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Introduction of Management Compensation

Introduction of Management Compensation. A compensation is all the income in the form of money, goods directly or indirectly received by employees in exchange for services rendered to the company. - Drs. Malayu S.P Hasibuan -

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Introduction of Management Compensation

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  1. Introduction of Management Compensation A compensation is all the income in the form of money, goods directly or indirectly received by employees in exchange for services rendered to the company. -Drs. Malayu S.P Hasibuan- A compensation is anything that constitutes or is regarded as an equivalent or recompense. -Andrew F. Sikula-

  2. Our conclusion… compensation is a reward in the form of financial and nonfinancial firms given in reply to the services of the employee. The objective is to direct, manage and supervise the conduct of the employee in order oriented vision of the company.

  3. The Relationship between Management Control System and Compensation Management

  4. Type of Management Compensation • Extrinsic Rewards (Financial): - Direct Rewards - Indirect Rewards Cassandro Mary Hamel

  5. Type of Management Compensation Intrinsic Rewards (Non Financial): employee ownership, provide freedom of action & visionary leadership to employees 1. 2. employee satisfaction 3. enhance professional career 4.

  6. Type of Management Compensation Mathis and Jackson • Allowance - Life insurance - Paid leave - Pension fund - Workers compensation • Salary - Base pay - Wage • Not fixed income - Bonus - Commission - Incentive program - Stock options

  7. Source: VeithzalRivai (2004:358)

  8. Three Types of Management Compensation Michael and Harold (1993: 443) • Material compensation not only in the form of money, such as salaries, bonuses, and commissions, but all forms of physical reinforcer. • Social compensationclosely linked to the need to interact with others. • Activities compensationis able to compensate the compensation aspects of the job he did not like being given an opportunity to perform a particular activity.

  9. In compensation, the rate or amount of compensation should really be considered because it will determine the level of compensation lifestyle, self-esteem, and the value of the company. Compensation has great influence in the withdrawal of employees, motivation, productivity, and employee turnover. (Benardin and Russell, 1993: 373)

  10. Why do we need Compensation Management? 1. To get good quality employees 2. Maintain current employees 3. Ensure the justice (internal and external equity) 4. Award for desirable behaviour 5. Control cost 6. Obey the regulation 7. Facilitate understanding Werther, Davis, McGraw-Hill Human resource management 5 Sub edition (1995)

  11. Factors that affect Compensation Martoyo, S., 2007, Manajemen Sumber Daya Manusia, BPFE, Yogyakarta, hal. 128-129.

  12. Some of Examples

  13. Thank You

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