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COMPENSATION IN A KNOWLEDGE BASED WORLD chpt-1

COMPENSATION MANAGEMENT ? WHAT IS COMPENSATION & WHAT IS MEANT BY COMPENSATION MANAGEMENT ? chpt-1

ACHIEVING ORGANIZATIONAL OBJECTIVES WHAT IS ROLE & IMPORTANCE OF COMPENSATION FOR ACHIEVING ORGANIZATIONAL OBJECTIVES chpt-1

COMPENSATION chpt-1

COMPENSATION IN A KNOWLEDGE BASED WORLD Political –Social Economic battle between capitalism on one side and between communism & socialism on the other side. Capitalism economic theory : Profit is ok and making money is acceptable. There must be strong , direct relationship between work and monitory rewards available through work. Employees must respect money and challenges of their work to gain satisfaction from work performed. Move of capitalism into knowledge based world centers and focus on enlightened society. The importance of knowledge demands predisposition toward continues improvement. To be successful in a knowledge based capitalistic world, there must be passion for learning including recognition of need for education. chpt-1 CHPT-1

COMPENSATION IN A KNOWLEDGE BASED WORLD Major problem facing USA and it’s leadership in a capitalistic democratic world is increasing & Unacceptable difference between income of lower paid and highly paid members of workforce, due to difference in knowledge and skills. Need to redesign compensation and reward system to improve employee morale and motivation. This pushed enhancement in knowledge & skills of compensation management professionals. chpt-1

INTEGRATING KNOWLEDGE & SKILLS WITH COMPENSATION AND EMPLOYEE’S INCOME To be successful in knowledge based world each organization must make full use of available technologies. Expansion in work related knowledge & skills. Change is inevitable in knowledge based world. Knowledge demands - continuous improvement. Difference in compensation due to difference in levels of knowledge , skills & ability. (KSA) chpt-1

INTEGRATING KNOWLEDGE & SKILLS WITH COMPENSATION AND EMPLOYEE’S INCOME Work does pay off but to be a successful employee one must be Willing to accept challenges, solve problems, take risk, minimize chances of additional cost. Enhance efficiency and productivity etc. Organizations must value of employee satisfaction while making efforts for cost effective operations & should support employees in their life style opportunities . Re-engineering, organizational redesign, re-structuring, lean manufacturing, operational excellence, cost effectiveness initiatives improve financial results of the organizations are right initiatives but relationship between work based pay and employee satisfaction needs to be appreciated as well. chpt-1

Life style & compensation. Two critical forces of pay; Absolute . Relative. Money makes the mare go.- Influence behavior, motivation level. Understand relationship between money and life style. Money brings honor, friends, conquests & riches (john milton , a poet). Criteria for classes in the society– income, property, occupation, education chpt-1

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Total Compensation Direct Indirect Wages / Salaries Time Not Worked Vacations Breaks Holidays Commissions Insurance Plans Medical Dental Life Bonuses Gainsharing Security Plans Pensions Employee Services Educational assistance Recreational programs chpt-1 CHPT-1 6

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PAY & SOCIAL CLASS. Social structure & income. Social class is group of people of same status within unequal society. Social issues due to restricted job market / un employment for low skill, low knowledge class , poverty , crimes, political unrest, individual temperament. Social structure & income. Upper, middle & lower classes. chpt-1

LIFE STYLE & SOCIAL CLASS The poverty class. Working poor. Lower middle class. Middle- middle class Upper middle class. The wealthy. The ultra rich. Two wage earner family chpt-1

The poverty class. Mostly school dropouts. Unemployment. Housing problems. Living in suburbs. 25-50% income goes to rent and utilities. Teenager mothers. Socials issues. Emotional problems, drugs, robbery, stealing. chpt-1

Have part or full time jobs. Low income housing. WORKING POOR. Have part or full time jobs. Low income housing. Some furniture & clothing. Strive to move into lower middle class. chpt-1

Do not have luxury of wasting money. Lower middle class. Do not have luxury of wasting money. Just one step away from returning to lower income class. Mostly single earner family. Can afford to buy small house . Little or no savings, deeply in debts. Job loss is problem. Financial problem can be disastrous. chpt-1

Middle- middle class Monthly bills payments does not require extensive manipulation of family financial resources. Little savings for rainy days begin to develop. Can purchase extras to make life enjoyable. A new car every four / five years. Money for fashionable clothes available. Job based income is critical. Any problem can revert back to lower middle class. chpt-1

Upper middle class. Can afford a house in a secure section of city. Financial investments become significant. Life style change. Public schools are no longer sole option. Housing, clothing , furnishing begin to have the feel of luxury. Loss of job may reduce the family to middle middle class. chpt-1

The wealthy. Not too many families in this class. Develop saving and investment. Good life for the remainder of their lives. Distinctive household, furnishings is common. Eye caching designer’s cloth, high performance automobiles. Spend 25% income in leisure activities. Luxury is way of life. chpt-1

The ultra rich. Known wealthiest people/ families. William gates.( Bill gates) type. Known families / groups chpt-1

Two wage earner family. Historically, female members of families in lower class of society perform some kind of activities in addition to raising family and performing household duties. The job related income provide support to move from the working lower class to lower middle class & to middle middle class . The desire to enjoy life style is primary motivator. Make major adjustments among their work, family and recreational activities. chpt-1

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