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Base vs Supplementary Compensation Explained

This document discusses compensation management. It defines compensation as the total reward received by employees in exchange for their services. Compensation includes both base pay like salaries as well as supplementary benefits. The objectives of compensation management are to attract, retain and motivate talented employees. It also aims to establish fair pay for similar work and maintain internal and external equity. Compensation consists of direct monetary payments as well as indirect benefits. The key components of compensation include salaries, bonuses, incentives, medical benefits, retirement funds and other perks. An effective compensation system is important for organizations to accomplish their goals and increase productivity.

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Ishita Dutta
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15 views15 pages

Base vs Supplementary Compensation Explained

This document discusses compensation management. It defines compensation as the total reward received by employees in exchange for their services. Compensation includes both base pay like salaries as well as supplementary benefits. The objectives of compensation management are to attract, retain and motivate talented employees. It also aims to establish fair pay for similar work and maintain internal and external equity. Compensation consists of direct monetary payments as well as indirect benefits. The key components of compensation include salaries, bonuses, incentives, medical benefits, retirement funds and other perks. An effective compensation system is important for organizations to accomplish their goals and increase productivity.

Uploaded by

Ishita Dutta
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

SiMER

COMPENSATION
MANAGEMENT
By-
Ishita, Shiladitya, Rajesh, Jhaggar
CONTENTS
CONTENTS
• Compensation concept
• Meaning of
compensation
• Objective & importance
of compensation
management
• Base vs supplementary
compensation
• Components & types of
compensation
What
is
Compensation?
Compensation is the total reward
received by an employee in
exchange for services performed
for an organization.
Organizations usually associate
compensation/pay ranges with job
descriptions in the organization.
The ranges include the minimum
and the maximum amount of
money that can be earned per year
in that role.
• A good compensation package is
important to motivate the employees to
increase the organizational productivity.
• Unless compensation is provided no one
will come and work for the organization.
Thus,
• compensation helps in running an
organization effectively and accomplishing
NEEDS
its goals.
• Salary is just a part of the compensation
OF
system, the employees have other
psychological and self-actualization needs
COMPENSATION
to fulfil. Thus, compensation serves the
purpose.
• The most competitive compensation will
help the organization to attract and sustain
the best talent. The compensation
package should be as per industry
standards
The tool is used to:-
 
• Recruit and retain qualified
employees. 
• Increase or maintain
morale/satisfaction. 
• Reward and encourage peak
performance. 
• Achieve internal and external equity. 
• Reduce turnover and encourage
company loyalty. 
• Modify (through negotiations)
practices of unions.
Objectives • Evaluate jobs consistently and fairly.
• Place staff positions in the
appropriate pay grade with salary
ranges that are competitive with the
marketplace for comparable jobs.
• Regularly measure the external
market value for comparable jobs
and adjust the salary structures
accordingly.
• Create and support a system which
will provide flexibility to managers in
pay administration and to staff in
career development.
• To establish a fair and equitable
compensation offering similar pay for
similar work
• To attract competent and qualified
personnel
• To retain the present employees by keeping
wage levels in tune with competitive units
• To minimize the chances of favoritism while
assigning the wage rates
• To establish job sequences and lines of
promotion wherever applicable
• To keep labor and administrative costs in
line with the ability of the organization to
pay
• To improve motivation and morale of
employees and to improve union and
management relations
• To project a good image of the company
• To comply with legal requirements relating
to wages and salaries
BASE COMPENSATION
1. It denotes payments to
workers in the form of wages
and salaries
2. Wages and salaries are paid in
cash
3. Wages and salaries are paid to
compensate employees for
their services
4. Wages and salaries are
determined by JE, demand and
supply of labour, organisation’s
capacity to pay, productivity,
govt regulations etc
SUPPLEMENTARY COMPENSATION

1. It denotes fringe benefits to workers


over and above their regular wages and
salaries
2. Fringe benefits are offered in the form
of employee services and benefits
3. Fringe or non-wage payments are
made to increase the efficiency of
employees and to retain them
4. Supplementary compensation are
determined by the history of the
organisation, philosophy of
management, organisation’s capacity
to spend on employees benefit, need
to retain talented employees and
desire to enhance public image etc
TYPES OF COMPENSATION

–Direct compensation
The employer exchanges monetary
rewards for work done.

- Indirect compensation
Employer-provided benefits—like health
insurance—that are provide employees
for being a member of the organization.
COMPONENTS OF
COMPENSATION
rEFERENCES
• [Link]/.../
[Link]

• [Link]
THANK YOU
Q
U
E
R
I
E
S

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