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MANAGING COMPENSATION AND BENEFIT Driving Employee Motivation throughCompensation and Benefit Adhyatmika | Amir | David | Kynan | Tantia
MANAGING COMPENSATION AND BENEFIT Why do millions of people go to work each day?We all have a drive to acquire money, things, prestige, power…
MANAGING COMPENSATION AND BENEFIT Increases Effort Improves Focus DrivesCreativity Enhances Persistence Aids Retention
MANAGING COMPENSATION AND BENEFITALIGNING WITH BUSINESS STRATEGY
MANAGING COMPENSATION AND BENEFITWhy does compensation become important? Contribution based Ensure Equity Remuneration Effective Administratively Attract talent Compensation Efficient Legal Compliance Motivate & Retain Reward Valued Staff Behavior
MANAGING COMPENSATION AND BENEFITWhat should thecompany be aware of? Link with objectives& culture Establishing pay Motivate for performance employee standard
MANAGING COMPENSATION AND BENEFIT The Internal and External Equity INTERNAL EXTERNAL FACTORS FACTORS •CONDITIONS OFCOMPENSATION THE LABORSTRATEGY OF THE MARKETORGANIZATION •AREA WAGE RATESWORTH OF JOB PAY LEVELS •COST OF LIVINGEMPLOYEE’SRELATIVE WORTH •COLLECTIVE BARGAININGEMPLOYER’SABILITY TO PAY •LEGAL REQUIREMENTS
MANAGING COMPENSATION AND BENEFIT What is the entire pay model process? Business Goals Compensation activities serveCEO Business Business Objectives Strategy Compensation strategyHR Head Compensation is periodically Strategy reevaluated and the Org.Structure Non-Financial Compensation plan Rewards periodically developed Compensation PlanC & B/S M Performance Job Evaluation Market Surveys Management Unit Inputs Pay levels / structures Compensation Manager, Contribution along with team isEmployee /outputs responsible for carrying Total out compensation remuneration related activities Performance linked Pay Individual Pay Internal Equity External Equity 9
MANAGING COMPENSATION AND BENEFIT Job Evaluation: HAY Method “The Most Widely Used Point System in The World” The measurement Problem Know-How Accountability SolvingOutput: Rank OrderInternalEquity MarketAnalysis Pricing Analysis
MANAGING COMPENSATION AND BENEFITSalary Survey: Kelly Services
MANAGING COMPENSATION AND BENEFIT BALANCED, PRACTICAL REWARD STRATEGY MODEL EMPLOYER’S EMPLOYEE’S PERSPECTIVE PERSPECTIVEORGANIZATION COMPETENCIESCAPABILITIESBUSINESS EMPLOYMENT DEAL DEMOGRAPHICSSTRATEGYORGANIZATIONSTRUCTURE VALUES TOTAL REWARD STRATEGY PAY BENEFITS LEARNING & WORK DEVELOPMENT ENVIRONMENT IMPROVED BUSINESS RESULTS & ALIGNED EMPLOYEE BEHAVIOURS
MANAGING COMPENSATION AND BENEFITWhat Are TheClassification& Components?
MANAGING COMPENSATION AND BENEFITHow the Rewards areclassified? Base Pay: Wages, Salaries Direct Variable Pay: Incentives (Individual, Team, Organization) Financial Mandatory: (Extrinsic Provident Fund, Rewards) Gratuity, Maternity Leave, Health Plans, medical Leave TotalCompensation Indirect Benefits Voluntary: Vacations, Satisfaction Break, Holiday, Non Financial derived Security Plan, (Intrinsic Educational Assistance, Rewards) Praise and Recreational Rewards
MANAGING COMPENSATION AND BENEFITHow do I get myDirect Pay? Fixed Payment based on Period Salaried Hourly Payment Wages Project Based Commission
MANAGING COMPENSATION AND BENEFITHow would the companypay for my risk workingthere? Health Benefits Wellness Programs inpatient& outpatient Security Pensions plan, mobility, flexible retirement, Provident Fund
MANAGING COMPENSATION AND BENEFIT Incentives Plan •Piece Work Plan •Straight Piecework Individual Incentives •Standard Hour Plane Organizational Group/team Incentives IncentivesProfit Sharing Gain sharing Plan: Rucker, Scanlon, Improshare
MANAGING COMPENSATION AND BENEFIT Total Rewards Trends: Flexible Rewards (Pay For Performance)Pay plans that aim Paying for skills, Collective bonus for high- Less Fixed, more knowledge, and and Bonusperformance work competencies variable deferral system. Pros Cons • Higher quality • Implementation problems • Cost implications of paying for unused • Lower absenteeism knowledge, skills and and fewer accidents behaviors • Uncertainty • Consolidating salary grades
MANAGING COMPENSATION AND BENEFIT Total Rewards Trends: Flexible Rewards (Choice) Low Flexibility High Flexibility Low Cost High Cost - Premium - Choice - Core: Basic FlexibleSalary Reduction Modular Options Core Plus Mix and Match Conversion different coverage Credits - Flexible combinations - Plus: Flexible Spending of benefits credits to Account purchase additional coverage
MANAGING COMPENSATION AND BENEFIT Total hours worked per week Childcare Subsidy Childcare Flexibility Family Friendly Workplace Holidays: Number Job Practice & RegulationSwitching Working Job Sharing from Home
MANAGING COMPENSATION AND BENEFITWhat is the Trend for ExecutiveCompensation? Base salary, Short-term incentives or bonuses, Long-term incentives or stock plans and Perquisites (perks) Executive Personal Company Financial Company-Company car eating liability plane consulting paid parking facilities insurance Estate First-class Home Chauffeur Children’s Spouse travel planning air travel computers service education Large Luncheon Physical Mobile Income tax Country club insurance club exams phones preparation membership policies membership Personal Legal Vacation Loans home repairs counseling cabins
MANAGING COMPENSATION AND BENEFIT Issues in Managing Compensation Cost Attraction/retentioncontainment/reduction Process• Wage Freeze • Sign-on/hiring• Pay Reduction bonus• Hiring Freeze • Employee Referral• Limit/eliminate Bonus overtime • Flexible work• Reduction in force schedules• Early retirement • Spot Bonus• Increase employee • Merit prevalent share of health care premiums from bonus
MANAGING COMPENSATION AND BENEFIT 4thLargestSector Employee Compben Structure based on cost- competitiveness, innovation and mass-market nature of the products
MANAGING COMPENSATION AND BENEFIT Unilever: Pay For Performance, Market Competitive and Long Term RetentionFixed Salary which Variable Salary linked Employee Gaincompetitive with its to company and Sharing. peer companies individual performance Benefits and Retirement benefits Perquisites aimed at which market providing you choices. competitive Source: www.ghallabhansali.com
MANAGING COMPENSATION AND BENEFIT Johnson & Johnson Compete and Retain for Talented Employees Award Programs:Flexible Reward Plan: Standards of The benefits programsCash and J & J common Leadership Awards and services to stock’. Program, global Encore Awards Program Maintain good health Plan for retirement and well-being Source: www.ghallabhansali.com
MANAGING COMPENSATION AND BENEFITProcter and GambleHigh Ownership towards theCompany Every one of P&G’s 110,000 employees is 18% of the Firm owned given P&G stock as part by the Employee of the company’s One Share program. Source: www.ghallabhansali.com