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COMPENSATION PACKAGE

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

What is Compensation ?
Compensation is the process of directly and indirectly
rewarding employees on a current or deferred basis,
for their performance of assigned tasks.

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Objectives of Compensation
Legal Compliance with all appropriate laws and
regulations
Cost effectiveness for the organization
Internal, External and Individual equity for employees
Performance enhancement for the organization

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Compensation Types

DIRECT
Base Pay

INDIRECT
Benefits

Wages

Medical Insurance

Salaries

Paid time off


Retirement Pensions

Variable Pay
Bonuses
Incentives
Stock Options
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

Workers Compensation

Division of Compensation -Responsibility


HR Manager
Develops

Line Manager
and

Administers
Compensation system
Conducts job evaluation
and wage surveys
Develops wage / salary
structures and policies

Attempt

to

march

performance and rewards


Recommend

pay

rates

and increment based on


guidelines from HR unit
Evaluate
performance

employee
based

compensation purposes
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

COMPENSATION STRATEGIES
Compensation Philosophies
Strategic Compensation Design
Compensation and Organizational Culture
Cost Effectiveness and Labour Market Positioning

Competency Based Pay


Broadbanding and Career Development

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Compensation Philosophy
ENTITLEMENT

PERFORMANCE

Seniority Based

No raises for length of service

Across the board raises

No raises for longer service poor


performers

Guaranteed movement of scales

Market adjusted pay structure

Industry comparisons only

Broader Industry comparisons

Santa Claus Bonuses

Bonuses tied to performance results

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Changing Compensation Strategies


Yesterday

Today

Fixed salary

Tomorrow

Variable pay as add-on


to salary

Low fixed salary,


variable pay

Variable pay emerging


throughout organization

Variable
pay
common
throughout the organization

Fixed
benefits,
reward long tenure

Flexible benefits

Portable benefits

Company-based
career moving up

Industry-based career,
moving around

Skill-based,
employment

interim

Hierarchical
organizations

Flatter
team-based
organizations

Network
organizations

virtual

Cookie cutter pay


plans

Total
compensation
(Look at benefits, too)

Customized, integrated pay


systems; pay, benefits,
intangibles

Bonuses/perks
executives only

for

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

more

Quartile Strategy
Third Quartile
Above-Market Strategy

Maximum

(25% of firms pay above and 75% pay below)

Second Quartile
Middle-Market Strategy

Medium

(50% of firms pay above and 50% pay below)

First Quartile
Below-Market Strategy

(75% of firms pay above and 25% pay below)

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Minimum

Outcomes from Competency Based Systems

Organization-Related
Outcomes

Employee-Related
Outcomes

Greater workforce flexibility

Enhanced employee
understanding of Organisational
big picture

Increased effectiveness of
work Team

Greater employee selfmanagement capabilities

Few bottlenecks in work flow

Improved employee satisfaction

Increased worker output

Greater employee commitment

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

DESIGNING EFFECTIVE COMPENSATION


PROGRAM
Job Analysis
(Job Descriptions, Job Specifications)

Job Evaluation

Pay Surveys

Pay Policies

Pay Structures

Performance
Appraisal

Individual Pay

Implementation,
Communication, Monitoring

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Salary Structure
Job Evaluation Results

Pay Survey Data

Develop Market Line

Identify Different
Pay Structures
Establish Pay Grades

Revise Pay Grades and


Ranges as Needed
Compare Current
Pay to Pay Ranges

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

Compute Pay
Ranges

COMPENSATION POLICIES AND


PROCEDURES
Know what the competition is doing and benchmark your
structure to reflect competitive practices for retention and
recruitment purposes.
Salaries should reflect level of responsibility employees
may have in the organization.
Form
a
compensation
committee
(preferably
represented by management and employees).
Contd...
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

COMPENSATION POLICIES AND


PROCEDURES

Create a structure where salaries and any increases


reflect company performance as espoused by the
compensation committee.
Develop and document a general company policy and
strategy for pay increases.
Liaison with the compensation committee for review,
adjustments and approval.
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

Team Based Compensation

Types of Team Incentives


Same size reward for each team member
Different size rewards for each team member

Criteria for Best Team Work


Significant interdependence exists among the work of
several individuals, and team work and co-operation is
absolutely essential.
Contd..
Copyright 2004 Asia Cryo-Cell Private limited.
In technological collaboration with Cryo-Cell International, Florida, USA.

Team Based Compensation

Difficulties exist in identifying exactly who is


responsible for different levels of performance.
Management wants to create or reinforce team
work and co-operation among employees
Rewards are seen as being allocated in a fair and
equitable manner.

Copyright 2004 Asia Cryo-Cell Private limited.


In technological collaboration with Cryo-Cell International, Florida, USA.

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