Introduction • Everyone likes to be paid &

money still can be turned into most people want

• The compensation an employee receives in return for his or her contribution to the organization

FINANCIAL NON- FINANCIAL

WAGES & SALARIES

Hourly and Monthly Rated Differ from employee to employee

INCENTIVES Individual schemes Group Schemes Based on performance

FRINGE BENEFITS

P.F Medical Accident Relief, Hospitalization, Insurance

PERQUISITES Company car, Club Membership, Paid Holidays, Furnish House,

JOB CONTEXT

Challenging job, Responsibilities, Supervision, Work Condition.

Direct Indirect

Fringes Benefits

• Employee benefits and services include any benefits that the employee receives in addition to direct remuneration

• Also known as service programmes, employee benefits & hidden payroll

Types of Benefits & Services

TREATS

Free Lunches Festival Bashes

Coffee Break Picnics

Dinner with boss

KNICK-KNACKS

Desk Accessories Company Watches

Tie-pins Planner T-shirts

OFFICE ENVIRONMENT

Redecoration

Office with window Flexible hours

AWARDS

Trophies Certificates

Letter of appreciation

SOCIAL ACKNOWLEDGEMENT

Office get-together Friendly greeting,

smiles, e-mail

TOKENS

Movie Tickets Vacation trips Early time-offs

anniversary, birthday allowances/presents

ON THE JOB

More responsibility Job rotation

Training Representing the

company

Principles of Fringes • Benefits and services must provided to the

employees on the basis of the genuine interest in promotion & protection of their well-being

• The benefits must satisfy the real need • The benefits must be cost effective • The benefits must be broad-based as possible • Administration of the benefits should happen by

sound planning • Employee should be educated to make use of the

benefits • The wishes of the union representative must be

considered

Components of Remuneration

Executive Remuneration

Salary

Bonus

commission Long-term incentive

perks

Reason for higher Remuneration

• The executives have high basic worth and therefore authority heavy premiums.

• The category of people is always in short supply.

• Retaining high caliber personnel is more difficult than attracting them.

• Managers must be motivated for better performance. – Only one way to motivate the employees and that

is money or more money!!

Cont…

• Expectations of people.

– (like electronic gadgets , vehicles , etc )

• An executives' salary and perks are not the same is as the wage of the worker.

– For worker wage means to a living.

• It’s to remove or at least, minimize corruption.

INCENTIVE

Incentive Payment

• Incentive are variable rewards granted to employees according to variations in their performance.

• The other name for incentives is ‘payment by result ’

Importance of Incentives

• Motivates workers for higher efficiency

• Better performance

• Improve standard living of employees

• Productivity increase

• Reduced supervision

• Better utilization of equipment

• Reduced lost of time

• Reduced absenteeism & turnover

• Increase output

Disadvantages of Incentives

• Quality of the product

• Difficulties arise over the introduction of new machines

• Increasing the danger accidents

• Jealousies may arise because group incentives

• Difficult to determine standard performance

Methods of incentives

• Taylor’s differential Piece Rate system, an efficient worker (whose output exceeds standard output) is paid 120 per cent of the piece rate. An inefficient worker (whose output fall short of standard) is paid only 80 per cent of piece rate – Standard output = 100 units

– Rate per unit = 0.10 paise

– If output = 120 units

– If output = 90 units

Cont... • The Merrick differential Piece-Rate, straight

piece rate is paid to the worker up to 83 per cent of standard unit output at which a bonus of 10 per cent of the time-rate is payable, with further 10 per cent bonus on reaching standard output – Standard output = 100units

– Piece rate = 10paise

– If output = 80units

– If output = 90units

– It output = 110units

Cont... • The Gantt Task System, the worker is

guaranteed his or her time-rate for output below standard on reaching the standard output or task, which is set high level the worker entitled to a bonus of 20 per cent of time wages, for output above task, high piece rate are paid – Rate per hour = 0.50 if output = 70 units

– High piece-rate = 0.10 if output = 80 units

– Standard output = 80 units if output = 110 units

– Time taken = 08 hrs

Cont...

• Emersion’s Plan, up to 67 per cent of efficiency, only time rate is paid to worker. Beyond this, a graduated bonus of 20 per cent at 100 per cent efficiency is paid, thereafter, a additional bonus of 1 per cent, for each additional 1 per cent efficiency is added – Standard output in 10 hrs = 100units

– Rate per hours = 01

– If output in 10 hrs = 50units

– Earning efficiency = 50 per cent

– If out put in 10 hrs = 100units

– Earning efficiency = 100 per cent

– If out in 10 hrs = 130units

– Earning efficiency = 130 units