COMPENSATION
ADMINISTRATION
Non-
Direct Indirect
Financial
Wages Insurance Praise
Salary Vacation Self-esteem
Bonuses Child-care Recognition
Commissions
PURPOSE?
Capable employees are
attracted
toward the organization.
The employees are
motivated for
better performance.
The employees do not
leave the
employer frequently.
Compensation
Administration
It means control and balance of wage and salary level for establishment of fair and
equitable remuneration for various categories of staff. Also utilization of wages
and salaries as an incentive to greater employee productivity.
OBJECTIVES
1. Developing compensation programs, policies, and procedures to meet the needs
of the administrators as they attract, retain, motivate, develop, and organize their
diverse workforce.
2. Establishment of fair and equitable remuneration for various categories of staff.
3. Utilization of wages ans salaries as an incentive to greater employee
productivity.
4. Maintenance of a satisfactory public relations image.
Role of an HR Manager in
Compensation Administration
1. To approve the system of job analysis and job evaluation.
2. To check all activities of the salary administration group
against the company policies.
3. To recommend to top management the wage policies and in
the salary or wage level.
4. To review department wise wage and salary schemes.
5. To recommend to the top management specific raises for
executives above a specified limit.
Points of
Discussion
01 Wage determinants for SMEs
02 Incentive Pay Programs
03 Supplementary compensation
and fringe benefits
04 Rewards and recognition
programs
05 Laws on wages and working
hours in the Philippines
Company Size
t s
a n
m in Industry
e r
e t Individual
e D Qualifications
g E s
a
W rS M Flexible Pay
Structures
f o
Location
Opportunities
for growth
Individual Group Company
Incentive Incentive Incentive
Incentive Plans Plans Plans
Pay-Programs
Compensation other than base
wages or salaries, that fluctuates
according to employees’ attainment
of some standard such as:
Pre-established formula
Individual or group goals
Company earnings
Designed to reward employees and
teams for performance
Classified into three categories:
Individual Incentive Plans
Management
A system to reward Piece-work Plans Incentive Plans
employees for meeting
work-related performance
standards, such as:
a. Quality
b. Productivity Types of
Behavioral
c. Customer satisfaction Individual
Encouragement
Plans Referral Plans
d. Safety Plans
e. Attendance
Individual Plans
Piece-work Plans Management Incentive Behavioral Referral Plans
Plans Encouragement Plans
The most basic Awards bonuses to
individual incentive managers when they
system is the piece- meet or Awards employees for
exceed objectives specific behavioral Employees awarded
rate system.
based on sales, profits, accomplishments, such bonus for referring new
production, as: customers or new
Incentives are based a. Good attendance or employees.
or other measures for
on the quantity their division, b. Safety records
produced by the department, or
employee. unit.
Group Incentive Plans
Companies that use work teams need to change individualistic
compensation practice so that groups are rewarded for their behavior
together
Team based pay plans should;
Emphasize cooperation between and within teams
Compensate employees for additional responsibilities they often must assume
as members of the team
Encourage team members to attain predetermined objective for the team
Team based organization structures encourages team members to:
Learn new skills
Assume broader responsibility than is expected of them under traditional pay
structures
Employees working in teams must initiate plans for achieving their teams goals
Group Incentive Plans
Small Group Gains Sharing
Incentive Plans Plans
A small group of A group of
employees shares a employees, generally
financial a department
reward when specific or work unit is
objective is met rewarded for
Types of productivity gains
Group Plans
Company Incentive Plans
Origins
• Instituted, in the 19th century, as a way for companies to ease workers' :
a. Dissatisfaction with low pay
b. Belief that company management paid them substandard wages
while earning substantial profits
• Defined as systems that reward employees when the company exceeds minimally
acceptable performance standards such as:
a. Profit
b. Overall value of the company basd on its Stock price
• Companies use company wide incentive programs to motivate employees to work
harder for increased profits or increased company value to the owners
• Well designed company wide incentive programs make workers' and owner goals
more compatible as workers strive toward increasing company profits or value
Company Incentive Plans
Profit Sharing Employee Stock
Plans Option Plans
Employees earn a Companies grant
financial reward when employees the right
their company's profit to
objective is met purchase shares of
the company
Types of
Comapny
Plans
Supplementary
Compensation
The employee earns extra pay for working beyond a statutory workweek.
Overtime Overtime pay amounts vary by country.
Employers offer additional pay to employees as a motivating incentive or
Bonuses performance reward. Common types include signing, referral, and retention
bonuses.
Employees earn merit-based payments. For example, some employers pay a
Commissions portion of a total sale to the employee who made the sale.
Employers pay out any unused sick leave in the form of supplemental wages.
Unused Sick Pay
An employee receives additional compensation when they leave their position
Severance Pay or are terminated.
While vacation pay does not typically qualify as supplemental pay, it can if an
Vacation Pay employer pays out any unused vacation hours or days as a lump sum to an
employee.
Fringe Benefits
Covers or significantly reduces the cost of medical treatments for
Health Insurance employees. This may include vision and dental coverage as well.
Help employees prepare for retirement, employers will match a portion of the
Retirement Plans employee's contributions, further incentivizing participation.
Provide financial protection to employees in case of unforeseen life events,
Life & Disability Insurance ensuring peace of mind for them and their families.
Employers may offer to cover the cost of further education or professional
Tuition Assistance development courses, encouraging continuous learning and advancement
within the field.
Some organizations offer onsite childcare, subsidies, or assistance in finding
Childcare Assistance childcare services, which is a significant benefit for working parents.
This can range from company-provided transportation to subsidies for public
Transportation Benefits transit or parking, easing the daily commute for employees.
Rewards are more than just perks. They are Recognition helps shape a company’s
tangible acknowledgments of the hard culture. It also improves how employees
work, dedication, and triumphs of your feel about their jobs and their engagement
employees. While recognition has intrinsic with the company. While rewards often have
value, rewards give something tangible clear benefits, recognition is about
that boosts satisfaction and engagement. recognizing and valuing the intrinsic worth
of what employees do.
Tangible Incentives Acknowledgement & Praise
Performance Based Behavior Based
Immediate Gratification Long-term Impact
Competitive Collaborative
Measurable Personal
Rewards are tangible and immediate incentives, while
recognition offers a lasting and personal form of praise.
Enhance Performance
The appreciation reinforces excellence
in the employee. It motivates others in
the organization to achieve the same.
Boosting Engagement
The reward instills a sense of belonging,
leading to heightened discretionary
efforts.
Advocates a Culture of Appreciation
Employees sense that their work and efforts
are openly applauded and celebrated. The
company sees better team dynamics and a
better work environment.
Objectives
Retaining Top Talent
Employees feel content when they receive
praise and recognition from their peers and
leaders. Their satisfaction with the job and
company does not make them think about
leaving.
Reinforcing Company Values
Companies can get desired behavior and
contribution if they tie their rewards program
to company principles. The incentives act as
powerful motivators for everyone to work
towards company goals.
Types of Recognition
Social Monetary
Recognition Recognition
Social recognition is a Monetary rewards go
deeply personal form down well with
of acknowledgment employees as they
regarded for its help meet their
emotional value. It is a different needs and
non-monetary form of preferences. They
incentive but 2 Types of
improve financial
profoundly impacts an Recognition
well-being and, in
employee’s morale
some cases, reduce
and satisfaction.
financial stress.
Types of Recognition
Social Monetary
Recognition Recognition
Performance Based
Public Acknowledgement
Bonuses
Personal Thank You
Gift Cards or Vouchers
Notes
2 Types of
Recognition Salary Increase or
Awards and Certificates
Promotions
Laws on wages and working
hours in the Philippines
Under the provisions of Article 82 of the Labor Code of the Philippines, working
hours apply to employees in all establishments and undertakings whether for profit
or not, EXCLUDING the following:
government employees;
managerial employees;
field personnel;
family members of the employer who depend on him for support;
domestic helpers;
persons who provide personal service to other people; and
workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.
Laws on wages and working
hours in the Philippines
The normal hours of work an employee has to render must not exceed eight (8)
hours a day and should be exclusive of the one (1) hour daily lunch break.
Philippine laws, however, do not prohibit work done for less than eight hours.
Working hours shall include:
all time during which an employee is required to be on duty and/or to be at a
prescribed workplace;
all time during which an employee is permitted to work; and
rest periods of short duration during working hours.
Every employer is mandated by the Labor Code to give their employees not less
than sixty (60) minutes’ time-off for their regular meals. During day shifts, this
time-off is usually during 12:00 PM.
Laws on wages and working
hours in the Philippines
Night Differential Pay
Every employee shall be paid a night shift premium of not less than 10% of their regular wage for each
hour of work performed between 10:00 PM and 6:00 AM.
Overtime Work
Work may be performed beyond eight hours a day provided that the employee is paid for the overtime
work, which consists of an additional compensation equivalent to his regular wage plus at least 25%
thereof.
Compensation for Rest Day, Sunday, or Holiday Work
When an employee is made or permitted to work on their scheduled rest day, they shall be paid an
additional compensation of at least thirty percent (30%) of their regular wage. They shall be entitled to
such additional compensation for work performed on Sunday only when it is their established rest day.
Work performed on any special holiday shall be paid an additional compensation of at least thirty percent
(30%) of the employee’s regular wage. When such holiday work falls on an employee’s scheduled rest
day, they shall be entitled to an additional compensation of at least fifty percent (50%) of their regular
wage.
Laws on wages and working
hours in the Philippines
Undertime Not Offset by Overtime
Article 88 of the Labor Code enunciates that undertime work on a business day shall not be offset by
overtime work on any other day. The law discourages the offset because the hourly rate of overtime is
higher than the hours missed when an employee works for less than eight hours.
Permission given to the employee to go on leave for a day in a regular work week shall not exempt the
employer from paying the additional compensation required for the overtime work done.
Emergency Overtime Work
An employee may be required to perform overtime work in any of the following cases:
1. When the country is at war or when any other national or local emergency has been declared by the
National Assembly or the Chief Executive;
2. When it is necessary to prevent loss of life or property in cases of imminent danger to public safety
due to actual or impending emergencies in the locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic or any other disaster;
3. When there is urgent work to be performed on machines, installations, or equipment, in order to avoid
serious loss or damage to the employer or some other cause of similar nature;
4. When the work is necessary to prevent loss or damage to perishable goods; and
5. Where the completion or continuation of the work started before the eighth hour is necessary to
prevent serious obstruction or prejudice to the business or operations of the employer.
Laws on wages and working
hours in the Philippines
The employer may require his employees to work on any day:
1. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent
danger to public safety;
2. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious
loss which the employer would otherwise suffer;
3. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
4. To prevent loss or damage to perishable goods;
5. Where the nature of the work requires continuous operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
6. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of
Labor and Employment.
Service
Weekly Rest
Holiday Pay Incentive
Employee Day
Leave
Rights
Notes:
It shall be the duty of every
employer to provide each of his
employees a rest period of not less
than twenty-four (24) consecutive
hours after every six (6)
consecutive normal work days.
The employer may require an
employee to work on any holiday
but such employee shall be paid a
compensation equivalent to twice
his regular rate.
Service
Weekly Rest
Holiday Pay Incentive
Employee Day
Leave
Rights
Notes (cont.):
Every employee who has rendered at least
one year of service shall be entitled to a
yearly service incentive leave of five days
with pay.
This provision shall not apply to those who
are already enjoying the benefit herein
provided, those enjoying vacation leave with
pay of at least five days and those
employed in establishments regularly
employing less than ten employees or in
establishments exempted from granting this
benefit by the Secretary of Labor and
Employment in the Philippines after
considering the viability or financial
condition of such establishment.
Sources
[Link]
[Link]
[Link]
[Link]
pay/#:~:text=Supplemental%20pay%20types%20include%20additional,lump%20sum%20to%20an%20em
ployee.
[Link]
hrm#:~:text=Paid%20Time%20Off%20(PTO):,significant%20benefit%20for%20working%20parents.
[Link]
program#:~:text=Rewards%20and%20Recognition%20Programs%2C%20also,are%20rewarded%20for%2
0their%20commitment.
[Link]
fbclid=IwY2xjawIQMxFleHRuA2FlbQIxMAABHcRHs6HCPMBLJn4iel6b_ioqjzKwHQHRenSYzJ4sKJkZcN_dgf
9R1PWrHQ_aem_ZMiBkObaTksWGmP0jy1QNw#:~:text=Night%20Shift%20Differential%20Pay,PM%20and
%206:00%20AM