1. 1. The Factor Comparison Method
This method is a combination of the ranking and point system. Thomas E. Hitten was the
first to originate factor comparison method of job evaluation. As originally developed this
method involves ranking of jobs in respect of certain factors and usually involves the
assigning of money wages to the job depending upon the ranking. This is more systematic
and scientific method. Under this method, jobs are evaluated by some standards. In this
method, instead of ranking complete jobs, each job is ranked according to series of factors.
All jobs are compared to each other for the purpose of determining their relative importance
by selecting four or five major job elements which are more common or less common to all
jobs. These elements are not pre-determined. These are chosen on the basis of job analysis.
The five factors which are commonly used are
(i) mental requirement
(ii) skill
(iii) physical requirement
(iv) responsibilities and
(v) working conditions.
The number of factors may be more than five. Pay will be assigned in this method by
comparing the weights of the factor required for each job, i.e., the present wages paid for
key jobs may be divided among the factors weighted by importance. So the wages are
assigned to the job in comparison to its ranking on each job factor.
The major steps in this system consist of the following:
Selection of factors: They may be skill, mental and educational requirements, physical
requirements and responsibility, working conditions. The persons writing job specifications
are generally provided with a set of dimensions within which they have to perform this
important work.
Selection of key jobs: Key jobs serve as a standard against which all other jobs are
compared. Generally a key job is one whose contents has become stabilized over a period of
time and whose wage rate is considered to satisfactory and acceptable by the management
and union. The key jobs should be a good sample representing the entire range. It is
suggested that 15 to 20 jobs should be picked. All of these should be clearly describable and
capable of analysis in terms of factors.
Ranking of Key jobs: Rank the selected jobs under each factor (by each and every
member of the job evaluation committee) independently. Ranking is made individually and
then a meeting is held to develop a consensus.
Assign money value: Money value is assigned to each factor so as to determine the wage
rate for each key job. The basic pay for each 'key' job is allocated to each factor. This
should reflect a range from the lowest to the highest.
Comparing all jobs with key jobs: All other jobs are compared with the list of key jobs.
This is done to know their relative importance and position in the scale of jobs.
An illustration of how the factor comparison method works is given below:
Table: Ranking Jobs by Factor Comparison
Job Skill Mental Physical Responsibility Working
Requirement Requirements Requirements Conditions

2. Toolmaker 1 1 2 1 4
Mechanist 2 2 3 2 3
Electrician 3 3 4 3 5
Assembler 4 4 5 5 2
Janitor 5 5 1 4 1
Table: Allocation of Money Value to the different factors and Ranking of Jobs under the
Factor Comparison Method
For example, if tool making is a benchmark job and its wage rate is 20 money units; it may
be decided to assign nine of these to skill, five to mental requirements, two to physical
requirements, three to responsibility and one to working conditions. Similarly, if the wage
rate for another benchmark job. for example that of a machinist, amounts to 18 money
units, eight of these may be allotted to skill, three to working conditions and so on.
Advantages:
1. Factor comparison method permits a more systematic comparison of jobs than the
non-analytical methods. It is a systematic, quantifiable method for which detailed
step by step instructions are available.
2. The system results in more accurate job evaluation as it is more objective because
weights are not selected arbitrarily.
3. It is flexible as it has no upper limit on rating that a job may receive on a factor.
4. The reliability and validity of the system are greater than the same statistical
measures obtained from group standardised job analysis plans.
5. The procedure of rating new jobs by comparing with other standards or key job is
logical and not too difficult to accomplish.
6. It utilizes few factors and thereby reduces the likelihood of overlapping.
7. t is a scheme that in corporate money value, determination of wage rates is
automatic.
Disadvantages:
1. This method is comparatively complicated to apply and it is difficult to explain to
workers.
2. It is costly to install, and somewhat difficult to operate for anyone who is not
acquainted with the general nature of job-evaluation techniques.
3. The use of present wages for the key jobs may initially create errors into the plan.
The contents and the value of these jobs may change over a period of time and they
will lead to future errors.

3. 4. It goes against the common belief that the procedure of evaluating jobs and fixing
their wages should be kept separate.
5. The use of five factors is a growth of the technique developed by its organisations.
And using the same five factors for all organisation and for all jobs in an organisation
may not always be appropriate.
6. It is a very expensive method/system of job evaluation because experts have to be
appointed particularly in selecting weights which are based in actual analysis.
2. Point Rating Method
This is the most widely used method for job evaluation. It along with factor comparison
method, involves a more detailed, quantitative and analytical approach to the measurement
of job worth. This method is widely used currently. In this method jobs are expressed in
terms of key factors. Then various points are assigned to each factor in order of their
importance. Then points are summed up to determine the wage rate for the job. Jobs with
similar point totals are placed in similar pay grades. The point rating procedure has to
clearly define from very start. By and large, its steps fall into two distinct stages, namely
preparing and evaluation plan and schedule (by defining and weighting factors) and grading
jobs by reference to this schedule. This involves the following steps:
Listing of Jobs: The jobs have to be determined first which are to be evaluated.
They are usually clustered. This should cover all the categories of jobs: skilled,
unskilled, semi-skilled, professional, executives etc.
Selecting and defining factors: Identify the factors common to all the identified
jobs such as skill, effort, responsibility, job conditions etc. There should be sufficient
number of factors to evaluate all aspects of the jobs. The number of factors will
depend upon the nature of the jobs.
Dividing the factors into degree: Once the factors are selected they must be
divided into degrees to make them operational. The point method generally uses
from four to six degrees for each factor. It is advisable to an even number of degrees
in the development of point method and the same number of degrees should be used
for each factor in order to maintain consistency in the job evaluation plan.
Weighting the factors: The relative importance of each factor selected has to be
determined. In other words, the factors must be weighted. There is no scientific or
readymade method for weighting factors. It is generally done pragmatically and will
depend upon the knowledge of the work of the enterprise. Weighting will also depend
on the firm's objectives and policies.
Allocations points to each degree: Once the relative importance of the factors
has been determined in a preliminary way and the factors suitably divided into
degrees, each degree must be assigned a numerical value. These are the values that
will be used in determining the total point values of jobs.

4. Evaluation of Jobs: Once the factor plan is adopted, it is usual to prepare an
evaluation handbook explaining the procedure to be followed and summarising all
the elements required for evaluation.
Assign money value points: For this purpose points are added to give the total
value of a job: its value of a job; its value is then translated into terms of money
with a pre-determined formula.
Advantages:
The point method is a superior and widely used method of evaluating jobs. It gives
us a numerical basis for wage differentials. By analysing a job by factors it is usually
possible to obtain a high measure of agreements on job value.
Once the scales are developed, they can be used for a long time.
It accounts for differences in wage rates for various jobs on the strength of job
factors. Jobs may change over time, but the rating scale established under the point
method remain unaffected.
It has the ability of handling a large number of jobs and enjoys stability as long as
the factor remains relevant.
Disadvantages
This method is a costly affair. The development and installation of the system calls of
heavy expenditure.
This is a complex method. Adoption of the whole procedure is a very difficult and
time-consuming process.
There may be wide fluctuations in the compensable factors with the change in
technology, values of employees etc.
Employees, trade union representatives, management and other interest parties may
perceive differently in selecting a compensable factors, in giving weightage etc
Job analysis
Job analysis is a systematic process of collecting all information about the job for preparing
of job description and job specification meant toselection of employee, satisfaction in job,
and motivation etc.
Job Analysis
Job Analysis

5. Job analysis
o Job Descriptions and Job Specifications
Job Analysis and HR Activities
Job Analysis Methods
Stages in the Job Analysis Process
Job Design
Job design
Methods or Techniques of Job Design
o Job Rotation
o Job Enrichment
o Job Enlargement
Job Evaluation
o Qualitative Methods of Job Evaluation
o Quantitative Methods of Job Evaluation
What Is a Job?
A group of homogeneous tasks related by similarity of functions.
When performed by an employee in an exchange for pay, a job consists of duties,
responsibilities, and tasks (performance elements) that are (1) defined and specific, and (2)
can be accomplished, quantified, measured, and rated. From a wider perspective, a job is
synonymous with a role and includes the physical and social aspects of a work environment.
Often, individuals identify themselves with their job or role (foreman, supervisor, engineer,
etc.) and derive motivation from its uniqueness or usefulness.
Job Analysis
Job Analysis is the SYSTEMATIC process of collecting and making judgments about all the
important information related to a job. Job analysis is the procedure through which you
determine the duties and nature of the jobs and the kinds of people who should be hired for
them. You can utilize the information it provides to write job descriptions and job
specifications that are utilized in recruitment and selection, compensation, performance
appraisal, and training.
Job analysis is a detailed examination of the
(1) tasks (performance elements) that make up a job (employee role),
(2) conditions under which they are performed, and
(3) what the job requires in terms of aptitudes (potential for achievement), attitudes
(behavior characteristics), knowledge, skills, and the physical condition of the employee.

6. Its objectives include
(a) determination of the most efficient methods of doing a job,
(b) enhancement of the employee's job satisfaction,
(c) improvement in training methods,
(d) development of performance measurement systems, and
(e) matching of job-specifications with the person-specifications in employee selection.
Definitions of Job Analysis
Some important definitions of job-analysis are as under :
Harry L. Wylie. "Job analysis deals with the anatomy of the job.....This is the complete
study of the job embodying every known and determinable factor, including the duties and
responsibilities involved in its performance; the conditions under which performance is
carried on; the nature of the task; the qualifications required in the worker; and the
conditions of employment such as pay, hours, opportunities and privileges"
In the words of Dale Yoder. "A Job is a collection of duties, tasks and responsibilities which
are assigned to an individual and which is different from other assignment"
According to Michael J. Jucius, "Job analysis refers to the process of studying the
operations, duties and organisational aspects of jobs in order to derive specification or, as
they are called by some job description"
In the words of Edwin B. Flippo, "Job analysis is the process of studying and collecting
information relating to the operations and responsibilities of a specific job "
According to Blum, "A job analysis is an accurate study of the various components of a
job. It is concerned not only with an analysis of the duties and conditions of work, but also
with the individual qualifications of the worker."
According to John A Shubin "Job analysis is the methodical compilation and study of work
data in order to define and characterise each occupation in such a manner as to distinguish
it from all others."
In the words of Scott, Clothier and Spriegel, "Job analysis is the process of critically
evaluating the operations, duties and relationship of the job."
In simple words Job analysis is a formal programme which examines the tasks, duties and
responsibilities contained in an individual unit of work.
Before the recruitment process, job analysis takes place.
Job Descriptions and Job Specifications >>
Facts [+]

7. The U.S. Department of Labor publishes The Occupational Outlook Handbook every two
years. The handbook is a nationally recognized source of career information for hundreds of
various jobs. Information subjects include required job training and education, earnings,
expected job prospects, what workers do on the job, and working conditions.
Importance of Job Analysis
Job analysis helps in analyzing the resources and establishing the strategies to accomplish
the business goals and strategic objectives. Effectively developed, employee job
descriptions are communication tools that are significant in an organization's success.
The main purpose of conducting job analysis is to prepare job description and job
specification which helps to hire right quality of workforce.
Job Analysis can be used in training to identify or develop, training content, and assessment
tests to measure effectiveness of training, equipment to be used in delivering the training
and methods of training.
Job Analysis can be used in compensation to identify or determine: skill levels, compensable
job factors, work environment, responsibilities and required level of education.
Job Analysis can be used in selection procedures to identify or develop job duties that
should be included in advertisements of vacant positions, appropriate salary level for the
position to help determine what salary should be offered to a candidate, minimum
requirements for screening applicants, interview questions, selection tests/instruments
(e.g., written tests; oral tests; job simulations), applicant appraisal forms and orientation
materials for new hires
Job Analysis can be used in performance review to identify or develop goals and objectives,
performance standards, evaluation criteria, length of probationary periods, and duties to be
evaluated
An ideal job analysis should include
Duties and Tasks: The basic unit of a job is the performance of specific tasks and
duties. This segment should include frequency, duration, effort, skill, complexity,
equipment, standards, etc.
Environment: This segment identifies the working environment of a particular job.
This may have a significant impact on the physical requirements to be able to perform
a job.
Tools and Equipment: Some duties and tasks are performed using specific
equipment and tools. These items need to be specified in a Job Analysis.
Relationships: The hierarchy of the organization must be clearly laid out. The
employees should know who is under them and who they have to report to.

8. Requirements: The knowledge, skills, and abilities required to perform the job
should be clearly listed.
There are several ways to conduct a job analysis, including: interviews with
incumbents and supervisors, questionnaires (structured, open-ended, or both),
observation, critical incident investigations, and gathering background information
such as duty statements or classification specifications.
The following are the benefits of job analysis.
1. Organizational structure and design :- Job analysis helps the organization to
make suitable changes in the organizational structure, so that it matches the needs
and requirements of the organization. Duties are either added or deleted from the
job.
2. Recruitment and selection :-Job analysis provides information about what the job
entails and what human characteristics are required to perform these activities. This
information, in the form of job descriptions and specifications, helps management
decide what sort of people to recruit and hire.
3. Performance appraisal and training/development :- Based on the job
requirements identified in the job analysis, the company decides a training program.
Training is given in those areas which will help to improve the performance on the
job. Similarly when appraisal is conducted we check whether the employee is able to
work in a manner in which we require him to do the job.
4. Job evaluation :- Job evaluation refers to studying in detail the job performance by
all individual. The difficulty levels, skills required and on that basis the salary is fixed.
Information regarding qualities required, skilled levels, difficulty levels are obtained
from job analysis.
5. Promotions and transfer :- When we give a promotion to an employee we need to
promote him on the basis of the skill and talent required for the future job. Similarly
when we transfer an employee to another branch the job must be very similar to
what he has done before. To take these decisions we collect information from job
analysis.
6. Career path planning :- Many companies have not taken up career planning for
their employees. This is done to prevent the employee from leaving the company.
When we plan the future career of the employee, information will be collected from
job analysis. Hence job analysis becomes important or advantageous.
7. Labour relations :- When companies plan to add extra duties or delete certain
duties from a job, they require the help of job analysis, when this activity is
systematically done using job analysis the number of problems with union members
reduce and labour relations will improve.
8. Health and safety :- Most companies prepare their own health and safety, plans
and programs based on job analysis. From the job analysis company identifies the
risk factor on the job and based on the risk factor safety equipments are provided.
9. Acceptance of job offer :- When a person is given an offer/appointment letter the
duties to be performed by him are clearly mentioned in it, this information is
collected from job analysis, which is why job analysis becomes important.

9. Compensation Management
Before reading the compensation management topic, one should know the impact of
compensation system on the organisation and its gravity if it is not managed effectively.
First and last word on compensation management is that, it is core and direct influencing
factor on employee motivation and other factors succeeds.
Compensation Management
Compensation Management
Compensation and Employee Motivation
Direct Employee Compensation
Indirect Employee Compensation
Variable pay Plans >>
Compensation for Individual Performance
o Piecework Rates
o Standard Hour Plan
o Merit Pay
o Performance Bonus
o Sales Commission
Pay For Team Performance
o Gainsharing
o Team Awards and Bonus
Pay for Organizational Performance
o Profit Sharing
o Employee Share Option Plan (ESOP)
o Stock Option
Skill Based Pay
Executive Compensation
Factors Influencing Employee Compensation
Determining Employee Compensation
Compensation for Loss Suffered Physical or Mentally
Compensation Vs Remuneration
[USA]
Broadbanding

10. Employees, in exchange of their work, generally expect some appreciation. Money is
considered as the most important motivating factor for employees, though non-financial
incentives work efficiently. The goals of compensation management are to design the
lowest-cost pay structure that will attract, motivate and retain competent employees. Here
the term compensation and salary of employee are one and same.
Before knowing about Compensation management one must know the labor laws of the
country which are governing employees compensation or remuneration system.
International Labour Organisation (ILO) made conventions on labour welfare especially on
regularly in payment of wages & salaries with minimum pay for stipulated working hours. In
accordance with the conventions & recommendations of ILO every country has established
labour laws and enforced, who ever contravene them shall be liable for penalty or
punishment under serious cases both may be awarded. Naturally judiciary of the concern
country is watchdog for dealing labour issues.
India is one of the countries with very high population and stands second in place followed
by china. In the India, parliament has enforced four key laws on wages of workers that are
Payment of wages act 1936 and Minimum wages act 1948 for the purpose of ensuring
minimum payment for particular type of jobs in different sectors and industries according to
stipulated working hours prescribed by the law. Normally eight hours is stipulated working
time in almost all countries, above stipulated time if any worker is made to work, his
employers has to compulsory pay overtime, if not it shall be treated as unlawful by the
court of law for which it may impose penalty. Other side of coin it may create serious
dissatisfaction among workers and make them feel that they are being exploited which may
lead to agitations eventually may lead strikes which is ultimate weapon in hands of
workers, ultimately organisations may chose for lockout which is the weapon in hands of
employers altogether may create industrial disputes. On this law may support worker
agitation for not complying payment of wages by their employer in accordance with wage
laws and in some cases law may support employer if workers agitation causes serious
damages to organisation.
The third key law is workmen's compensation act 1923, the primary objective of this law is
to have any compensation by an employee from his employer if any accident occurs, which
make permanent are partial disablement. This law defines under schedules various types of
accidents certain to happen to worker and percentage of compensation paid to him in
accordance with his age.
The fourth key law is Equal Remuneration Act, 1976, according to the section 4 it is the
DUTY OF EMPLOYER TO PAY EQUAL REMUNERATION TO MEN AND WOMEN WORKERS FOR
SAME WORK OR WORK OF A SIMILAR NATURE. According to Section 3, a settlement arrived
at between the management and the employees cannot be a valid ground for effecting
discrimination in payment of remuneration between male and female employees performing
the same work or work of a similar nature; Mackinnon Mackenzie and Co. v. Audrey D’
Costa, (1987) 2 SCC 469.
"The most important thing is to note that compensation plays a major role in attracting
talent from the market and compensation system of the organisation is Key factor for
creating employer brand, which is most important factor for attracting talent people. Having
talent people for the organisation is a major asset for the organisation development"
Importance of employees compensation or reward system

11. Compensation or reward system of the organisation is most influencing factor for
employee motivation, must remember.
If we observe history of causes of industrial disputes, employee compensation a
reward system issues were the main reason in most cases.
good compensation system of rewards system in the organisation will minimise
industrial disputes and helps in maintaining peace and harmony within the
organisation.
Compensation system plays a key role in employee attrition.
Compensation system mostly influences retention of employee in the organisation.
Most of employee satisfaction depends upon compensation a reward system of
organisation.
Effective compensation system builds employer brand, which plays a key role in
attracting talent.
Effective compensation system makes employee to put his full efforts for
achievement of organisation's goals and objectives.
Effective compensation system builds initiative towards work, which in turn enhances
the productivity of organisation.
Effective compensation makes employees feel belongingness towards the
organisation.
Companies in allegations on employees salary issues
Especially on crux matter of compensation system in the year 2012- September, law suits
were filed on well known giant companies like Walmart Stores for not paying overtime to its
workers and less payment of wages without following the United States federal laws.
Apple incorporation's electronic components supplier Foxconn Electronics from China had
faced same allegations on less payment of wages and also no payment for
additional Working hours to its workers. Kingfisher airlines in India succumbed into losses
by various reasons eventually failed to pay salaries to its employees for nearly a period of
seven months which lead to strike by its employees. Due to no salary payment for months
to its employees created severe financial crisis to one of its employee's family,
which abetted his wife to commit suicide out of depression. Extremely disappointed
Kingfisher airlines employees resorted to road demonstration against company, which
ultimately lead to company's reputation down.
Recent example as Walmart claims to giant retail stores dipped in serious allegations
accompanied by lawsuit filed for not paying overtime wages at least minimum wages in
accordance with federal laws. Opposite to united states federal labour laws, Walmart stores
insisting workers to appear for work early hours working during lunch breaks and leaving
workplace at late hours.
Compensation and remuneration are grammatically synonym but in the context of labor
laws both have different meaning and purpose for which it is paid. Remuneration is paid for
work done by a worker or employee whereas compensation is paid for loss suffered
physically, mentally or disabled worker or employee.
The HR Compensation Analyst assists with producing the organization's compensation
program. Their primary responsibility is the research and study to determine appropriate
employee compensation. In addition, they evaluate predicted market trends, recommend
revisions to company compensation plans, review job descriptions, and assist the
Compensation Manager.
The HR Compensation Manager directs the organization's compensation program. Their

12. responsibilities include developing job descriptions,analyzing jobs, conducting salary surveys
and job evaluations, and establishing a salary structure. They suggest revisions to the
compensation plan and procedures, administer bonus and incentive programs, and manage
the performance appraisal system.
Facts [+]
A recent WorldatWork survey of more than 6,000 managers and employees in 26
organizations in North America found that many employees and managers do not
understand why they get paid what they do. 40% reported as knowing what to do to
increase their base pay. Only 38% percent reported knowing how to increase the size of
their cash bonus.
The 2011 Nielsen survey also showed that the top five dimensions students considered
when it comes to seeking employment were high degree of independence at work, salary
package, learning on the job, growth prospects and standing of the company in the market
respectively.
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----------------------
Mercer Human Resource Consulting, a subsidiary of Marsh and McLennan, is a global leader in HR and
financial services. Mercer Human Resource Consulting provides expertise in human resource areas,
ranging from compensation and benefits to operational effectiveness and employee performance and
engagement. Mercer has over 15,000 employees serving clients in 41 countries.
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The Adamson Act was signed by President Woodrow Wilson in 1916. The law established
for railroad workers an eight-hour workday with additional pay for overtime work. This was
the first federal law that regulated the hours of workers in private companies in
the U.S. The 1938 Fair Labor Standards Act made the eight-hour work day a "legal work
day" work throughout the nation.
The Fair Labor Standards Act was passed in June 1938. The main objective of the law was to
establish minimum standards of living necessary for health, efficiency, and well being of workers. A major
provision of the act was the establishment of a minimum wage, initially 25 cents an hour, along with a
maximum workweek of 44 hours.
Employee pay raises have averaged a little less than four percent for the past several years
according to data compiled by WorldatWork.The two main reasons cited for the relatively
low pay raises are: lower rates of inflation and cost-of-living increments, and the increasing
use of bonus and variable pay to reward high performing employees.
In India, The Payment Wages Act was enacted in the year 1936 for the purpose of payment of wages
regularly to the workers within time limit not exceeding wage period of one month with out any
deduction by his employer. Deduction form salary or wages can be done in case of absence, loss or
damage, fines and advances.etc. Deductions shouldn't exceed 50% from wage.
Compensation: an overview
Compensation management is one of the most challenging human resource areas because it
contains many elements and has a far-reaching effect on the organisation's goals. The

13. purpose of providing compensation is to attract, retain and motivate employees. There are
two main types of financial compensation.
1. Direct financial compensation - the pay that a worker receives as wages, salaries,
commissions and bonuses, and
2. Indirect financial compensation - all financial rewards that are not included in
direct compensation (i.e. benefits).
An example of direct financial compensation is the money the worker receives as wages
at the end of the week, or as a salary paid at the end of the month. Many companies pay
salaries straight into the employee's bank account.
An example of indirect financial compensation is when the company contributes to an
employee's housing subsidy or a pension plan.
Not all compensation is financial. A worker can get great satisfaction from his work and
enjoy the environment in which he works. This is called non-financial compensation and
cannot be counted in terms of money. For example, a veterinarian might enjoy working
outside, going to farms to treat animals and deliver calves. A publisher might enjoy the
challenge of producing books that will enrich people's lives.
It is not always possible to provide a perfect pay package (the agreement between the
organisation and the employee about how much money and other benefits the employee will
receive). Because of this, some companies allow their employees to work out their own
compensation packages.
India: Central government employees draw more salary along with benefits than state
government employees, compared with private sector employees. There is a particular pay
structure fixed for every government employee in India which is not in private companies.
The pay structure of government employees in India is as follows
Employee salary : Basic pay + Grade pay + Dearness Allowance (DA) + House Rent
Allowance (HRA) + City Compensatory Allowance (CCA)
The details of above said components of salary of government employees are as follows.
Basic pay: The primary component of employee salary which is bases for calculation
of other components in the employee salary.
Grade pay: An amount which is fixed by the government on the range of employee
in government hierarchy. (for example; Group A officers have high grade pay than
Group B officers.)
Dearness Allowance: Certain percentage of the amount on basic pay. This
percentage varies from state government to Central government employees. An
allowance paid to employees on the basis of consumer Price index. Consumer price
index denotes the cost of the products which influences by the inflation. (in simple
terms cost of living) At present, 41% is for state government employees and 72 %
is for Central government employees as dearness allowance on their basic pay.

14. House Rent Allowance (HRA): Certain percentage of the amount on basic pay.
This percentage varies from state government to Central government employees.
This allowance is paid to employees are meeting house rent expenditure.
City Compensatory Allowance (CCA): An allowance paid according to the city or
town where employee do the job and the purpose of this allowance is to compensate
high cost of living especially in cities like Mumbai, Delhi, Calcutta and Hyderabad et
cetera . Government decides the amount of allowance to be paid to employees on
basis of city or town.
Facts [+]
An estimated twenty-five million American employees without bank accounts are unable to
be paid via direct deposit. Increasing numbers of organizations are offering employees
without bank accounts payroll cards, similar to debit cards. Electronically transferring funds
to employees is estimated to be up to 75% cheaper than issuing traditional paychecks.
"Red-circling" refers to freezing a highly tenured or highly skilled employee's base pay in
the event that the pay rate is above the established range maximum assigned to the job
grade or classification. A red-circled employee is usually not eligible for further base pay
increases until the top pay rate for their job grade/classification is increased.
Objective of Compensation
The objective of the compensation function is to create a system of rewards that is
equitable to the employer and employee alike. The desired outcome is an employee who is
attracted to the work and motivated to do a good job for the employer. Patton suggests that
in compensation policy there are seven criteria for effectiveness. Compensation should be:
1. Adequate Minimal governmental, union, and managerial levels should be met.
2. Equitable Each person should be paid fairly, in line with his or her effort, abilities,
and training.
3. Balanced Pay, benefits, and other rewards should provide a reasonable total reward
package.
4. Cost-effective Pay should not be excessive, considering what the organization can
afford to pay.
5. Secure Pay should be enough to help an employee feel secure and aid him or her in
satisfying basic needs.
6. Incentive-providing Pay should motivate effective and productive work.
7. Acceptable to the employee The employee should understand the pay system and
feel it is a reasonable system for the enterprise and himself or herself.