• The learners will be able to design an appropriate organization structure for a specific business

• The learners will have an understanding of the significance of organization structures for effective business management.

​Learning Objectives:

​At the end of the lesson:

​Drill

​

​Can you identify the following images?

​COMPENSATION

​

​What is COMPENSATION?

• Describes the rewards paid to employees in exchange for the services they provide.

• ​It may include salary, wages, incentives and/or commission.

• ​Total compensation includes cash rewards as well as any other company benefits.

​Basic objectives of Compensation:

If you don't pay a competitive wage, it puts the company at a disadvantage to hire on the open market.

​ATTRACT

You can encourage performance on specific objectives by compensating the behaviors you desire.

​FOCUS

​Basic objectives of Compensation:

Fair compensation encourages good performance.

​MOTIVATE

Low turnover is a goal. You want to keep your top performers.

​RETAIN

​Importance of Compensation

• providing positive control on the efficiency of employees and motivates them to perform better and achieve the specific standards;

• creating a base for satisfaction of the workforce that limits the labor turnover and confers a stable organization.

• enhancing the job evaluation process, which in return helps in setting up more realistic and achievable standards.

• cultivating an environment of efficiency and cooperation among the workers and ensures satisfaction to the workers.

​TYPES OF COMPENSATION

• ​is associated with employee compensation quoted on an annual (yearly) basis.

​SALARY

​

• ​employee compensation that is based on the number of hours worked multiplied by an hourly rate of pay.

​WAGES

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​SALARIES AND WAGES

• employee who renders service beyond eight hours in a day will be given additional compensation equivalent to his regular wage including at least 25% of basic salary or wage.

​OVERTIME PAY

​

• ​ is an overtime pay for rest days and official holidays. If an employee reports to work on a holiday, he is entitled to 200% of his basic pay for that day.

​PREMIUM PAY

​

​SALARIES AND WAGES

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• ​ An employee working on Regular Holidays is entitled to 260% of his hourly rate.

​​Regular Holidays

• ​also known as Special Non-Working Holidays, they fall on flexible dates, depending on the circumstance. An employee working on Special Holidays is entitled to 300% of his of his hourly rate.

Special Holidays

• ​this is a rare occurrence wherein a regular holiday and a special holiday fall on the same day. An employee working on Double Holiday is entitled to 400% of his hourly rate.

​​Double Holidays

​PREMIUM PAY

​ALLOWANCES

can be defined as the amount of something that is allowed, especially within a set of rules and regulations or for a specified purpose. Various allowances are paid in addition to basic pay.

​TYPES OF ALLOWANCES

a. Cost of Living Allowance (COLA) − This allowance is given to protect real income of an employee against increase in prices of basic commodities.

b. Rice Allowance – This allowance is given as subsidy for food expenses. A fixed amount is paid every month while some companies provide the actual sacks or rice. c. City Compensatory Allowance − This allowance is paid basically to employees in metros and other big cities where cost of living is comparatively more expensive.

d. Transportation Allowance – This allowance is a fixed amount paid every month to cover a part of the employee’s traveling expenses.

​INCENTIVES AND PERFORMANCE BASED PAY

• is performance-related remuneration paid with a view to encourage employees to work hard and do better. Employees receive bonuses based on the result of their performance review (also known as performance appraisal).

​FRINGE BENEFITS/PERQUISITES

• include employee benefits like medical care, hospitalization, accident relief, health and group insurance, canteen, uniform, recreation and the likes.