITS. UNDERSTAND ALL OF THEM ONE BY ONE BELOW: 1. Control the incurring costs of the organization. 2. Follow the labor laws or wage system by acknowledging the legal provisions To bring an easy understanding of salary structure and other benefits by the staff of the company. 3. To enhance the overall motivation of an employee. 4. To improve the comprehensive company’s ranking on social platforms in terms of employee motivation and satisfaction. MULTIPLE OBJECTIVES ARE ASSOCIATED WITH COMPENSATION AND BENEFITS. UNDERSTAND ALL OF THEM ONE BY ONE BELOW: 5. Competent compensation for reinforcing the reward winning behavior Balance in pay structure also helps in attracting the right and creative talent. 6. Long Term Retention of the employee. 7. Payment must meet the employees’ overall needs and expectations in return for the work done. COMPENSATION  The different forms of payments made to employees because of the tasks they perform for the organization are known as compensation.  Compensation is typically provided in monetary terms.  It is essentially the financial payment made to employees for carrying out the tasks and responsibilities assigned to them within an organization COMPENSATION  Compensation plays a significant role in Human Resource Management to boost the overall performance and effectiveness of the employees working in the organization.  Compensation is at the heart center of every company TYPES OF COMPENSATION COMPENSATION CAN TAKE PLACE ON MONETARY AND NON-MONETARY TERMS. 1. Direct Compensation  It enables the employers to make sure that employees are getting paid without any biasedness inside the premises of an organization.  All the benefits, including the employees’ salary as well as health-related benefits, are included in this type of compensation.  It keeps the threat of ‘cost incurred loss’ away from the employer’s minds that a well-trained employee might leave the organization to the competition. TYPES OF COMPENSATION 1. Direct Compensation  Multiple Monetary forms of compensation include the following 1. Bonus 2. Employee rewards and recognition, 3. commission on sales, 4. Sharing of profits, 5. Paying for working overtime etc. TYPES OF COMPENSATION 2. Indirect Compensation  Indirect compensation indirectly motivates the employees.  It doesn’t involve the direct transfer of the money between the two parties. Instead, the employees are helped with multiple other beneficial things instead of getting benefits in cash.  It eventually creates a sense of belonging and admiration by the company, keeping them away from the front of leaving the organization TYPES OF COMPENSATION 2. Indirect Compensation  Non Monetary forms of compensation include: 1. Internet reimbursement 2. Mobile phone reimbursement, 3. Public recognition 4. Transfer facility 5. Promotion opportunities 6. Paid house for stay by the company, as well as 7. Company car for traveling office. 8. Free scholarship for an online courses. KINDS OF COMPENSATION BASED ON THE NATURE OF THE WORK, DIFFERENT KINDS OF COMPENSATION ARE MADE TO EMPLOYEES. THESE INCLUDE: Basic compensation:  Basic salaries are offered in a few companies as a form of compensation to their employees.  Those employees who are at same level in the organization receive the same basic pay.  However, people with higher educational qualifications and with better skills and experience usually receive greater pay in comparison to those with lesser education, experience and skills. KINDS OF COMPENSATION BASED ON THE NATURE OF THE WORK, DIFFERENT KINDS OF COMPENSATION ARE MADE TO EMPLOYEES. THESE INCLUDE: Performance-related compensation:  In these plans, pay can be based on a certain measure of performance, which may be the employee’s productivity or the department’s productivity.  Most of the times, performance based compensation packages for senior employees include annual bonuses on the basis of organizational profitability. KINDS OF COMPENSATION BASED ON THE NATURE OF THE WORK, DIFFERENT KINDS OF COMPENSATION ARE MADE TO EMPLOYEES. THESE INCLUDE: Piece-rate compensation:  Employees are sometimes paid compensation on the basis of piece-rate plans, where a base salary is not paid; rather, their pay depends on their output.  This is also referred to as commission-based compensation, where employees are paid a given percentage of the total sales they produce each day.  The greater the sales generated, the greater the compensation they receive. COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 1. Analysis of Job Job Analysis comes into the picture when you do the detailed process of analysis of the job. It further gives way to formulating the description of a specific job. Various techniques are used while analyzing the position, i.e., 1. Questionnaires 2. Interviews 3. Observation COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 2. Description of Job Job Descriptions – plays a crucial role by being the most vital component of the entire selection system of a candidate and their compensation. Descriptions of the different jobs are made differently, or for the same profiles, Also, it’s made as one for the whole family. Job Descriptions are mainly responsible for determining the numerous aspects of a single job as a whole. COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 2. Description of Job Some of these elements are mention below: 1. Duties 2. Responsibilities 3. Environmental conditions 4. Requirements 5. Functions 6. Location COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 3. Evaluation of Job Candidates often feel the comparison of different jobs is quintessential. It allows them to have a basic idea about the compensation model followed by various companies for the same profile. Once the candidate makes the comparison, he selects the best suitable company in terms of compensation level. Four different techniques used for evaluating a particular are mentioned below: 1. Factor Comparison 2. Ranking 3. Point Method 4. Classification COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 4. Pay Structures  The pay structure allows the companies to standardize the overall compensation strategy.  Also, it often comes up with the grading system. Here, each grade comprises the minimum fixed salary, and with the increase in it, the compensation takes a peak too under the predefined maximum range of it.  Union-level positions have the predefined pay for a particular job through collective bargaining. In this, the compensation pays step increments as a usual standard set by the company. COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 5. Salary Related Researchers and Surveys  Salary-related surveys are customarily conducted aiming to gather the overall market data based on the salary. We all know that data is everything.  Here, what happens is that the companies are eager to buy the data based on the surveys done regarding the salaries via survey companies.  They also conduct their surveys in exceptional cases, which gives them a fair idea about the competitive salary and ongoing salary trends in the market.  All of these surveys conducted are specific to industries or a geographical area or an amalgamation of all.  It is wholly based on the client company on what type of survey they are looking for as per their requirements. COMPONENTS OF COMPENSATION THE VARIOUS COMPONENTS OF COMPENSATION INCLUDES THE FOLLOWING: 5. Salary Related Researchers and Surveys  The survey generally includes the following: 1. Inflation Rates 2. Average of the Salary Budgets 3. Average Salaries to date 4. Cost of Living DIFFERENCE BETWEEN COMPENSATION AND BENEFITS THE DIFFERENCE BETWEEN COMPENSATION AND BENEFITS IS GIVEN BELOW: 1. Meaning  Compensation is defined as the financial remuneration given to employees in return to the services they provide to the organization.  On the other hand, benefits is defined as the non- financial forms of rewards given to employees in addition to their cash salary for the services they offer to the organization. DIFFERENCE BETWEEN COMPENSATION AND BENEFITS THE DIFFERENCE BETWEEN COMPENSATION AND BENEFITS IS GIVEN BELOW: 2. Form of remuneration  Compensation is a direct form of remuneration that is based on the performance of the employee.  It may depend on the employee’s performance on his own, or on the performance of the department or the whole organization, with bonuses being awarded for exceptional performance.  However, benefits is an indirect form of remuneration that is given to employees as part of their employment condition, i.e. it is not performance based.  Rather, employees are entitled to receive benefits being members of the organization, irrespective of their performance. DIFFERENCE BETWEEN COMPENSATION AND BENEFITS THE DIFFERENCE BETWEEN COMPENSATION AND BENEFITS IS GIVEN BELOW: 3. Purpose  The purpose of compensation is to attract and retain a competent and skilled workforce.  Benefits, on the other hand, seek to enhance the welfare of the employees and motivate them to improve their performance. DIFFERENCE BETWEEN COMPENSATION AND BENEFITS THE DIFFERENCE BETWEEN COMPENSATION AND BENEFITS IS GIVEN BELOW: 4. Nature  Compensation is made as cash payments to employees, whereas benefits are the non-cash forms of value offered to the employees for the contributions they make to the organization. DIFFERENCE BETWEEN COMPENSATION AND BENEFITS THE DIFFERENCE BETWEEN COMPENSATION AND BENEFITS IS GIVEN BELOW: 5. Examples  Compensation mainly includes salaries and wages, while insurance plans, paid leaves, holidays, vacations and social security benefits are some of the types of benefits offered to employees. EMERGING ROLE & SIGNIFICANCE OF THE COMPENSATION AND BENEFITS IN HRM 1. The entire process of evaluating the job gets strengthen and also, adopting compensation and benefits measures. 2. It, in turn, helps to design more realistic and achievable targets or goals for the employees. 3. It enriches the bond of colleagues working with each other. It leads to motivated employees putting in the best of their efforts because they feel satisfied and fitted to the organization. EMERGING ROLE & SIGNIFICANCE OF THE COMPENSATION AND BENEFITS IN HRM 4. Compensation and Benefits design and implementation based on labor laws. Because of this, the chance of conflicts or unnecessary arguments between the coworkers comes to an end before it even starts. Overall, it leads to a peaceful working atmosphere and a healthy professional relationship between the employer and the employees. 5. It enables the employers to retain the promising talent of the company. And no company would expect the employee to leave so soon after they have trained them well. Henceforth, such Compensation and Benefits schemes allow employees to retain and stick to the company for the long term without getting distracted from the outside offers. EMERGING ROLE & SIGNIFICANCE OF THE COMPENSATION AND BENEFITS IN HRM 6. Compensation and Benefits act as a paycheck or a refund to the employees for all the hard work and efforts they have put into the organization. 7. The better the Compensation and Benefits plan, the better will be the efficiency of the employees. Workers are driven by the factors that make them feel happy about everything while adhering to the organization. Such plans ensure the employees become the best version of themselves and show 110% dedication towards their work. THANK YOU and GOD BLESS!