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Question
1. Explain the concept and role of compensation. Describe the compensation structure of any organization you are familiar with. Briefly describe the organization you are referring to.
2. Explain the need, object and scope of the minimum wages Act, 1948. Describe the various methods of fixation /revision of minimum wages under the minimum wages Act. Discuss, can the employer discriminate the women employee in respect to wages.
3. Define job evaluation. Describe the various methods and systems of job-evaluation. Discuss, how job evaluation is linked with wage fixation, citing example from any organization your familiar with.
4. Define and discuss incentives and different types of incentive systems. Describe the pre-requisites for the effective incentive scheme and there respective merits and demerits.
5. Define and differentiate between tax planning and tax avoidance. Describe the tax implication of compensation package to the employer and employees with suitable examples from an organization you are familiar with.

Answer


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PLEASE  FORWARD  THESE  BALANCE  QUESTIONS  TO  MY  EMAIL  ID   
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LEO  LINGHAM   
==========================================







1. Explain the concept and role of compensation. Describe the compensation structure of any organization you are familiar with. Briefly describe the organization you are referring to.



COMPENSATION   system usually mean the financial reward on organization gives its employees in return for their labour. While the term COMPENSATION  system, not only includes material rewards, but also non-material rewards. The components of a  COMPENSATION  system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee.
---------------------------------------------------
Compensation philosophy is the set of values and beliefs that an organization has in regards to compensation
decision-making. This often is combined with a set of guiding principles that further assist in compensation administration.
The collection of decisions that the firm has
made over a period of time constitutes a compensation set of beliefs and values — a compensation philosophy —
regardless of whether or not the firm has actually committed those ideas to a formal document. Compensation strategy is
used to guide the design of specific compensation decisions.

Differences in compensation philosophies are widespread. Thus, some organizations believe in the widespread use of
incentive compensation, while others only apply incentive compensation to a very narrow group of employees who are
believed to affect the bottom line.  Another  illustration may be found in the examination of the behavior of firms who seek to apply compensation levels “at the  midpoint.” These firms differ philosophically from those firms that seek to pay at the top of the market, thus enabling them to attract the highest caliber employees that they can find. Business settings often explain these differences. Some
firms are proportionally more generous to certain levels of exempt employees, while others believe in principles of
achieving widespread equity across all employees. The openness with which compensation decisions are made, and the
degree of stakeholder involvement in those decisions, is yet another example of philosophical differences that may exist
between organization.

Needless to say, compensation is a key issue for the high performance organization, as the employee and management
systems utilized by the organization must be reinforced through the rewards structure. Again, our experience is
telling in avoiding making compensation unduly controversial, thus adversely affecting the very heart of the high
performance system.

Compensation administration includes a collection of activities required to sustain the effectiveness of a compensation
strategy. Thus issues ranging from labor market surveying to performance management to skill certification and peer
review come under this umbrella. Involving stakeholders in compensation administration can reinforce the values and
beliefs underlying the compensation philosophy and strategy.

AS  PART  OF  THE  ALIGNING  PROCESS, THE  FOLLOWING
FACTORS  ARE  TAKEN  INTO  CONSIDERATION.

1.Employee Inputs and Preferences
• Perceptions of external pay equity
• Perceptions of internal pay equity
• Pay delivery beliefs
— Form (cash, gainsharing, benefits)
— Method (individual, small group, large group)
• Risk tolerance
• Trust in management

2.Business and Operating Inputs
• Operations and Manufacturing strategy
• Sales development strategy
• Percentage of compensation costs to total product/
service costs
• Percentage of compensation costs to controllable
product/service cost
• Existing markets/products
• Potential markets/products
• Anticipated volume
• Reinforce/enhance work design
• Maintain cultural change processes
• Other operating issues

3.Industry and Labor Market Practices
and Trends
• Availability and quality of work force
• Industry practices
• Retention of work force
• Retention of key contributors
• Wage/salary levels and movement
• Wage/salary delivery charges

4.Compensation Philosophy and Objectives
• How much emphasis should be placed on rewards to
drive organization
• What issues are to be driven by compensation as
opposed to management practices
• Market definition (exempt and non-exempt)
• Method of delivery
• Targeted position in labor market
• Targeted position in product market
• Relationship within total company
• Relationship to selection and retention
• Portion of pay guaranteed and at risk
• Percentage of workforce bonus eligible

5.Base Pay Delivery
• Method of delivery — Job-based vs. individual-based
• Number of levels
• Structure of levels
• Pricing strategies
• Adjustment method
• Weighting of individual performance

6.Organization Performance or Variable Pay
• Role in total compensation strategy
• Structure
• Measures
• Targets
• Tolerance for pay at risk
• Risk - reward ratios
• Use of other monetary rewards
• Use of non-monetary rewards
• Individual performance recognition

7.Fringe Benefits
• Usually determined at corporate level; limited scope at
other levels
• Tie to business and human resource objectives
• Coverage
• Cost
• Communications (Purpose - Coverage - Value)

8.Compensation Administration
• Stakeholder role in compensation administration
• Performance management & evaluation
• Overtime policy (exempt & non-exempt)
• Shift differentials
• Attendance policynce
• Role of seniority

Compensation decisions should be fully integrated into the organization’s business and operations strategy, through
its compensation philosophy. The design of compensation systems should be subsequent to, and not precede, this key
analysis and decision point. For the high performance firm, an appropriate level of employee involvement can further
reinforce the organization’s general beliefs and values.
==========================================
================================================
The  integrated  COMPENSATION   system  includes:
Job evaluation and profiling
•   Defining key performance indicators
•   Analysis and modification of pay levels and structures to reflect both internal and market relativities
•   Designing of performance evaluation processes
•   Structuring of individual, team and corporate performance bonuses
Social climate surveys with focus on remuneration
•   Designing flexible benefits plans
•   Implementation of new reward components in compensation package
•   Implementation and assistance in change communications
•   Training for internal specialists in reward structure planning and maintenance

Performance Based  COMPENSATION   is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based   COMPENSATION  system.
Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system   increases  the   effectiveness and enable better control.
Why  COMPENSATION  system is required?
These components will be designed, developed and maintained on the basis of  strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;

1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.

2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.

3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process.

4. Supportive Managers: Support individual managers in the achievement of their goals.

5. Motivate Employees : Motivate employees to achieve high levels of quality performance.

6. Compete in the Labour Market: Attract and retain high quality people.

7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.

8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.

9. Improved Skills : Upgrade competence and encourage personal development.

10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.

11. Develop team working : Improve co-operation and effective team working at all level.

12. Value for money: Pride value for the money for the organization.

13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.

14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget.
--------------------------------------------


COMPENSATION   system usually mean the financial reward on organization gives its employees in return for their labour. While the term COMPENSATION  system, not only includes material rewards, but also non-material rewards. The components of a  COMPENSATION  system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee.
---------------------------------------------------
Compensation philosophy is the set of values and beliefs that an organization has in regards to compensation
decision-making. This often is combined with a set of guiding principles that further assist in compensation administration.
The collection of decisions that the firm has
made over a period of time constitutes a compensation set of beliefs and values — a compensation philosophy —
regardless of whether or not the firm has actually committed those ideas to a formal document. Compensation strategy is
used to guide the design of specific compensation decisions.

Differences in compensation philosophies are widespread. Thus, some organizations believe in the widespread use of
incentive compensation, while others only apply incentive compensation to a very narrow group of employees who are
believed to affect the bottom line.  Another  illustration may be found in the examination of the behavior of firms who seek to apply compensation levels “at the  midpoint.” These firms differ philosophically from those firms that seek to pay at the top of the market, thus enabling them to attract the highest caliber employees that they can find. Business settings often explain these differences. Some
firms are proportionally more generous to certain levels of exempt employees, while others believe in principles of
achieving widespread equity across all employees. The openness with which compensation decisions are made, and the
degree of stakeholder involvement in those decisions, is yet another example of philosophical differences that may exist
between organization.

Needless to say, compensation is a key issue for the high performance organization, as the employee and management
systems utilized by the organization must be reinforced through the rewards structure. Again, our experience is
telling in avoiding making compensation unduly controversial, thus adversely affecting the very heart of the high
performance system.

Compensation administration includes a collection of activities required to sustain the effectiveness of a compensation
strategy. Thus issues ranging from labor market surveying to performance management to skill certification and peer
review come under this umbrella. Involving stakeholders in compensation administration can reinforce the values and
beliefs underlying the compensation philosophy and strategy.

AS  PART  OF  THE  ALIGNING  PROCESS, THE  FOLLOWING
FACTORS  ARE  TAKEN  INTO  CONSIDERATION.

1.Employee Inputs and Preferences
• Perceptions of external pay equity
• Perceptions of internal pay equity
• Pay delivery beliefs
— Form (cash, gainsharing, benefits)
— Method (individual, small group, large group)
• Risk tolerance
• Trust in management

2.Business and Operating Inputs
• Operations and Manufacturing strategy
• Sales development strategy
• Percentage of compensation costs to total product/
service costs
• Percentage of compensation costs to controllable
product/service cost
• Existing markets/products
• Potential markets/products
• Anticipated volume
• Reinforce/enhance work design
• Maintain cultural change processes
• Other operating issues

3.Industry and Labor Market Practices
and Trends
• Availability and quality of work force
• Industry practices
• Retention of work force
• Retention of key contributors
• Wage/salary levels and movement
• Wage/salary delivery charges

4.Compensation Philosophy and Objectives
• How much emphasis should be placed on rewards to
drive organization
• What issues are to be driven by compensation as
opposed to management practices
• Market definition (exempt and non-exempt)
• Method of delivery
• Targeted position in labor market
• Targeted position in product market
• Relationship within total company
• Relationship to selection and retention
• Portion of pay guaranteed and at risk
• Percentage of workforce bonus eligible

5.Base Pay Delivery
• Method of delivery — Job-based vs. individual-based
• Number of levels
• Structure of levels
• Pricing strategies
• Adjustment method
• Weighting of individual performance

6.Organization Performance or Variable Pay
• Role in total compensation strategy
• Structure
• Measures
• Targets
• Tolerance for pay at risk
• Risk - reward ratios
• Use of other monetary rewards
• Use of non-monetary rewards
• Individual performance recognition

7.Fringe Benefits
• Usually determined at corporate level; limited scope at
other levels
• Tie to business and human resource objectives
• Coverage
• Cost
• Communications (Purpose - Coverage - Value)

8.Compensation Administration
• Stakeholder role in compensation administration
• Performance management & evaluation
• Overtime policy (exempt & non-exempt)
• Shift differentials
• Attendance policynce
• Role of seniority

Compensation decisions should be fully integrated into the organization’s business and operations strategy, through
its compensation philosophy. The design of compensation systems should be subsequent to, and not precede, this key
analysis and decision point. For the high performance firm, an appropriate level of employee involvement can further
reinforce the organization’s general beliefs and values.
==========================================
================================================
The  integrated  COMPENSATION   system  includes:
Job evaluation and profiling
•   Defining key performance indicators
•   Analysis and modification of pay levels and structures to reflect both internal and market relativities
•   Designing of performance evaluation processes
•   Structuring of individual, team and corporate performance bonuses
Social climate surveys with focus on remuneration
•   Designing flexible benefits plans
•   Implementation of new reward components in compensation package
•   Implementation and assistance in change communications
•   Training for internal specialists in reward structure planning and maintenance

Performance Based  COMPENSATION   is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based   COMPENSATION  system.
Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system   increases  the   effectiveness and enable better control.
Why  COMPENSATION  system is required?
These components will be designed, developed and maintained on the basis of  strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;

1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.

2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.

3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process.

4. Supportive Managers: Support individual managers in the achievement of their goals.

5. Motivate Employees : Motivate employees to achieve high levels of quality performance.

6. Compete in the Labour Market: Attract and retain high quality people.

7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.

8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.

9. Improved Skills : Upgrade competence and encourage personal development.

10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.

11. Develop team working : Improve co-operation and effective team working at all level.

12. Value for money: Pride value for the money for the organization.

13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.

14. Controllable: Be easily controllable so that the policies can be implemented consistently and  costs can be contained within the budget.
--------------------------------------------
==========================================

The  current  trend  is  one  of  integrated  reward   approach.
Reward system usually mean the financial reward on organization gives its employees in return for their labour. While the term reward system, not only includes material rewards, but also non-material rewards. The components of a reward system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee.
The  integrated reward  system  includes:
Job evaluation and profiling
•   Defining key performance indicators
•   Analysis and modification of pay levels and structures to reflect both internal and market relativities
•   Designing of performance evaluation processes
•   Structuring of individual, team and corporate performance bonuses
Social climate surveys with focus on remuneration
•   Designing flexible benefits plans
•   Implementation of new reward components in compensation package
•   Implementation and assistance in change communications
•   Training for internal specialists in reward structure planning and maintenance

Performance Based Reward is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based reward system.
Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system   increases  the   effectiveness and enable better control.
Why reward system is required?
These components will be designed, developed and maintained on the basis of reward strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;

1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.

2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.

3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process.

4. Supportive Managers: Support individual managers in the achievement of their goals.

5. Motivate Employees : Motivate employees to achieve high levels of quality performance.

6. Compete in the Labour Market: Attract and retain high quality people.

7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.

8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.

9. Improved Skills : Upgrade competence and encourage personal development.

10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.

11. Develop team working : Improve co-operation and effective team working at all level.

12. Value for money: Pride value for the money for the organization.

13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.

14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget.
==========================================================================
2.Analyse it with respect to your organisation or an organisation you are familiar with and discuss its impact on productivity. Describe the organisation you are referring to.

Describe the organisation you are referring to

The  organization, I am  familiar  with  is  a
-a  large  manufacturer/ marketer of  safety products
-the products  are  used  as  [personal  protection safety] [ industrial  safety]
-the products  are  distributed through  the distributors as well as  sold directly
-the  products  are  sold  to various  industries like  mining/fireservices/defence/
as  well  as  to  various  manufacturing  companies.
-the  company employs  about  235  people.
-the  company  has  the following  functional   departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer  service
*distribution
*warehousing/  transportation
*TQM  
==============================================
THE  ORGANIZATION ,  I  ASSOCIATED  WITH  
HAVE  THE  FOLLOWING  SYSTEM

The  Reward systems focus on positive reinforcement. Positive reinforcement is the most effective tool for encouraging desired behavior because it stimulates people to take actions because they want to because they get something of value (internally or externally) for doing it. An effectively designed and managed reward program can drive an organization's change process by positively reinforcing desired behaviors.
The SMART criteria.
These criteria  used when designing and evaluating programs. Programs should be:
1   Specific. A line of sight should be maintained between rewards and actions.
2   Meaningful. The achievements rewarded should provide an important return on investment to both the performer and the organization.
3   Achievable. The employee's or group's goals should be within the reach of the performers.
4   Reliable. The program should operate according to its principles and purpose.
   *Timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts
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Performance Management.  
The process of performance management reflects how the work gets done and creates the environment in which people feel valued for their achievements. The performance management process includes four critical components:
1   Focus on what is important to change or be improved.
2   Measures to determine whether and how much progress is being achieved.
3   Feedback so that performers will know whether and how much progress is being achieved.
4   Reinforcement so that everyone celebrates achievements as they are unfolding.
Indicators of successful performance management include the following:
1   All measures are understood by the employees, who can describe the importance of their activities to the agency. Measures address results and behaviors/processes.
2   A tracking system is used to monitor performance in the areas identified.
3   The performance measures and progress are displayed in a public area.
4   Data on the performance charts is current.
5   The team leaders/managers are actively engaged in coaching staff members and providing assistance to improve performance.
6   Periodic celebrations mark achievements as they are realized. These celebrations are regarded positively by employees.
7   Data indicate performance is improving.

Recommend that organizations:
1   focus on variables critical to success;
2   create timely, chart-oriented feedback;
3   create celebrations that mean something to the performers;
4   use performance reviews as an opportunity to reflect "how we won" and "how we lost" make them as often as necessary to cement the learning;
5   anchor the memory of achievements achievement-oriented firms measure a lot, accomplish milestones frequently, and do much celebrating;
6   don't rely on annual performance appraisals as the sole source of feedback;
7   when designing programs, avoid copying programs used by other organizations; and
8   don't make the design process into the "let's make a form" game.
------------------------------------------------------------------------------------------------------
THE  REWARD   SYSTEM  IS  TWO-FOLD
1.RECOGNITION  FOR  PERFORMANCE.

2.PAYMENT. WHICH   INCLUDES
-base pay
-cost  of  living  rise
-merit INCREASE , which  is based  on
*performance  against  the KEY  PERFORMANCE  INDICATORS.
*bonus  for  exceptional  performance  with  the  scope of the  job  position
===============================================================

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Leo Lingham

Expertise

management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc

Experience

18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc

PLUS

24 years in management consulting which includes business planning, strategic planning, marketing , product management,
human resource management, management training, business coaching,
counseling etc

Organizations
PRINCIPAL -- BESTBUSICON Pty Ltd

Education/Credentials
MASTERS IN SCIENCE

MASTERS IN BUSINESS ADMINSTRATION

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