EMPLOYEE RETENTION
Contd...
1) Compensation
Compensation constitutes the largest part of the employee retention process. The employees always have high expectations regarding their compensation packages. Compensation packages vary from industry to industry. So an attractive compensation package plays a critical role in retaining the employees.
Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While setting up the packages, the following components should be kept in mind:
Salary and monthly wage: It is the biggest component of the compensation package. It is also the most common factor of comparison among employees. It includes -
Basic wage
House rent allowance
Dearness allowance
City compensatory allowance
<image no longer exists>
Salary and wages represent the level of skill and experience an individual has. Time to time increase in the salaries and wages of employees should be done. And this increase should be based on the employee’s performance and his contribution to the organization.
Bonus: Bonuses are usually given to the employees at the end of the year or on a festival.
Economic benefits: It includes paid holidays, leave travel concession, etc.
Long-term incentives: Long term incentives include stock options or stock grants. These incentives help retain employees in the organization's startup stage.
Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that the organization cares about the employee and its family.
After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc.
Miscellaneous compensation: It may include employee assistance programs (like psychological counseling, legal assistance etc), discounts on company products, use of a company cars, etc.
2) Career Growth
Growth and development are the integral part of every individual’s career. If an employee can not foresee his path of career development in his current organization, there are chances that he’ll leave the organization as soon as he gets an opportunity.
The important factors in employee growth that an employee looks for himself are:
Work profile: The work profile on which the employee is working should be in sync with his capabilities. The profile should not be too low or too high.
Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations can not keep aside the individual goals of employees and foster organizations goals. Employees’ priority is to work for themselves and later on comes the organization. If he’s not satisfied with his growth, he’ll not be able to contribute in organization growth.
Training and development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for better jobs. Organization should not limit the resources on which organization’s success depends. These trainings can be given to improve many skills like:
Communications skills
Technical skills
In-house processes and procedures improvement related skills
C or customer satisfaction related skills
Special project related skills
Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees.
3) Support
Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should support his subordinates in a way so that each one of them is a success. Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. Management can support employees by providing them recognition and appreciation.
Employers can also provide valuable feedback to employees and make them feel valued to the organization.
The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management can also support its employees in their personal crisis by providing personal loans during emergencies, childcare services, employee assistance programs, counseling services, et al.
Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. Thus employers can support their employees in a number of ways as follows:
By providing feedback
By giving recognition and rewards
By counseling them
By providing emotional support
<image no longer exists>
4) Relationship
Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. There are times when an employee starts feeling bitterness towards the management or peers. This bitterness could be due to many reasons. This decreases employee’s interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition.
A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships at work, the management should keep the following points in mind.
Respect for the individual: Respect for the individual is the must in the organization.
Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs ands plans work for each employee. It is his duty to involve the employee in the processes of the organization. So an organization should hire managers who can make and maintain good relations with their subordinates.
Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the relationships among colleagues.
Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is. Deliver what is promised.
Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and he’ll show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc.
Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc.
Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones.
5) Organization Environment
It is not about managing retention. It is about managing people. If an organization manages people well, employee retention will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets.
People want to work for an organization which provides
Appreciation for the work done
Ample opportunities to grow
A friendly and cooperative environment
A feeling that the organization is second home to the employee
Organization environment includes
Culture
Values
Company reputation
Quality of people in the organization
Employee development and career growth
Risk taking
Leading technologies
Trust
Types of environment the employee needs in an organization
Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc.
Support environment: Organization can provide support in the form of work-life balance. Work life balance includes:
Flexible hours
Telecommuting
Dependent care
Alternate work schedules
Vacations
Wellness
Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, clarity of work and responsibilities, and recognition.
Lack or absence of such environment pushes employees to look for new opportunities. The environment should be such that the employee feels connected to the organization in every respect.
CRK
From India, Vijayawada
44Contd...
1) Compensation
Compensation constitutes the largest part of the employee retention process. The employees always have high expectations regarding their compensation packages. Compensation packages vary from industry to industry. So an attractive compensation package plays a critical role in retaining the employees.
Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While setting up the packages, the following components should be kept in mind:
Salary and monthly wage: It is the biggest component of the compensation package. It is also the most common factor of comparison among employees. It includes -
Basic wage
House rent allowance
Dearness allowance
City compensatory allowance
<image no longer exists>
Salary and wages represent the level of skill and experience an individual has. Time to time increase in the salaries and wages of employees should be done. And this increase should be based on the employee’s performance and his contribution to the organization.
Bonus: Bonuses are usually given to the employees at the end of the year or on a festival.
Economic benefits: It includes paid holidays, leave travel concession, etc.
Long-term incentives: Long term incentives include stock options or stock grants. These incentives help retain employees in the organization's startup stage.
Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that the organization cares about the employee and its family.
After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc.
Miscellaneous compensation: It may include employee assistance programs (like psychological counseling, legal assistance etc), discounts on company products, use of a company cars, etc.
2) Career Growth
Growth and development are the integral part of every individual’s career. If an employee can not foresee his path of career development in his current organization, there are chances that he’ll leave the organization as soon as he gets an opportunity.
The important factors in employee growth that an employee looks for himself are:
Work profile: The work profile on which the employee is working should be in sync with his capabilities. The profile should not be too low or too high.
Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations can not keep aside the individual goals of employees and foster organizations goals. Employees’ priority is to work for themselves and later on comes the organization. If he’s not satisfied with his growth, he’ll not be able to contribute in organization growth.
Training and development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for better jobs. Organization should not limit the resources on which organization’s success depends. These trainings can be given to improve many skills like:
Communications skills
Technical skills
In-house processes and procedures improvement related skills
C or customer satisfaction related skills
Special project related skills
Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees.
3) Support
Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should support his subordinates in a way so that each one of them is a success. Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. Management can support employees by providing them recognition and appreciation.
Employers can also provide valuable feedback to employees and make them feel valued to the organization.
The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management can also support its employees in their personal crisis by providing personal loans during emergencies, childcare services, employee assistance programs, counseling services, et al.
Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. Thus employers can support their employees in a number of ways as follows:
By providing feedback
By giving recognition and rewards
By counseling them
By providing emotional support
<image no longer exists>
4) Relationship
Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. There are times when an employee starts feeling bitterness towards the management or peers. This bitterness could be due to many reasons. This decreases employee’s interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition.
A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships at work, the management should keep the following points in mind.
Respect for the individual: Respect for the individual is the must in the organization.
Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs ands plans work for each employee. It is his duty to involve the employee in the processes of the organization. So an organization should hire managers who can make and maintain good relations with their subordinates.
Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the relationships among colleagues.
Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is. Deliver what is promised.
Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and he’ll show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc.
Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc.
Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones.
5) Organization Environment
It is not about managing retention. It is about managing people. If an organization manages people well, employee retention will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets.
People want to work for an organization which provides
Appreciation for the work done
Ample opportunities to grow
A friendly and cooperative environment
A feeling that the organization is second home to the employee
Organization environment includes
Culture
Values
Company reputation
Quality of people in the organization
Employee development and career growth
Risk taking
Leading technologies
Trust
Types of environment the employee needs in an organization
Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc.
Support environment: Organization can provide support in the form of work-life balance. Work life balance includes:
Flexible hours
Telecommuting
Dependent care
Alternate work schedules
Vacations
Wellness
Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, clarity of work and responsibilities, and recognition.
Lack or absence of such environment pushes employees to look for new opportunities. The environment should be such that the employee feels connected to the organization in every respect.
CRK
From India, Vijayawada
EMPLOYEE RETENTION
Contd...
Importance of Employee Retention
Employees are the backbone of every organization and hence considered to be an important asset for every employer. It’s their knowledge and strength which helps the organization to reach the ladder of success.
Therefore, their contribution towards growth and success of organization cannot be overlooked or ignored. So, it’s very important for employers to understand their employee’s needs and make them content and satisfied.
Today the whole world is a small place. Due to increased technology and communication level, the whole world is easily reachable and so jobs have also become easily accessible. Holding and retaining its employees especially its knowledge bank is a big challenge for every organization. This is because; getting right people for right profile with right attitude towards work is not easy. Beside this, it involves risks, costs and time as well. Thus, every employee is precious and organizations should always try to retain them and from getting poached.
[img]http://www.voiceprism.com/solutions/images/hr_diagram.gif[/img]
Hiring new employees requires good amount of time and money. It involves lot of procurement planning, implementation and providing training to the new employee. Besides this, there is always a risk if the new employee selected will adjust to the new environment, his dedication and work efficiency etc. So, it’s a challenge for organizations to find and keep the best people, who can contribute towards the growth and success of every organization.
Resignations are quite infectious. Directly or indirectly it affects the thoughts of other employees. This leads to loss of return from its employees .Therefore, every organization should develop clear understanding and expectations from their employees. This implies, every organization should take care of needs and requirements of their employees and at the same time should clear them about their expectations from them. This helps the employees from getting poached.
When an employee works for an organization he gathers detail knowledge about the organization, its competitors, working style, different projects etc. So, when he leaves the place, there is loss of knowledge. Besides this, sometimes this information’s gets misused by its competitors or rival company in the market.
Employees are related to its customers and are encouraged by organizations to develop healthy relationship with them to attract business. But, when employees leave the organizations, there is interruption of customer service and thus this affects the business and can even lead to business loss.
A higher retention rate helps to build goodwill of the company. It creates a healthy working environment not only amongst its employees but it also acts a motivational source for others to join the organization.In addition to this, customers also develop a strong positive image about the organization and thus build long term relationship with them .This contributes towards more business and hence success and growth .
Thus, retention is of paramount importance for companies as this reduces the risk of losing manpower talent and thus contributes towards its growth.
CRK
From India, Vijayawada
Contd...
Importance of Employee Retention
Employees are the backbone of every organization and hence considered to be an important asset for every employer. It’s their knowledge and strength which helps the organization to reach the ladder of success.
Therefore, their contribution towards growth and success of organization cannot be overlooked or ignored. So, it’s very important for employers to understand their employee’s needs and make them content and satisfied.
Today the whole world is a small place. Due to increased technology and communication level, the whole world is easily reachable and so jobs have also become easily accessible. Holding and retaining its employees especially its knowledge bank is a big challenge for every organization. This is because; getting right people for right profile with right attitude towards work is not easy. Beside this, it involves risks, costs and time as well. Thus, every employee is precious and organizations should always try to retain them and from getting poached.
[img]http://www.voiceprism.com/solutions/images/hr_diagram.gif[/img]
Hiring new employees requires good amount of time and money. It involves lot of procurement planning, implementation and providing training to the new employee. Besides this, there is always a risk if the new employee selected will adjust to the new environment, his dedication and work efficiency etc. So, it’s a challenge for organizations to find and keep the best people, who can contribute towards the growth and success of every organization.
Resignations are quite infectious. Directly or indirectly it affects the thoughts of other employees. This leads to loss of return from its employees .Therefore, every organization should develop clear understanding and expectations from their employees. This implies, every organization should take care of needs and requirements of their employees and at the same time should clear them about their expectations from them. This helps the employees from getting poached.
When an employee works for an organization he gathers detail knowledge about the organization, its competitors, working style, different projects etc. So, when he leaves the place, there is loss of knowledge. Besides this, sometimes this information’s gets misused by its competitors or rival company in the market.
Employees are related to its customers and are encouraged by organizations to develop healthy relationship with them to attract business. But, when employees leave the organizations, there is interruption of customer service and thus this affects the business and can even lead to business loss.
A higher retention rate helps to build goodwill of the company. It creates a healthy working environment not only amongst its employees but it also acts a motivational source for others to join the organization.In addition to this, customers also develop a strong positive image about the organization and thus build long term relationship with them .This contributes towards more business and hence success and growth .
Thus, retention is of paramount importance for companies as this reduces the risk of losing manpower talent and thus contributes towards its growth.
CRK
From India, Vijayawada
Dear CRK,
1st of all thanx for all the precious information that u share. Just reading ur threads make me again and again fall for this subject. I go through all ur info's very carefully. Thanx once again.
I would request you share ur knowlwdge n information on the models and theories related to HR in brief.
Thank you
Regards
CLASSREP
From India, Delhi
1st of all thanx for all the precious information that u share. Just reading ur threads make me again and again fall for this subject. I go through all ur info's very carefully. Thanx once again.
I would request you share ur knowlwdge n information on the models and theories related to HR in brief.
Thank you
Regards
CLASSREP
From India, Delhi
EMPLOYEE RETENTION
Why Employees leave
Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be:
Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction.
Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job
which mismatches his personality, then he won’t be able to perform it well and will try to find out reasons to leave the job.
No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant.
<image no longer exists>
Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and loses interest in job.
Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make office environment unfriendly and difficult to work in.
Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization.
Compensation: Better compensation packages being offered by other companies may attract employees towards themselves.
New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.
From India, Vijayawada
Why Employees leave
Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be:
Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction.
Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job
which mismatches his personality, then he won’t be able to perform it well and will try to find out reasons to leave the job.
No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant.
<image no longer exists>
Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and loses interest in job.
Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make office environment unfriendly and difficult to work in.
Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization.
Compensation: Better compensation packages being offered by other companies may attract employees towards themselves.
New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.
From India, Vijayawada
Source:Naurki hub
EMPLOYEE RETENTION
Contd..
Employee Retention Strategies
The basic practices which should be kept in mind in the employee retention strategies are:
1. Hire the right people in the first place.
2. Empower the employees: Give the employees the authority to get things done.
3. Make employees realize that they are the most valuable asset of the organization.
4. Have faith in them, trust them and respect them.
5. Provide them information and knowledge.
6. Keep providing them feedback on their performance.
7. Recognize and appreciate their achievements.
8. Keep their morale high.
9. Create an environment where the employees want to work and have fun.
These practices can be categorized in 3 levels: Low, medium and high level.
<image no longer exists>
LOW LEVEL
Appreciating and recognizing a well done job
Personalized well done and thank-you cards from supervisors
Congratulations e-cards or cards sent to spouses/families
Voicemails or messages from top management
Periodic days off for good performance
Rewards ( gift, certificates, monetary and non monetary rewards)
Recognizing professional as well as personal significant events
Wedding gifts
Anniversary gifts
New born baby gifts
Scholarships for employee’s children
Get well cards/flowers
Birthday cards, celebrations and gifts
Providing benefits
Home insurance plans
Legal insurance
Travel insurance
Disability programs
Providing perks: It includes coupons, discounts, rebates, etc
Discounts in cinema halls, museums, restaurants, etc.
Retail store discounts
Computer peripherals purchase discounts
Providing workplace conveniences
On-site ATM
On-site facilities for which cost is paid by employees
laundry facility for bachelors
Shipping services
Assistance with tax calculations and submission of forms
Financial planning assistance
Casual dress policies
Facilities for expectant mothers
Parking
Parenting guide
Lactation rooms
Flexi timings
Fun at work
Celebrate birthdays, anniversaries, retirements, promotions, etc
Holiday parties and holiday gift certificates
Occasional parties like diwali, holi, dushera, etc
Organize get together for watching football, hockey, cricket matches
Organize picnics and trips for movies etc
Sports outings like cricket match etc
Indoor games
Occasional stress relievers
“Casual dress” day
“Green is the color” day
Handwriting analysis
Tatoo, mehandi, hair braiding stalls on weekends
Mini cricket in office
Ice cream Fridays
Holi-Day breakfast
Employee support in tough time or personal crisis
Personal loans for emergencies
Childcare and eldercare services
Employee Assistance Programs ( Counseling sessions etc)
Emergency childcare services
MEDIUM LEVEL
Appreciating and recognizing a well done job
Special bonus for successfully completing firm-sponsored certifications
Benefit programs for family support
Child adoption benefits
Flexible benefits
Dependents care assistance
Medical care reimbursement
Providing conveniences at workplace
Gymnasiums
Athletic membership program
Providing training and development and personal growth opportunities
Sabbatical programs
Professional skills development
Individualized career guidance
HIGH LEVEL
Promoting Work/Life Effectiveness
Develop flexible schedules
Part-time schedules
Extended leaves of absence
Develop Support Services
On-site day care facility etc.
Understand employee needs: This can be done through proper management style and culture
Listen to the employee and show interest in ideas
Appreciate new ideas and reward risk-taking
Show support for individual initiative
Encourage creativity
Encouraging professional training and development and/or personal growth opportunities: It can be done through:
Mentoring programs
Performance feedback programs
Provide necessary tools to the employees to achieve their professional and personal goals
Getting the most out of employee interests and talents
Higher study opportunities for employees
Vocational counseling
[img]http://t3.gstatic.com/images?q=tbn:ANd9GcRPUi5rwV24MQhSf7l6j0lqjHn_1hwn4 8c_tH5RbiDFt_vgRamX[/img]
Offer personalized career guidance to employees
Provide an environment of trust: Communication is the most important and effective way to develop trust.
Suggestion committees can be created
Open door communication policy can be followed
Regular feedbacks on organization’s goals and activities should be taken from the employees by:
Management communications
Intranet and internet can be used as they provide 24X7 access to the information
Newsletters, notice boards, etc.
Hire the right people from the beginning: employee retention is not a process that begins at the end. The process of retention begins right from the start of the recruitment process.
The new joinees should fit with the organization’s culture. The personality, leadership characteristics of the candidate should be in sync with the culture of the hiring organization.
Referral bonus should be given to the employees for successful hires. They are the best source of networking.
Proper training should be given to the managers on interview and management techniques.
An internship program can be followed to recruit the fresh graduates.
CRK
From India, Vijayawada
EMPLOYEE RETENTION
Contd..
Myths
Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Corporate is facing a lot of problems in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for a talented person. There are many organizations which are looking for such employees. If a person is not satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it becomes very important for organizations to retain their employees.
[img]http://t2.gstatic.com/images?q=tbn:ANd9GcS8YeAIGJmZnfLSkWAlEZsMVmkxXYxZl 9_EurXo3fJ29d2-yDmmuQ[/img]
The picture states the latest statement that corporate believes in “Love them or Lose them”
The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Employees stay and leave organizations for some reasons.
The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention.
The process of retention is not as easy at it seems. There are so many tactics and strategies used in retention of employees by the organizations. The basic purpose of these strategies should be to increase employee satisfaction, boost employee morale hence achieve retention. But some times these strategies are not used properly or even worse, wrong strategies are used. Because of which these strategies fail to achieve the desired results.There are many myths related to the employee retention process. These myths exist because the strategies being used are either wrong or are being used from a long time.
These myths prevent the employer from successfully implementing the retention strategies. Let us learn about some of these myths.
Employees leave an organization for more pay: Money may be the motivating factor for some but for many people it is not the most important factor. Money matters more to the low-income-employees for whom it’s a survival issue. Money can make an employee stay in an organization but not for long.
The factors more important than money are job satisfaction, job responsibilities, and individual’s skill development. The employers should understand this and work out some other ways to make employees feel satisfied. When employees leave, management tries to retain them by offering more money. But instead they should try to figure out the main reason behind it. Issues that are mainly the cause of dissatisfaction are organization’s policies and procedures, working conditions, relationship with the supervisor and salary, etc. For such employees, achievement, growth, respect, recognition, is the main concern.
<image no longer exists>
Incentives can increase productivity: Incentives can surely increase productivity but not for long term. Cash incentives, volume work targets and speed awards are old management beliefs. They can generate work speedily and in volumes but can’t boost employee commitment. Rather speed can hamper the quality of work produced. What really glues employees to their work and organization is quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly supervisors.
Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-fact employees feel more responsible if they are given extra responsibilities apart from their regular job. Employees look for variety, greater control on the processes and authority to take decisions in their present job. They want opportunities to learn and grow. Management can assign extra responsibilities to their employees and appreciate them on the completion of these tasks. This will induce a sense of pride in the employee and will improve the relationship between the management and the employee.
Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom they can be loyal. There is no reason for the employee to hop jobs if he’s satisfied with the employer.
Taking measures to increase employee satisfaction will be expensive for the organizations: The things actually required to improve employee satisfaction like respect, career growth and development, appreciation, etc. can’t be bought. They are free of cost. An employer or management that reacts well to the employee’s ideas and suggestions is enough for the employees to be retained.
CRK
From India, Vijayawada
Contd..
Myths
Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Corporate is facing a lot of problems in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for a talented person. There are many organizations which are looking for such employees. If a person is not satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it becomes very important for organizations to retain their employees.
[img]http://t2.gstatic.com/images?q=tbn:ANd9GcS8YeAIGJmZnfLSkWAlEZsMVmkxXYxZl 9_EurXo3fJ29d2-yDmmuQ[/img]
The picture states the latest statement that corporate believes in “Love them or Lose them”
The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Employees stay and leave organizations for some reasons.
The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention.
The process of retention is not as easy at it seems. There are so many tactics and strategies used in retention of employees by the organizations. The basic purpose of these strategies should be to increase employee satisfaction, boost employee morale hence achieve retention. But some times these strategies are not used properly or even worse, wrong strategies are used. Because of which these strategies fail to achieve the desired results.There are many myths related to the employee retention process. These myths exist because the strategies being used are either wrong or are being used from a long time.
These myths prevent the employer from successfully implementing the retention strategies. Let us learn about some of these myths.
Employees leave an organization for more pay: Money may be the motivating factor for some but for many people it is not the most important factor. Money matters more to the low-income-employees for whom it’s a survival issue. Money can make an employee stay in an organization but not for long.
The factors more important than money are job satisfaction, job responsibilities, and individual’s skill development. The employers should understand this and work out some other ways to make employees feel satisfied. When employees leave, management tries to retain them by offering more money. But instead they should try to figure out the main reason behind it. Issues that are mainly the cause of dissatisfaction are organization’s policies and procedures, working conditions, relationship with the supervisor and salary, etc. For such employees, achievement, growth, respect, recognition, is the main concern.
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Incentives can increase productivity: Incentives can surely increase productivity but not for long term. Cash incentives, volume work targets and speed awards are old management beliefs. They can generate work speedily and in volumes but can’t boost employee commitment. Rather speed can hamper the quality of work produced. What really glues employees to their work and organization is quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly supervisors.
Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-fact employees feel more responsible if they are given extra responsibilities apart from their regular job. Employees look for variety, greater control on the processes and authority to take decisions in their present job. They want opportunities to learn and grow. Management can assign extra responsibilities to their employees and appreciate them on the completion of these tasks. This will induce a sense of pride in the employee and will improve the relationship between the management and the employee.
Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom they can be loyal. There is no reason for the employee to hop jobs if he’s satisfied with the employer.
Taking measures to increase employee satisfaction will be expensive for the organizations: The things actually required to improve employee satisfaction like respect, career growth and development, appreciation, etc. can’t be bought. They are free of cost. An employer or management that reacts well to the employee’s ideas and suggestions is enough for the employees to be retained.
CRK
From India, Vijayawada
COMPENSATION MANAGEMENT
Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. The lucrative compensation will also serve the need for attracting and retaining the best employees.
Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Components of Compensation System
Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Components of a compensation system are as follows:
<image no longer exists>
Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. If the compensation offered is effectively managed, it contributes to high organizational productivity.
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.
Basic Salary
Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services.
House Rent Allowance
Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work.
Conveyance
Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.
<image no longer exists>
Leave Travel Allowance
These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization.
Medical Reimbursement
Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements.
Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one month’s salary of the employee.
Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.
Leave Policy
It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc.
Overtime Policy
Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc.
Hospitalization
The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security.
<image no longer exists>
Insurance
Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization.
Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free.
Retirement Benefits
Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age.
Holiday Homes
Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house.
Flexible Timings
Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons.
CRK
From India, Vijayawada
Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. The lucrative compensation will also serve the need for attracting and retaining the best employees.
Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness.
Components of Compensation System
Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Components of a compensation system are as follows:
<image no longer exists>
Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. If the compensation offered is effectively managed, it contributes to high organizational productivity.
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.
Basic Salary
Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services.
House Rent Allowance
Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work.
Conveyance
Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.
<image no longer exists>
Leave Travel Allowance
These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization.
Medical Reimbursement
Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements.
Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one month’s salary of the employee.
Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.
Leave Policy
It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc.
Overtime Policy
Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc.
Hospitalization
The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security.
<image no longer exists>
Insurance
Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization.
Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free.
Retirement Benefits
Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age.
Holiday Homes
Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house.
Flexible Timings
Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons.
CRK
From India, Vijayawada
COMPENSATION MANAGEMENT
Contd...
Need of Compensation Management
A good compensation package is important to motivate the employees to increase the organizational productivity.
Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals.
Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose.
The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards
<image no longer exists>
Strategic Compensation
Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems.
CRK
From India, Vijayawada
Contd...
Need of Compensation Management
A good compensation package is important to motivate the employees to increase the organizational productivity.
Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals.
Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose.
The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards
<image no longer exists>
Strategic Compensation
Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems.
CRK
From India, Vijayawada
COMPENSATION MANAGEMENT
Contd...
Compensation Management in corporates & components of compensation
Introduction:-
The increasing competitiveness of the labour market and turnover of employees had resulted in nightmare in compensation planning. Apart from this, the growing demands of the employees and competitive salaries offered by multinational companies had almost resulted in a compensation war in certain industries.
Therefore, the human resources managers and tax experts have to evolve proper compensation planning for High end and qualified employees. The components of compensation have to be devised in such a way that, it focuses on the growing demands of employees while retaining the competitiveness and profitability of the company.
Industry driven factors:-
There are also certain driven factors that are influencing the compensation planning. The compensation Packages of knowledge workers are different from that of manufacturing sector. The employees working in call centers are compensated differently (vs) employees of technology driven companies.
Some notable examples are.,
a) Compensation paid in IT/ITES,
b) Investment banking/Equity research,
c) Software companies,
d) High-end industries having high technology content like Bio/Nano technology.
e) Private research and related fields.
Compensation Oval:
[img]http://www.indianmba.com/Articles_on_Management/AOM31/AoM31a.jpg[/img]
Components of compensation:-
Basic wages/Salaries:-
These refers to the cash component of the wage structure based on which other elements of compensation may be structured. It is normally a fixed amount which is subject to changes based on annual increments or subject to periodical pay hikes. It is structured based on the position of an individual in the organization and differs from grades to grades.
Dearness allowance:-
The payment of dearness allowance facilitates employees and workers to face the price increase or inflation of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the living conditions of the labour. The increasing prices reduce the compensation to nothing and the money's worth is coming down based on the level of inflation.
The payment of dearness allowance, which may be a fixed percentage on the basic wage, enables the employees to face the increasing prices.
Bonus:-
The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually or in proportion to the profitability. The Government also prescribes a minimum statutory bonus for all employees and workers.
There is also a bonus plan which compensates the Managers and employees based on the sales revenue or Profit margin achieved. Bonus plans can also be based on piece wages but depends upon the productivity of labour.
Commissions:-
Commission to Managers and employees may be based on the sales revenue or profits of the company. It is always a fixed percentage on the target achieved. For taxation purposes, commission is again a taxable component of compensation.
The payment of commission as a component of commission is practised heavily on target based sales. Depending upon the targets achieved, companies may pay a commission on a monthly or periodical basis.
Mixed plans:-
Companies may also pay employees and others a combination of pay as well as commissions. This plan is called combination or mixed plan. Apart from the salaries paid, the employees may be eligible for a fixed percentage of commission upon achievement of fixed target of sales or profits or Performance objectives.
Nowadays, most of the corporate sector is following this practice. This is also termed as variable component of compensation.
Piece rate wages:-
Piece rate wages are prevalent in the manufacturing wages. The laborers are paid wages for each of the Quantity produced by them. The gross earnings of the labour would be equivalent to number of goods produced by them.
Piece rate wages improves productivity and is an absolute measurement of productivity to wage structure. The fairness of compensation is totally based on the productivity and not by other qualitative factors.
The GANTT productivity planning and Taylor's plan of wages are examples of piece rate wages and the related consequences.
Sign on Bonuses:-
The latest trend in the compensation planning is the lump sum bonus for the incoming employee. A person who accepts the offer, is paid a lump sum as a bonus.
Even though this practice is not prevelant in most of the industries, Equity research and investment banking companies are paying this to attract the scarce talent.
Profit sharing payments:-
Profit sharing is again a novel concept nowadays. This can be paid through payment of cash or through ESOPS. The structuring of wages may be done in such a way that, it attracts competitiveness and improved productivity.
Profit sharing can also be in the form of deferred compensation at the time of retirement. At the time of retirement the employees may be paid a lump sum or retiral benefits.
Fringe benefits:-
The provision of fringe benefits does not attract any explanation. These includes.,
a) Company cars
b) Paid vacations
c) Membership of social/cultural clubs
d) Entertainment tickets/allowances.
e) Discounted travel tickets.
f) Family vacation packages.
Reimbursements:-
Employees, depending upon their gradations in the organization may get reimbursements based on the Expenses incurred and substantiated. Certain expenses are also paid based on expenses incurred during the course of business.
In many cases, employers provides advances to the employees for incurring certain expenses that are incurred during the course of the business.
Some examples are.,
a) Travel expenses.
b) Entertainment expenses
c) Out of pocket expenses
d) Refreshments expenses during office routine outside office premises.
Sickness benefits/pregnancy:-
The increasing social consciousness of corporates had resulted in the payment of sickness benefit to the Employees of companies. This also includes payments during pregnancy of women employees.
The expenses incurred due to injury or illness are compensated or reimbursed to the employees. In certain companies, the death of an employee is compensated financially.
Companies are also providing supporting financial benefits to the family of the bereaved employees. However, companies covering these cost through appropriate insurance policies like, Medical and life insurance.
Conclusion:-
The whole idea of compensation management can be better understood through the following Pyramid structure.
[img]http://www.indianmba.com/Articles_on_Management/AOM31/AoM31b.jpg[/img]
CRK
From India, Vijayawada
Contd...
- By Regu Krishnan, Dy. Manager, Ford India
Compensation Management in corporates & components of compensation
Introduction:-
The increasing competitiveness of the labour market and turnover of employees had resulted in nightmare in compensation planning. Apart from this, the growing demands of the employees and competitive salaries offered by multinational companies had almost resulted in a compensation war in certain industries.
Therefore, the human resources managers and tax experts have to evolve proper compensation planning for High end and qualified employees. The components of compensation have to be devised in such a way that, it focuses on the growing demands of employees while retaining the competitiveness and profitability of the company.
Industry driven factors:-
There are also certain driven factors that are influencing the compensation planning. The compensation Packages of knowledge workers are different from that of manufacturing sector. The employees working in call centers are compensated differently (vs) employees of technology driven companies.
Some notable examples are.,
a) Compensation paid in IT/ITES,
b) Investment banking/Equity research,
c) Software companies,
d) High-end industries having high technology content like Bio/Nano technology.
e) Private research and related fields.
Compensation Oval:
[img]http://www.indianmba.com/Articles_on_Management/AOM31/AoM31a.jpg[/img]
Components of compensation:-
Basic wages/Salaries:-
These refers to the cash component of the wage structure based on which other elements of compensation may be structured. It is normally a fixed amount which is subject to changes based on annual increments or subject to periodical pay hikes. It is structured based on the position of an individual in the organization and differs from grades to grades.
Dearness allowance:-
The payment of dearness allowance facilitates employees and workers to face the price increase or inflation of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the living conditions of the labour. The increasing prices reduce the compensation to nothing and the money's worth is coming down based on the level of inflation.
The payment of dearness allowance, which may be a fixed percentage on the basic wage, enables the employees to face the increasing prices.
Bonus:-
The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually or in proportion to the profitability. The Government also prescribes a minimum statutory bonus for all employees and workers.
There is also a bonus plan which compensates the Managers and employees based on the sales revenue or Profit margin achieved. Bonus plans can also be based on piece wages but depends upon the productivity of labour.
Commissions:-
Commission to Managers and employees may be based on the sales revenue or profits of the company. It is always a fixed percentage on the target achieved. For taxation purposes, commission is again a taxable component of compensation.
The payment of commission as a component of commission is practised heavily on target based sales. Depending upon the targets achieved, companies may pay a commission on a monthly or periodical basis.
Mixed plans:-
Companies may also pay employees and others a combination of pay as well as commissions. This plan is called combination or mixed plan. Apart from the salaries paid, the employees may be eligible for a fixed percentage of commission upon achievement of fixed target of sales or profits or Performance objectives.
Nowadays, most of the corporate sector is following this practice. This is also termed as variable component of compensation.
Piece rate wages:-
Piece rate wages are prevalent in the manufacturing wages. The laborers are paid wages for each of the Quantity produced by them. The gross earnings of the labour would be equivalent to number of goods produced by them.
Piece rate wages improves productivity and is an absolute measurement of productivity to wage structure. The fairness of compensation is totally based on the productivity and not by other qualitative factors.
The GANTT productivity planning and Taylor's plan of wages are examples of piece rate wages and the related consequences.
Sign on Bonuses:-
The latest trend in the compensation planning is the lump sum bonus for the incoming employee. A person who accepts the offer, is paid a lump sum as a bonus.
Even though this practice is not prevelant in most of the industries, Equity research and investment banking companies are paying this to attract the scarce talent.
Profit sharing payments:-
Profit sharing is again a novel concept nowadays. This can be paid through payment of cash or through ESOPS. The structuring of wages may be done in such a way that, it attracts competitiveness and improved productivity.
Profit sharing can also be in the form of deferred compensation at the time of retirement. At the time of retirement the employees may be paid a lump sum or retiral benefits.
Fringe benefits:-
The provision of fringe benefits does not attract any explanation. These includes.,
a) Company cars
b) Paid vacations
c) Membership of social/cultural clubs
d) Entertainment tickets/allowances.
e) Discounted travel tickets.
f) Family vacation packages.
Reimbursements:-
Employees, depending upon their gradations in the organization may get reimbursements based on the Expenses incurred and substantiated. Certain expenses are also paid based on expenses incurred during the course of business.
In many cases, employers provides advances to the employees for incurring certain expenses that are incurred during the course of the business.
Some examples are.,
a) Travel expenses.
b) Entertainment expenses
c) Out of pocket expenses
d) Refreshments expenses during office routine outside office premises.
Sickness benefits/pregnancy:-
The increasing social consciousness of corporates had resulted in the payment of sickness benefit to the Employees of companies. This also includes payments during pregnancy of women employees.
The expenses incurred due to injury or illness are compensated or reimbursed to the employees. In certain companies, the death of an employee is compensated financially.
Companies are also providing supporting financial benefits to the family of the bereaved employees. However, companies covering these cost through appropriate insurance policies like, Medical and life insurance.
Conclusion:-
The whole idea of compensation management can be better understood through the following Pyramid structure.
[img]http://www.indianmba.com/Articles_on_Management/AOM31/AoM31b.jpg[/img]
CRK
From India, Vijayawada
COMPENSATION MANAGEMENT
Components of Payroll
Payroll refers to the administration of employees' salaries, wages, bonuses, net pay, and deductions. It consist of the employee ID, employee name, date of joining, daily attendance record, basic salary, allowances, overtime pay, bonus, commissions, incentives, pay for holidays, vacations and sickness, value of meals and lodging etc. There are some deductions such as PF, taxes, loan installments or advances taken by employee.
Payroll is administered on monthly basis and annual basis.
While administrating the monthly payroll basic salary, HRA, conveyance, and other special allowances such mobile, etc are considered. There are some deductions which are provident fund (12%) of the salary, taxes and other deductions.
<image no longer exists>
Deductions such as tax and loan/advances taken by the employee from organizations are deducted only where applicable. Dearness Allowance and House rent allowance is provided at a fixed rate stated by the employment law. Provident fund is deducted from the gross salary of employee on the monthly basis as per the employment law, which is provided later to the employee. Organizations also contribute the same amount to the provident fund of the employee.
Annual payroll consists of leave travel allowances, incentives, annual bonuses, meal vouchers/reimbursements, and medical reimbursements.
<image no longer exists>
Allowances, incentives, bonuses and reimbursements are based on organizational policies. Some organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. Some organizations go for performance based incentives.
CRK
From India, Vijayawada
Components of Payroll
Payroll refers to the administration of employees' salaries, wages, bonuses, net pay, and deductions. It consist of the employee ID, employee name, date of joining, daily attendance record, basic salary, allowances, overtime pay, bonus, commissions, incentives, pay for holidays, vacations and sickness, value of meals and lodging etc. There are some deductions such as PF, taxes, loan installments or advances taken by employee.
Payroll is administered on monthly basis and annual basis.
While administrating the monthly payroll basic salary, HRA, conveyance, and other special allowances such mobile, etc are considered. There are some deductions which are provident fund (12%) of the salary, taxes and other deductions.
<image no longer exists>
Deductions such as tax and loan/advances taken by the employee from organizations are deducted only where applicable. Dearness Allowance and House rent allowance is provided at a fixed rate stated by the employment law. Provident fund is deducted from the gross salary of employee on the monthly basis as per the employment law, which is provided later to the employee. Organizations also contribute the same amount to the provident fund of the employee.
Annual payroll consists of leave travel allowances, incentives, annual bonuses, meal vouchers/reimbursements, and medical reimbursements.
<image no longer exists>
Allowances, incentives, bonuses and reimbursements are based on organizational policies. Some organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. Some organizations go for performance based incentives.
CRK
From India, Vijayawada
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Human Resource Management for diploma in Business administration. pdf
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