Compensation bench marking, ESOP, Perks & benefits

By

R.Aghilandeeswari

Benchmarking

Benchmarking is the process of identifying, understanding &adapting outstanding practices from organizations anywhere in the world to help your organisation improve its performance

Gregory B Watson

Compensation benchmarking

Companies today are benchmarking the compensation packages provided to their people. This helps them to motivate their employees & retain best people within their company

It is done through range of salaries, companies annual report, informal contacts & other forms of market intelligence

Purpose of compensation benchmarking:-• Pay the employee as good as any

other organization• Motivate the employees to work

with almost loyalty• To retain the best workforce within

the organization• Compare the pay structures of

other organizations for the same job

• Review the salaries when needed

Types of benchmarking

Internal benchmarking External benchmarking Process benchmarking

Steps in benchmarking process

Planning Analyzing Integration Action Maturity

In Planning stage:-

Identify who is to be benchmarked & determine the data collection method.

In Analyzing stage:-

Determine the current compensation of target companies & set future plans of your company

In Integration stage:-

Communicate the findings & gain acceptance from deciding authorities

In Action stage:- Implement the revised

salary structure & monitor the response through employee satisfaction survey. recalibrate benchmarks if needed

In Maturity stage:- Newly invented

compensations are fully integrated into the process. Accordingly compensation is provided for the newly hired people too

Broader ways of compensation benchmarking

Competitors benchmarking:- compensation

benchmarking of one company with that of its market competitors

Neighbours benchmarking:- compensations are

benchmarked among the neighbourhood companies. Employees may shift to companies which located nearby locations

Advantages of benchmarking

It involves performance comparison with the best in the industry

It enables the organisation to incorporate creatively the best practices from any industry

It helps the organisation to meet the requirements of the end user.

It helps in establishing quality goals & true measures of productivity

It facilitate changes It helps in attaining a competitive edge.The interactions of professionals with

benchmarking facilitate future professional growth.

This will be more useful to the organisations in future assignment.

Pitfalls of benchmarking

Lack of focus and priority Lack of commitment on the part of management Failure to consider customer requirements Incompetent leadership Lack of proper planning Not involving the staff in the program Conflicting objectives of the organisation & those of

benchmarking partners Lack of adequate resources & facilities

Requirements for successful benchmarking

Understand your own company's processes &practices throughly

Select the best companies for benchmarking Focus on the best practices Share companies with the companies selected for

benchmarking Involve concerned people in benchmarking Use benchmark regularly Be willing to change

ESOP- employee stock option plan

Definition

An employee stock option plan is designed to give employees the right to purchase a fixed number of shares of company stock at a specified price for a limited period of time.

john jackson,2003

Objectives • Encouraging the cooperation &

involvement of all employees in improving the performance of the business

• Giving employee a sense of identification with the company

• Rewarding employee for past performance

• Generating a sense of business awareness among employees

Advantages of ESOP

Financial flexibility for the firm Increased employee commitment Tax advantages

Disadvantages of ESOP

Stock price do not always reflect the fundamentals of the company

Employees may be at considerable risk The inability to cash in quickly can

dampen the interest among the employees.

Perks and Benefits

Definition

“Perks are special benefits for executives that are usually non cash items”

David

Commonly used executive perks

Transportation Travel allowance Fuel reimbursement Housing facilities

Types of benefitsTypes of benefits

• Legally required benefits

• Health insurance

• Retirement benefits

• Paid time off

• Insurance

• Flexibility of benefits

• vocations

Thank you