Human Resource
Management
Compensation and Labour
issues
, Compensation
Compensation is commonly divided into:
– Direct compensation: employer’s payment of
money to employees; e.g. base pay, merit pay,
incentive pay, bonuses etc…
– Indirect compensation: given as a condition of
employment; e.g. protection plans (insurances),
pay for time not worked (vacation) etc…
Can be further categorised as immediate or deferred compensation
Immediate direct compensation: base pay etc…
Immediate deferred compensation: money earned in a period but paid at a
later stage; e.g. executive compensation plan
Immediate indirect compensation: when it applies to a current employee
Immediate deferred compensation: when it continues to be available to
employees even after retirement. 2
, Factors influencing compensation
plans
Cost of living:
– Consumer price index is the best overall
indicator of the real value or purchasing
power or wages and salaries.
measurement of changes in the retail prices of goods and
services;
varies according to many different environmental & economic
factors
often referred to as inflation – as a result increase in
compensation rates must be larger
– Cost of living in different regions influences
compensation
3
Management
Compensation and Labour
issues
, Compensation
Compensation is commonly divided into:
– Direct compensation: employer’s payment of
money to employees; e.g. base pay, merit pay,
incentive pay, bonuses etc…
– Indirect compensation: given as a condition of
employment; e.g. protection plans (insurances),
pay for time not worked (vacation) etc…
Can be further categorised as immediate or deferred compensation
Immediate direct compensation: base pay etc…
Immediate deferred compensation: money earned in a period but paid at a
later stage; e.g. executive compensation plan
Immediate indirect compensation: when it applies to a current employee
Immediate deferred compensation: when it continues to be available to
employees even after retirement. 2
, Factors influencing compensation
plans
Cost of living:
– Consumer price index is the best overall
indicator of the real value or purchasing
power or wages and salaries.
measurement of changes in the retail prices of goods and
services;
varies according to many different environmental & economic
factors
often referred to as inflation – as a result increase in
compensation rates must be larger
– Cost of living in different regions influences
compensation
3
