5th module presentation On Compensation for management staff (Service organization and nonprofit organization) Subject: - Management control

system Guided by: - Ms. Ripal Madhani Mr . Nilesh Movalia

Prepared by: - Gohil Ajaysinh p. (33) Talaviya yogesh c. (14)

Academic year: - 2011-2013 K. K. Parekh Institute of Management Studies Amreli.
Piyoosh Bajoria

Compensation for management staff

Introduction: Compensation Management is an integral part of the management of the organization. Compensation Management contributes to the overall success of the organization in several ways. Compensation management helps to determine the relative worth of a job in an organization in a systematic, consistent and accurate manner. It also helps in estimating the basic pay for each job in accordance with the importance of the job in the organizational hierarchy. Definition: Compensation management is a strategic activity that helps an organization improves the effectiveness of its employee reward processes.
Piyoosh Bajoria

CONT
Components of Compensation System Components of a compensation system are as follows:

Basic Wage and salary plans. Incentives Employee benefits. Performance-based pay Job analysis

importance of compensation management

To worker To employer To government

Piyoosh Bajoria

SERVICE ORGANISATION TATA CONSULTANCY SERVICES (TCS) Types of Compensation Direct Compensation Wages Salaries Commissions, Bonuses, Gainsharing, Profit Sharing Indirect Compensation Pay for Time Not Worked (vacation, sick leave, holidays, etc.) Insurance Coverage (medical, dental, life, etc.) Income Security (pensions and disability) Services(education assistance, child care, recreation, discounts, etc.)
Piyoosh Bajoria

EVA compensation model for TCS

TCS (Tata consultancy service) adopted EVA aimed at creating economic value by concentrating on long term continuous improvement. This model measured operating and financial performance of the organization.

Basis for giving compensation to employees.

To assess employees contribution, at the company.

Component of fixed and variable pay were determined

Fixed Pay- wages, pension. Variable Pay- bonus, profit sharing and stock options.
Piyoosh Bajoria

Eva model by TCS compenstion management

FIXED VARIABLE

BONUS
WAGE PROFIT SHARING PENSION STOCK OPTION

Piyoosh Bajoria

Types of Organizational Rewards Given by TCS

Organizational Rewards

Membership & Seniority

Task Performance

Competency

Job Status

Piyoosh Bajoria

Membership & Seniority Based Rewards

Rewards depends upon the firm which he or she joins and the time spent in it. Attract job applicants Reduce turnover May not directly motivate job performance May fail to motivate achievers to perform better

Piyoosh Bajoria

Job Status Based Rewards

Depends upon the Status of the Job which is determined with the help of job evaluation. Maintains the feeling of Equity Fail to motivate achievers to perform better

Piyoosh Bajoria

Competency Based Rewards

Rewards are linked to the competencies of employees. Also called Skill Based Reward System. Motivates employees to acquire additional skills Master of All Trades Improved Service Quality Expensive

Piyoosh Bajoria

Performance Based Rewards

Linked to performance rather than seniority or membership. Organizational Rewards Profit Sharing Stock Options Team Rewards Gain Sharing Special Bonuses Individual Rewards Piece Rate Commission
Piyoosh Bajoria

Pay and Performance Relationship

Feedback to employee

Employee expects Pay

Employee performs job

Performance is evaluated

Employee considers equity of performance, pay

Employee sets new expectations based on previous experiences

Piyoosh Bajoria

Effective Incentive Plans

1.Incentive plan should be linked to employee performance. 2.It should be communicated to the employees clearly . 3.Employee suggestions and inputs should be valued and rewarded. 4.The incentive plan should include both monetary and nonmonetary incentives for employees. 5. The incentive plan should be minimally affected by external factors.

Piyoosh Bajoria

Objectives of employees benefit program

Tata consultancy the benefits that company offers to its Employee are: 1. Common benefits: Like Hospitalization insurance, Parivar Raksha Yojna, Employee Referrals, Car lease, Transport etc 2. Performance incentives: Like project completion incentives, Best project award, Outstanding performance bonus & Spot awards 3. Special benefits: Tax planning consultancy, Retrial benefits, Special young genius award for dependent children

Piyoosh Bajoria

TCS
Employee satisfaction Won best employer award by CNBC

Lowest attrition rate

Performance Improvement Plans was employed EVA increased transparency

Piyoosh Bajoria

ESOPs and EVA

ESOPs' was offered to only few employees According to TCS ,objective of

EVA
Value creation

ESOP
Long Term rewards

Commitment

Piyoosh Bajoria

Piyoosh Bajoria