5mks Answers

5mks answers A1. Compensation is the remuneration received by an employee in return for his/her contribution to the organization.
It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. compensation management is the glue that binds the employee and the employer together and in the organized sector, this is further codified in the form of a contract or a mutually binding legal document that spells out exactly how much should be paid to the employee and the components of the compensation package. Imp & significance for CM:

A good compensation package is important to motivate the employees to increase the organizational productivity. Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals. Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose. The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards. An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed. It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system. The system should be simple and flexible so that every employee would be able to compute his own compensation receivable. It should be easy to implement, should not result in exploitation of workers. It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers. Such system would help management in complying with the various labor acts. Such system should also solve disputes between the employee union and management. The system should follow the management principle of equal pay. It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel. Sound Compensation/Reward System brings peace in the relationship of employer and employees. It aims at creating a healthy competition among them and encourages employees to work hard and efficiently. The system provides growth and advancement opportunities to the deserving employees.
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The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability. The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job. The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce. The sound compensation system is hallmark of organizations success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.
A3. Employee benefits Companies provide their employees and workers with a variety of benefits. These benefits are basically forms of value or services that are provided by an employer to his employees for their contribution in the performance of the organisation . Such benefits are an important component of a company's remuneration package for attracting and retaining its employees. The benefits serve as incentives to the employees and encourage them to work harder for the organisation. These also help in building up employee job satisfaction. These benefits may be financial or non-financial,long term or short term,free or at concessional rates.They may include educational, residential, medical, or recreational facilities. Such facilities may be provided individually or collectively and inside or outside the organization. Thus the employee benefits are the comforts and the facilities given to employees to enable them to work in a healthy and peaceful atmosphere. l Automobile allowance reimbursement plan
Reimbursement plans are instituted by employers in order to allow them to pay for a more accurate amount of employee expenses incurred instead of having to provide a broad allowance or increase in compensation to cover them If THE employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply.

THE employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. The allowance is similar in form to and not more than the federal rate You prove the time (dates), place, and business purpose of your expenses to your employer within a reasonable period of time.
You are not related to your employer If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement
2) factors determining pay plan Employers that want to succeed in this increasingly competitive environment must have a welldesigned compensation plan that motivates employees, controls compensation costs, and ensures equity. The best compensation plans mirror the culture of the employer. Therefore, employers should establish a compensation philosophy. Benefits programs should also be part of an employers compensation strategy. Factors are:

Job analysis (thoroughly analyze and describe each job within the organization) Job evaluation (determine what jobs are worth on an absolute basis and relative to other jobs in the organization, such as giving jobs that are of greater value to the organization a higher labor grade) Job pricing (establish rate ranges; that is, minimum, midpoint, and maximum dollar values for each labor grade)
3) insurance benefits insurance, n a contract, or policy, whereby, for a stipulated consideration, or premium, one party (the insurer or underwriter) promises to compensate the other (the insured or assured) for loss on a specified subject (insurable interest) by specified perils or risks. insurance benefits, n the contractual payout agreed to by the carrier for the policy holder. l

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5mks answers A1. Compensation is the remuneration received by an employee in return for his/her contribution to the organization.

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