TO understand about basic compensation plans and benefits by the employer to their employees

1. COMPENSATION PLAN
BY
SARAVANAN.P.S.
9916115071
Kalasalingam university

2. Compensation:
 Compensation is defined as money received in the
performance of work and many kinds of benefits and
services that organization provides their employees.
 It has paid in the form of wages , salaries, special al
owance and employee benefits such as paid vacation
,insurance , free travel facility and retirement benefits
etc.

3. Objectives:
 To attract manpower in competitive market.
 To maintain satisfaction of employees by
exhibiting that remuneration is fair adequate.
 To induce and improve performance, money is an
effective motivator

4. Factors affecting Compensation Plan
 Supply and Demand of labor
 Ability to pay
 Management’s Philosophy
 Legislation

5. Various Modes of Compensation
 Wages and Salary
 Incentives
 Fringe Benefits
 Non Monetary Benefits

6. Incentives
 Incentives are the Monetary benefits paid to workmen
For their outstanding Performance.
 It may vary individual to individuals from period to
period for the same individuals.
 The advantage of incentives payment reduce
supervision, reduce scrap and time, minimize
absenteeism and increase output.

7. Kinds of Incentives
Individual and Organizational Incentives
It is the extra Compensation
paid to an individuals for all production over
specified magnitude which stems from his normal
skill, effort when accomplished in a predetermined.
o Time based system
o Production based system

8. Time Based System
Halsey plan:
In this plan standard time is fixed in advance for completing a work.
Total Earnings of the worker = Wages for actual time + Bonus
Example: Time required to complete the job(S) = 20 hours
Actual time taken(T) = 15 hours
Hourly Rate of pay(R) =R.S 1.5, Find the wages of worker
Solution:
T*R+(
𝑺−𝑻
𝟐
)*R
= 15*1.5+(
𝟐𝟎−𝟏𝟓
𝟐
)*1.5
=22.5+3.75
= R.S.26.25
{3.75 is the incentives for savings for 5 hours}

9. Rowan Plan:
Under this method Minimum wages are guaranteed given
to worker at the ordinary rate of time taken to complete the work.
Incentive = Wages for actual time for completing the work + Bonus
Where Bonus = (
𝑺−𝑻
𝑺
)*T*R

10. Emerson Plan
 Wages on the time basis are guaranteed even to
those whose output is below the standard
 To determine the efficiency is based on standard
output per unit has fixed, the efficiency is
calculated on the basis of comparison of actual
performance against the standard

11. Bedeaux Plan
 It is Comparable Standards for all workers.
 The value of time is based of the ratio of workers and
supervisor ratio of ¾ and ¼ respectively.
 The supervisor also helps their employees to save time.
 The standard time of each job has determined in terms
of minutes or Bedeaux point B

12. Gantt’s Task and Bonus Plan
 In this method minimum wages are guarantied.
 Minimum wages given to anybody is based upon
who completes the job in standard time.
 If the job completed less than the standard time
then there is a hike in wages rate(25% to 50%)

13. Financial & Non Financial Incentives
• Incentives are provided based upon the Performance of
Employees
• Based on the performance they added some rewards such as
money or cash
• Financial Incentives: Salary, Premium, Rewards, Dividend.
• Non Financial Incentives: Encourage the people to do the work,
Lack of Fear, Promotion

14. Positive & Negative Incentives
 Positive incentives are those agreeable
factors related to work situation which promote individuals
to attain standards.(Example: Promotion)
 Negative incentives are those disagreeable
factors related to work situation.(Example: Reduction of
salary, Disapproval by employer)

15. Fringe Benefits
 Fringe benefits are the basic things that the organization
has to provides their employees.
 Example: Provident Fund, Medical Care, Health Insurance,

16. Kinds Of Fringe Benefits
 Retirement Benefits
 Workman’s Compensation
 Payment for Time not Worked
 Safety and Health
 Health Benefits