Components of Remuneration: The purpose of remuneration, an executive is considered to be an individual who is a management position at the highest levels. Specifically, this category includes presidents, vice-presidents, managing directors and general managers. Their remuneration generally companies five elements. They are: Salary Bonus Long-term ...

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Although the Incentive Payments have a universal appeal, their application is confined to certain important industries. Stated differently, payment-by-results schemes are difficult to apply in: Industries in which measurement of individual or group output Is rendered difficult or impossible either by technical consideration or by psychological circ...

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Installing a scheme of payment by results must proceed on the following lines: Define the objectives of the payment system and, if necessary, challenge the assumptions held about the purpose of the system and how it should operate. Collect facts about the existing system-the pay structure, the types of payment schemes in use the number of people pa...

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Labor Market refers to that geographical area which an organization recruits employees and where individuals seek employment. They labor market is often different for various groups of employees, for example, clerical and technical employees are recruited locally whereas managerial personnel are recruited at national and international level. Many f...

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Compensation Management is the strategic process of aligning pay, incentive and benefits of employees with organizational goals and objectives. Compensation is a formidable communication and can be a powerful instrument for change and a major determinant of the culture of an organization. The process of compensation management is depicted in fig: T...

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Management of compensation is a dynamic and complex issue. Compensation ambient globalization of economy is not limited to payment made by organizations to employees for their work, facilitated by labour market and state laws relating to compensation. In today’s organizational set up and with increasing reliance on human resources as  a source of c...

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Heneman and Schwab (1979) defines pay system as follows: Pay system is the method the organization uses to determine pay raise for individuals which can be computed in terms of the amount of time the employee spends on the job(time-based systems) or his performance or efficiency (performance-based systems). Performance-based systems include individ...

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Compensation Planning:The planning stages of compensation management are depicted by the following figure captioned as Compensation Planning: Compensation has long been considered one of the most important organizational rewards because it allows employees to obtain other rewards. Compensation management entails a mechanism that connects employee e...

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The work itself is a major determinant of whether to pay for time or output. The work characteristics to consider include: Measurability of output. The relationship between effort and output. The degree of standardization. Requirements for quality as well as quantity. Competitive conditions, which make it imperative that unit labour costs be defini...

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Compensation has long been considered one of the most important organizational rewards because it allows employees to obtain other rewards. Compensation management entails a mechanism that connects employee efforts, performance and outcomes with organizational goals and objectives. Since a large number of employees work in the organization, therefo...

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Theories of Job Satisfaction: These theories are related to job satisfaction and then explore the linkage of compensation and employee satisfaction. Comparison Theory: This theory specifics that employees compare what their jobs should provide (e.g. promotions and compensation)to what they currently receive from their jobs.  However simple need com...

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Compensation is need for survival and human satisfaction. Pay dissatisfaction can lead to a number of individual and organization problems as discussed below: High Turnover: If employees are not paid according to the position they hold, their skills, competencies and performance, then employees will become dissatisfied with compensation and search ...

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Organizations are increasingly devising performance linked compensation systems to induce employee’s performance and productivity which is essential for creating and sustaining competitive advantage. There is generally agreement on the need for rewards and recognition to form part of any effective performance management system. Employee’s knowledge...

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Organization wide incentive plans involve cooperation among employees, management and union in order to achieve broader objectives such as organization wide reduction in manpower, materials and supply cost, strengthening of loyalty to the organization, harmonious industrial relations, and deceased turnover and absenteeism. The group wide incentive ...

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Equity participation through employee stock plans constitutes an essential part of compensation packages offered to reward employees. Stock options are to purchase a specified number of shares of a company’s stock at a specified price (called the exercise or a stoke price) for a specified period of time (called the potion period or life of the poti...

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Types of Stock-Based Compensation:  The term “stock-based compensation” is a wide term which embraces the compensation of an employee in stocks options, stock appreciation rights and other stock-based related awards. Broadly, stock-based compensation can be classified into two follows: Restricted stock plan: The most traditional type of restricted ...

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There are two methods of accounting stock-based compensation as follows: The intrinsic value method: This method measures compensation expense as the excess, if any, of the quoted price of the stock at the measurement dare over the amount of which the employee must pay to acquire the stocks. Where the exercise price of the stock is equal to or grea...

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Culture based Strategic Compensation Management: Culture plays a central role influencing various HR system and sub-systems in the organization. The effectiveness of the performance management depends on the organization’s culture. The consequences of impact of organization culture on performance managements can be felt in compensation management. ...

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In India, instructional set up for regulating compensation system is twofold viz. wage board for regulating compensation in industries belonging to private sector including  newspaper establishments and working k=journalists while pay commission tend to regulate the compensation of public servants. Wage Boards: In the 1950s, when the organized labo...

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