CURRENT TRENDS

COMPENSATION
The total reward received by an employee in exchange for service performed for an organization. It includes direct pay(salary and wages) and indirect pay(perquisites and fringe benefits). Its importance:Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational efficiency.

Compensation objectives
To reward employees past performance.

To attract and retain competitive high performing

employees. Acts as a source of motivation. Communicating to the employee their worth in the organization.

Compensation Policy Issues

Pay for performance

Pay for seniority

Salary increases and promotions Overtime and shift pay

Probationary pay
Paid and unpaid leaves Paid holidays

 Salary compression
(A salary inequity problem, generally caused by inflation, resulting in longer-term employees in a position earning less than workers entering the firm today) Geographic costs of living differences

Legal framework for payment of salary in India

Payment of wages Act, 1936:- any sum to which the person

employed is entitled under any scheme framed under any law for the time being in force ;but does not include(1) any bonus (2) the value of any house accommodation (3) any contribution paid by the employer to any pension or provident fund (4) any travelling allowance or the value of any travelling concession .

The Minimum Wages Act,1948:- a basic rate of wages

with or without the cost of living allowance and the cash value of the concession in respect of supplies of essential commodities at concession rates, where so authorized.

 The Payment of Bonus Act,1965:-in

relation to a corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balanced; (ii) in relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not.
Equal Remuneration Act,1976:-An Act to provide for the

payment of equal remuneration to men and women workers and for the prevention of discrimination, on the ground of sex, against women in the matter of employment and for matters connected therewith or incidental thereto.

Changing trends of Compensation management

Motive Coping up with the current competition. Attract, retain and motivate high performing

employees. Changing business environment. Downsizing Transition to flexible or contingent work force.

WHATS NEW?
Competency based pay and reward

programmes.
What is competency-based pay? Where the company pays for the range, depth, and types of skills and knowledge, rather than for the job title he or she holds.

Competencies
Demonstrable characteristics of a person, including knowledge , skills and behaviors that enable performance. Why use competency-based pay systems? Paying for skills , knowledge and competencies is more strategic.

Broad banding

Reducing the number of pay grades while expanding the actual salary ranges.

Benefit :
Being able to expand the actual pay for performance and competency component.

Incentive Compensation
Directly connected to the performance of the individual or the team.

Benefit :
Increases

employee performance in the right environment. Employees efforts and results are measurable and the potential rewards are significant.

Stock options
Granting employees the right to purchase a specific number of shares of the companys shares at a guaranteed price during a designated time period.

BenefitsMotivating the employees to work hard to create the best possible value for their company.

The Sweetness of Executive Perks

Company car Company plane Executive eating facilities Financial consulting Company-paid parking Personal liability insurance Estate planning First-class air travel Home computers Chauffeur service

Childrens education Spouse travel Physical exams Mobile phones Large insurance policies Income tax preparation Country club membership Luncheon club membership Personal home repairs Loans Vacation cabins

RECENT TRENDS A FEW EXAMPLES

In GENPACT , the management identifies 35 star

leaders who are then sent on vacation with their family. ICICI provides great opportunities to their stars plus have locked in their key people with significant stock options. ADITYA BIRLA Group has built a great sense of belonging and a sense of security for their leaders .

 COGNIZANT has employed the policy of giving

instant reward to their employees like t-shirt and mug with their logo.