EMPLOYEE COMPENSATION

EMPLOYEE COMPENSATION

Wage and salary administration involves the direction of programs designed to implement payment of monetary or non monetary rewards. The primary financial reward is pay in the form of wages and salaries sometimes referred to as remuneration. Other forms of compensation involve supplementary payment referred to as fringe benefits.
Objectives of compensation

Wage and salary administration involves the direction of programs designed to implement payment of monetary or non monetary rewards. The primary financial reward is pay in the form of wages and salaries sometimes referred to as remuneration. Other forms of compensation involve supplementary payment referred to as fringe benefits.
Objectives of compensation

Group compensation schemes:
Include; a) Group piece rates – this refers to compensation to all members of the group e.g. where efforts of a single individual cannot be separated from the group e.g. in a motor vehicle assembly operation b) Employee profit sharing – under this scheme a cash bonus or contribution to a trust fund may be made the employer on the employees behalf c) Employee share ownership – in this type of compensation plan the management may allow employees to participate in share ownership at reduced rates e.g. 30% less than market rate. 3). Supplementary pay This type of compensation is also known as fringe benefits i.e. a reward to an employee in addition to basic wages or salary. It is usually provided at the expense of the employer e.g. goods or services which the employee would otherwise have to pay himself.
Types of fringe benefits provided various organizations
1) Pension scheme to be given on retirement or gratuity paid at the expiry of a contract
2) Medical scheme e.g. group medical cover or medical allowance to employees
3) Housing scheme e.g. house rental allowance or house purchase allowance
4) Insurance scheme e.g. life insurance benefits to employees
5) Car loans or use of the company car
6) Subsidized meals at the place of work
7) Company’s goods at discounted rates.
8) Company’s transport services to employees or transport allowance.
9) Entertainment allowance given to senior managers Characteristics of fringe benefits
1) They are not directly related to merit but they often improve with status and length of service
2) They do not necessarily benefit all employees e.g. a person who enjoys good health or does not need a company’s products
3) They are not universal. Large companies usually have a wide range of benefits while small companies tend to have very few or none at all
4) Once established they are difficult to abolish and become accepted employees as a normal condition of service other than benefits
5) There is no evidence that candidates are attracted to an organization fringe benefits but it is possible that fringe benefits discourage employees from leaving
6) They probably increase job satisfaction but will certainly bring dissatisfaction if they are inconsistently or carelessly administered theregiving rise to accusations of biasness

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