Compensation Management
                 MBA Second Year
             (Human Resource Management)
               School of Distance Education
          Bharathiar University, Coimbatore - 641 046
                               Author: B D Singh
                          Copyright © 2008, Bharathiar University
                              All Rights Reserved
                              Produced and Printed
                                  by
                          EXCEL BOOKS PRIVATE LIMITED
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                                  for
                         SCHOOL OF DISTANCE EDUCATION
                              Bharathiar University
                              Coimbatore-641046
                                                                                       CONTENTS
                                                                                              Page No.
                                                       UNIT I
             Lesson 1    Wage and Salary Management                                                  7
             Lesson 2    Theory of Wages                                                            39
                                                      UNIT II
             Lesson 3    Planning for Improved Competitiveness                                      67
             Lesson 4    Internal and External Equity in Compensation                               80
                                                      UNIT III
             Lesson 5    Incentives                                                                109
             Lesson 6    Fringe Benefits                                                           139
                                                      UNIT IV
             Lesson 7    Incentives Plans                                                          173
             Lesson 8    Retirement Plan                                                           209
                                                      UNIT V
             Lesson 9    Social Security Laws                                                      219
             Lesson 10   Wages and Bonus Laws                                                      233
             Model Question Paper                                                                  263
                       COMPENSATION MANAGEMENT
                             SYLLABUS
                              UNIT I
              Wage & Salary Administration - Nature and Scope, Compensation, wage determination
              process, Factors Influencing wage and Salary Administration. Wage - Theories of Wages,
              Types of Wages - Time rate, piece rate, debt method, Wage differentials.
                             UNIT II
              Planning for Improved Competitiveness: Diagnosis and Bench Marking, Obtaining
              Commitment; Determination of Inter and Intra-industry Compensation Differentials,
              Internal and External Equity in Compensation Systems.
                             UNIT III
              Incentives and Fringe Benefits - Incentives - Definition, Types of Incentives, Individual
              incentives: Measured day Work, Piece work, standard hour, Gain sharing, its advantages
              and disadvantages, Organization Wide incentives - Scanlon Plan, Kaiser Plan, Profit
              sharing, Non-financial incentives, Fringe Benefits - Definition, Objectives, Types of Fringe
              Benefits Individual Group Variable Compensation: Pay for Performance, Pay by Seniority,
              Group Piece rate, Production sharing plan, Employee Profit sharing Employee stock
              ownership, Gain Sharing.
                             UNIT IV
              Incentives and Retirement plans: Basic Pay, Provisions for Dearness allowance -
              Calculation of total compensation package, various methods of compensating cost of
              living Neutralization factors. Executive Compensation Plan, Retirement Plan.
                              UNIT V
              Social Security Laws - Laws Relating to Workmen's Compensation, Employee's State
              Insurance, Provident Fund, Gratuity and Maternity Relief. Wages and Bonus Laws -
              The Law of Minimum Wages, Payment of Wages, Payment of Bonus.  Objectives and
              scope of these Laws.  Equal Remuneration Act Working of Different Institutions related
              to Reward system like Wage Boards, Pay Commissions. The Impact of fifth pay scale
              on Central and State Government.