Compensation Administration

WAGES – paid to BLUE collared; on daily/weekly/monthly,; can be measured in terms of money SALARY – paid to WHITE collared; paid at specified intervals; paid to employees whose contribution cannot be measured. COMPENSATION – comparative form; all basic, gross amount, allowances and benefits.

Compensation Remuneration received by an employee in return for his/her contribution to the organization.

Compensation Invariably known as Employee Remuneration Also known as “pay” Pay is a statement of an employee’s worth by an employer and a perception of worth by an employee.

Compensation Refers to all forms of financial returns and tangible benefits that employees receive in exchange for their time, talents, efforts, performance, and results.

Compensation Under Philippine law, wages are remunerations or earnings for services rendered. Employers and employees may agree on rate but should not fall below the minimum wages set by the Regional Tripartite Wages and Productivity Boards (RTWPB) which has jurisdiction over the place of work. Assignment

Compensation Management Process of determining cost- effective pay structure. Designed to attract and retain employees. Provide an incentive to work hard Structure pay levels perceived as fair

Compensation Management System of compensating individuals for the work they perform in such a way that the organization is able to attract, retain and motivate them to perform well keeping in view organizational and market factors.

Compensation Management As the business environment becomes increasingly complex and global, the challenge to create and maintain effective compensation programs, given cost constraints,

Compensation Management Cont’n also requires greater professional expertise, organizational understanding, creativity, and vision than ever before.

TRENDS

Diversity in Strategies Not too long ago, employees received a base salary (w/c organizations described as COMPETITIVE) and a set of pre-established benefits (w/c organizations considered COMPREHENSIVE).

Diversity in Strategies (cont.) Today, firms are providing variable pay, special recognition bonuses, individual and group incentive plans, and broad-based success-sharing programs at all levels in the organization, and flexible benefits are becoming a norm.

Soaring Benefits Costs There is general consensus that the traditional approach to health care is “unsustainable”.

Significant Pay Inequity There continues to be significant pay inequity when comparing pay at the “top” and at the “bottom”.

Pay Programs to Communicate Change Pay programs are increasingly being used to communicated major changes in the organization, particularly during and after major downsizing and reengineering efforts.

Does pay matter?

The amount of pay and the way it is packaged and delivered to employees can motivate, energize, and direct behavior.

Compensation plays an important role in an organization’s ability to attract and retain qualified, high- performance workers. Compensation strategies and practices can clearly shape the composition of a workforce.

Microsoft sets out to hire a certain percentage of top technical talent that graduates each year. It invests heavily in recruiting and selection activities. It offers job candidates a generous sign- on bonus, a competitive base salary, stock options, and a flexible benefits program, which allows individuals to select the benefits and coverage that they both need and value most.

The cost of compensation can influence firm success. In 2009, Norway reported the highest per hour manufacturing compensation costs ($53.89), while the Philippines posted the lowest ($1.50)

$1 in 2009 = Php46 (est) Thus, $53.89 = Php2, If a worker rendered 8 hours a day, 5 times a week, the worker earns an amount of Php396, (gross)/ month or Php4,759, (gross)/year.

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