C OMPENSATION AND B ENEFITS A DMINISTRATION

C OMPENSATION This is what employees receive in exchange for their work. The function of providing adequate and equitable remuneration of personnel for their contribution to organization objectives.

O BJECTIVES OF C OMPENSATION Must attract and maintain employees of the right quality and mix. Must continually motivate employees to attain the desired level of output. Must be maintained at the desired competitive level. Must be cost-efficient Must comply with legal requirements. Must be acceptable to the employees. Must support the organization’s corporate strategy.

B ASES FOR C OMPENSATION Time Productivity Combination of time and productivity

T YPES OF C OMPENSATION Pay Incentives Benefits

D ETERMINING R EWARDS External Factors Labor Market Conditions Area Wage Rates Cost of Living Collective Bargaining Internal Factors Employer’s Compensation Policy Employee’s Relative Worth Employer’s Ability to Pay

I NCENTIVE C OMPENSATION Invariably referred to as variable pay

F ACTORS TO C ONSIDER IN E STABLISHING AND M AINTAINING I NCENTIVE S YSTEMS Must be tied to performance Must be designed to cater to individuals who have different needs Must consider the specific environment and limitations of the organization Must be reviewed periodically to find out if they are still effective

T YPES OF I NCENTIVES Individual incentive plan – designed to motivate the individual employees to perform beyond standard requirements. Examples are piece-rate system, commissions, bonuses, merit pay. Group incentive plan – designed to reward work teams, project members, or departments. Organizational incentive plan – designed to cover all employees in an organization. Examples are gain sharing plans, profit sharing plans, employee stock ownership plan.

E MPLOYEE B ENEFITS Benefits are rewards given to an employee or group of employees for maintaining membership in the organizaiton.

R EASONS FOR G RANTING B ENEFITS Keep the organization competitive Motivate employees to perform Keep a union out Comply with legal requirements Keep turnover costs low

T YPES OF E MPLOYEE B ENEFITS Legally required benefits Voluntary benefits Employee services

L EGALLY R EQUIRED B ENEFITS SSS / GSIS Employee’s Compensation Thirteenth Month Pay Paid Vacation, Paid Sick Leave, Paid Holidays PAG-IBIG Fund PhilHealth Paternity Leave

V OLUNTARY B ENEFITS Group Life Insurance Health Insurance Pension Plans Others

E MPLOYEE S ERVICES Education Programs Pre-Retirement Programs Company Sponsored Social and Recreational Events Counseling Services Credit Unions/Cooperatives Free Uniform Housing and Moving Expenses Food Services Company Paid Transportation and Parking Others