Introduction To Ion

Introduction to Compensation Semester III Chapter 1

Concept of compensation 

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Compensation may be defined as money received for the services rendered. It includes Direct Compensation + Indirect Compensation For employers it is a part of cost of production.

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Components Compensation

Wages & Salaries

Incentives

Fringe Benefits

Indirect

Direct

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Perquisites

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Meaning compensation management

of

Decenzo Robbins “compensation management aims at designing a cost effective pay structure that will attract, motivate and retain competent employees”.

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It includes such areas as: Job evaluation Surveys of wages & salaries Development and maintenance of wages structure Establishment of rules for administering wages Wage incentives and profit sharing Wage changes and adjustment Control of compensation costs

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Objectives  

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To attract and retain the employee To motivate employee to meet desired performance standards To achieve the internal & external equity To control excessive labor cost To ensure compliance with legal regulations To facilitates easy understanding and acceptability by all.

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Dimensions of compensation  

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Salary Pay Dispersion: tournament & equity fairness Incentives Perquisites

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Labour 

It refers to any manual or mental work whether performed for monetary consideration or not.

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Characteristics       

Active factor of production Labour is heterogeneous Labour is perishable Labour is a human factor Supply of labour is inelastic during the short run. Productivity & efficiency of labour can be improved. Efficiency and productivity of labour is highly contingent on factors surrounding him.

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