1. WELCOME TO OUR PRESENTATION

2. IUBAT—INTERNATIONAL UNIVERSITY OF BUSINESS AGRICULTURE AND TECHNOLOGY
HRM 502- Human Resources Management,
Section –MBA
Instructor: Ferdous Jalal
A presentation on -Compensation
Group Members of Focus group
Serial No Name ID No.
1 Jannatun Nahar Tania 14104028
2 Happy Akter 14104020
3 Nasima Nasrin 14104025
4 Md.Ahad Rahman 14104034

3. CONTENTS
1
o About Compensation
o Definitions
o Objectives of Compensation
o Importance of Compensation practices
o Model for Compensation System
o Total Compensation
o Different Types of Pay
o Design of Compensation strategy
o Designing Compensation Strategy in Bangladesh
o Compensation practise in Bangladeshi garments
o Compensation and Organizational Performance
o Conclusion

4. ABOUT COMPENSATION
 Compensation means what the employees receive in exchange
for their work. It is the monetary plus non-monetary return paid
to employees for the work done by them.
 Compensation system results from the allocation, conversion,
and transfer of a portion of the income of an organization to its
employees for their monetary and in-kind claims on good and
services. 2

5. DEFINITIONS
 Remuneration – money paid for services or work done.
 Total remuneration / rewards – includes both monetary and
non monetary rewards provided for services or work done.
 Incentives – designed to encourage employees to perform in a
certain manner, and commonly take the form of a payment to
stimulate greater output or improved quality. E.g. stock
option, discounts, free memberships, lump sum pay etc.
 Benefits – Indirect financial payments which employees are
legally entitled to receive. E.g. paid annual leave, sick leave.
3

6. OBJECTIVES OF COMPENSATION
 To acquire qualified personnel
 To retain current key employees
 To ensure equity
 To reward desired behavior
 To control costs
 To comply with legal regulation
 To further administrative efficiency
4

7. IMPORTANCE OF COMPENSATION PRACTICES
 Compensation is important for both employers and
employees.
 It is one of the main reasons for which people work.
 It creates substantial cash out flow of an enterprise .
 Compensation includes both financial and non-financial.
5

8. MODEL FOR COMPENSATION SYSTEM
Analyze Present Compensation
Structure
Formulate Salary Policies
Select Compensation System
Develop Implementation Plan
Evaluate and Monitor the Plan
6

9. TOTAL COMPENSATION
Employee Satisfaction
Salary
• Pay
• Overtime (if in non-
exempt classification)
Rewards
• Bonus
• Salary Increases
• Promotions
• Equity Offerings
• Awards
• Recognition
• New job assignments
Benefits
• Health Plans
• Retirement Plans
• Vacation/ time off
• Paid Training
• Working Hours
7

10. DIFFERENT TYPES OF PAY
 Wages – are calculated by multiplying the number of hours worked by the agreed
hourly rate of pay.
 Salary – total monthly / annual paid for performing the job.
 PRP – performance related pay when pay is determined on the basis of individual /
group performance.
 Other tangible – vacation, flexible hours, membership, free tickets, time off,
coupons, using company resources for personal use, any other favourable benefit.
 Social rewards – praise, recognition, positive feedback, greetings, complements,
company/social gatherings, nonverbal signs.
 Status enhancement – office size, location, promotion, furniture and fixtures, “hall
of fame”, company crests, pins, ties etc. 8

11. DESIGN OF COMPENSATION STRATEGY
Design of compensation strategy are primarily driven by the
organisation’s compensation philosophy based on:
 kinds and levels of required knowledge and skills.
 kind of business.
 capital intensive versus labor intensive.
 total compensation package.
 employment stability .
 profitability of the organization.
 geographic location.
9

12. DESIGNING COMPENSATION STRATEGY IN
BANGLADESH
Design of compensation strategy in BD probed into four
dimensions namely –
 The perceived importance of strategically designed
compensation for organisational growth.
 Importance of giving the right person the right
compensation.
 Importance of linkage between compensation and
organisational performance.
 Importance of regular review of salary with market
benchmark. 10

13. COMPENSATION PRACTISE IN BANGLADESHI
GARMENTS
 In Bangladesh, many garments industry have been following
the same compensation practices since long.
 Since the per capita income is not very high, industry do not
risk experimenting with the earning of individuals.
 Garments industry should consider a strategically designed
compensation is critical for success.
 Though Garments industry have attached importance to a well
designed compensation system, employee turnover is still
high in these sectors.
 In Bangladesh there were very low in comparison to
competing nations.
11

14. COMPENSATION PRACTISE IN BD GARMENTS
 Compensation has been researched from different
perspectives at home and abroad. most of the garments
industry (87.5%) paid one or more types of allowances in
addition to salary. we found that nearly 7% enterprises
paid festival bonus, 20% paid medical allowance, and
20% provided pay increment.
12

15. COMPENSATION AND ORGANISATIONAL
PERFORMANCE
 Individual performance contribute to the organisational
performance.
 Individual performance may not results in organisational
profitability because of various reasons.
 Considering organisational performance and individual
performance to determine compensation strategy is important.
 Majority of the Bangladeshi organisations determine
individual performance as a parameter for deciding salary
increments.
 This is not as per leading practices worldwide.
 Majority organisations practice increment policy – which is a
promise of continual payment for a performance in one
particular year.
 Performance should be linked more to variable pay and
bonuses. 13

16. CONCLUSION
 Compensation as a tool to drive performance culture and
success of organisations will become more prominent in
future.
 Given the relatively lower per-capita income of
Bangladesh, uncertainty of earnings may backfire at
junior levels.
 Inflation, cost of living, individual performance are the
key determinants for annual increments.
 Compensation system should be introduced carefully and
with utmost sensitivity.
14

17. 15