The presentation gives complete insight of career planning and compensation components.

1. Career Planning &
Compensation Management
Divya Sharma

2. Career Development -
Overview
 Career development is a
continuous process where both
employees as well as employers
have to put efforts in order to
create conducive environment so
that they can achieve their
objectives at the same time.

3. Importance of Career Development
 Employees continuously need to upgrade
their skills and competencies to meet the
current demands where as organizations
must be ready with those employees who
can handle the pressure efficiently and
cease the risk of falling prey to the changed
scenario. Therefore, understanding the
importance of career development is very
necessary for both the parties.

4. Business Environment Factors
that can Bring Undesired
Changes
 Economic Downsizing
 De-layering
 Cost Reduction Strategies of the
Organization
 IT Innovations

5. Designing Career Development
Systems
 Designing career development
systems according to specific needs
and requirements of an organization
can help HR specialists in bringing
efficiency to the entire process of
career management.

6. Career Development Plan
 A Career Development Plan is a
written list of the short and long-term
goals that employees have pertaining
to their current and future jobs, and a
planned sequence of formal and
informal experiences to assist the
employees in achieving their goals.

7. Purpose of a Career
Development Plan
 to assist employees in achieving their
goals
 increases the likelihood of retaining
employees
 helps employees set realistic
expectations of career growth
 Helps employees becoming eligible
for their next career milestone

8. Format of a Career
Development Plan
 As a manager or supervisor, encourage the use of an
Individual Career Development Plan (ICDP) format for
all of your employees.
 employees need to take responsibility for creating this
form for themselves and provide the following
information:
 Short-term career goals/objectives (1-5 years),
 Long-term career goals/objectives (+5 years)
 Development experiences in the short term:
 Summary statement
 Education and training
 Job assignments
 Developmental activities

9. Process for Supporting Your
Employee's Career
Development Plan
 Plans about development should
focus on two dimensions: specific
technical and functional expertise and
overall demonstration, by the
employee, of the organization's
culture, philosophy and values.

11. 1. Meet individually with your employees to identify
their long-term career interests.
2. Identify resources
3. Prepare the plan
4. Review the proposed plan, revise it, adjust it and
confirm alignment by providing your signature and
obtaining the employee's signature.
5. Assess employee progress against the plan, and
revise the plan to adjust it, if necessary.

12. Useful tool for career development
practitioners
• Offer it to managers as a way to
encourage the development of those
they supervise.
• Help the manager in supporting
employees for gaining new skills
• It also helps employees stay on track
and move forward in their careers.

13. Components of a Career
Development System
 A career development system
includes a variety of components for
use in the organizations.
1. Self Assessment Tools
2. Career Planning Workshops
3. Individual Counseling
4. Organizational Assessment Program
5. Developmental Programs

14. Objectives of Career
Development Systems
 Fostering Better Communication in
Organization
 Assisting with Career Decisions
 Better Use of Employee Skills
 Setting Realistic Goals
 Creating a Pool of Talented Employees
 Enhancing the Career Satisfaction
 Feedback

15. Career Planning
 A career develops over a lifetime and is made up of
many work and life experiences.
 What is Career Planning?
 Career Planning is an ongoing process of learning
what you are cut out for by:
1. exploring your values, interests, skills, abilities, etc.
2. exploring different occupations and industries,
3. exploring different learning options, making an
informed decision when setting a career goal, and
developing SMART plans to achieve each career goal.

17. Succession planning
 Succession planning is one of the most
important career development tools used
by organizations.
 Identify those with the potential to assume
greater responsibility in the organization
 Provide critical development experiences to
those that can move into key roles
 Engage the leadership in supporting the
development of high-potential leaders
 Built a database that can be used to make
better staffing decisions.

18. Benefits of Formal Succession
Planning
 systematic approach for preparing employees to
handle the responsibilities at higher levels.
 It helps in knowing why a specific individual should be
developed and trained.
 It reduces the randomness in organization’s processes
 is a proactive approach to fill a top position
 helps in further exploitation of computer systems,
HRP software applications
 fosters pro-active management approaches to make
organization a better place to work.
 It establishes a logical basis for making choices
 establishes a specific connection between the
business objectives and HR strategic planning.

19. Wage and salary administration
 Wage and salary administration affect levels of
employee commitment to the organisation.
 Administration of employee compensation is called
wage and salary administration.
 “Wage and Salary Administration refers to the
establishment and implementation of sound policies
and practices of employee compensation.
 The wage and salary administration aims to
establish and maintain an equitable wage and salary
structure and an equitable labor cost structure.

20. Objectives of Wage and Salary
Administration :
 The wage and salary administration
aims to establish and maintain an equitable
wage and salary structure and an equitable
labor cost structure.
 To establish a fair and equitable
compensation offering similar pay for
similar work.
 To attract competent and qualified
personnel.
 To retain the present employees by keeping
wage levels in tune with competitive units.

21.  To keep labor and administrative costs in line with the
ability of the organization to pay.
 To improve motivation and morale of employees and
to improve union management relations.
 To project a good image of the company and to
comply with legal needs relating to wages and
salaries.
 To establish job sequences and lines of promotion
wherever applicable.
 To minimize the chances of favoritism while assigning
the wage rates.

22. Principles
1. Should be sufficiently flexible
2. Job evaluation must be done
scientifically
3. It must be always consistent with
overall organizational plans and
programs

23. Principles
4. It should be in conformity with the social
and economic objectives of the country like
attainment of equality in income
distribution and controlling inflationary
trend
5. It should be responsive to the changing
local and national conditions
6. These plans should simplify and expedite
other administrative process

24. Elements Wage and salary systems should have a
relationship with the performance, satisfaction and
attainment of goals of individual. Wage and salary
system has following elements (Henderson):
1. Identifying the available salary opportunities, their
costs, estimating the worth of its members, of their
opportunities and communicating them to employees.
2. Relating salary to needs and goals
3. Developing quality, quantity and time standards
related to work and goals
4. Determining the effort necessary to achieve standards
5. Measuring the actual performance

25. 6. Comparing the performance with the salary
received
7. Measuring the job satisfaction of the
employees
8. Evaluating the unsatisfied wants and
unrealized goals aspirations of the
employees
9. Finding out the dissatisfaction arising from
unfulfilled needs and unattained goals
10. Adjusting the salary levels to help
employees reach unleashed goals and fulfill
the unfulfilled needs and aspirations

26.  HR Challenges
 How can individuals and groups be
recognized?
 What is a pay-for-performance plan and
how is it used in the organization?
 How is an executive compensation package
designed?
 What are the pros and cons of different
compensation methods?

27.  Pay-for-Performance (Incentive) Systems
Assume That…
 Individuals and teams differ in level
and quality of contribution
 Firm’s overall performance depends on
performance of individuals and groups in
the firm
 Firm should reward employees based on
their relative performance to attract, retain
and motivate high performers

28.  Challenges to Incentive System
 “Do Only What You Get Paid For” Syndrome
 Adversely affects cooperation
 Lack of Control
 Difficulties in Measuring Performance
 “Psychological Contract” is created that is
often resistant to change

29.  Employees question fairness and
credibility
 Potential reduction of intrinsic drives
 Leads to job
dissatisfaction
and stress

30. Developing Incentive Systems
 Link pay and performance appropriately
 Use incentives as part of a larger plan
 Use financial and non-financial incentives
 Build Employee Trust
 Promote belief that performance matters
 Use multiple layers of rewards
 Increase employee involvement

31. Pay-for-Performance Programs
Micro Level Macro Level
Individual Team Business Firm
Unit
Merit Pay Bonuses Gain- Profit
sharing Sharing
Bonuses Awards Bonuses Stock
plans
Awards Awards
Piece rate

32. Individual-Based Plans
Best When…
 contributions of individuals can
be accurately isolated
 job demands autonomy
 cooperation is less critical to
successful performance or when
competition is to be encouraged

33. Team-Based Plans
Best When…
 it is difficult to single out who did
what
 firm’s culture / structure support
teams
 task objective fosters
entrepreneurship in self-managed
work groups

34. Fringe Benefits
 Definition::
 Definition: Fringe benefits are those
monetary and non monetary benefits
given to the employee during and
post-employment period which are
connected with employment but not
to the employees contribution to the
organization.

35. You Could receive a benefit when
you
 Use a work car for private purposes.
 Are provided with a cheap loan.
 Are provided with free private health
insurance.
 Are provided with cleaning services
for your private residence.

36. Need & Importance of Fringe
Benefits:
 To retain the employees.
 To motivate performance.
 As a social security.
 Trade Union demand.
 Skill shortage.
 Employee Demand

37. Objective
 To recruit and retain the best employees.
 To protect employees against certain hazards e.g. life
insurance, old age pension, etc.
 To improve motivation and morale of the employees
 To improve work environment
 To ensure health, safety and welfare of employees.
 To develop a sense of belongingness and loyalty
among workers.
 To improve the public image of the organization.

38. Kinds of Fringe Benefits :
 The benefits and services to be included
under the title ‘fringe benefits’ are
numerous. A few of them are –
 Bonus for quality and attendance,
 contribution to group insurance plan,
 lay off and termination pay,
 travel expenses,
 suggestion awards,
 medical leave with pay,
 overtime, university and trade courses, etc.

39. Employee Stock Options Plans
 Employee Stock Option Plan (ESOP), is a plan through
which a company awards Stock Options to the
employees based on their performance. Under an
ESOP, the employees have right to buy the shares of
the company on a predetermined date at a
predetermined price. The objective of ESOP is to
motivate the employees to perform better and
improve shareholders' value. Apart from giving
financial gains to the employees, ESOP also creates a
sense of belonging and ownership amongst the
employees.

40.  Here’s an example of a typical employee stock option
plan: an employee is granted the option to purchase
1,000 shares of the company’s stock at the current
market price of $5 per share (the "grant" price). The
employee can exercise the option at $5 per share—
typically the exercise price will be equal to the price
when the options are granted. Plans allow employees
to exercise their options after a certain number of
years or when the company’s stock reaches a certain
price. If the price of the stock increases to $20 per
share, for example, the employee may exercise his or
her option to buy 1,000 shares at $5 and then sell the
stock at the current market price of $20.

41.  Companies sometimes revalue the
price at which the options can be
exercised. This may happen, for
example, when a company’s stock
price has fallen below the original
exercise price. Companies revalue the
exercise price as a way to retain their
employees.

42. Different terms used in an ESOP
 Grant date - The date on which the
company grants an option to its employee.
 Option price - The price at which such
shares in a scheme are offered. It is also
known as the ‘strike price’ or ‘grant price’.
 Exercise period - The employees would
be given a time period, called exercise
period, within which they are required to
exercise the option. The date on which
employees exercise this option is known as
‘exercise date’.

43. Different types of ESOPs
 Employee Stock Option Scheme (ESOS) -
Under this scheme, the company grants an
option to its employees to acquire shares at
a future date at a pre-determined price.
Eligible employees are free to acquire
shares on vesting within the exercise
period. Employees are free to dispose of
the shares subject to lock-in-period if any.
Generally exercise price is lower than the
prevalent market price.

44.  Employee Stock Purchase Plan (ESPP) -
This is generally used in listed companies,
wherein the employees are given the right
to acquire shares of the company
immediately, not at a future date as in
ESOP, at a price lower than the prevailing
market price. Shares issued by listed
companies under ESPP will be subject to
lock-in-period, as a result, the employee
cannot sell the shares and/or the employee
has to continue with the employer for a
certain number of years.

45.  Share Appreciation Rights (SAR)/
Phantom Shares - Under this scheme,
no shares are offered or allotted to
the employee. The employee is given
the appreciation in the value of
shares between two specified dates
as an incentive or performance
bonus, that is linked to the
performance of the company as a
whole, as reflected in its share value.

46. Designing compensation and
incentive systems
 Value-based compensation design