https://www.youtube.com/watch?v=XXgo-hTRQV8
Topic: Compensation & Benefits Dashboard
Speaker: Praveen Ratna, SHRM and HRCI certified HR professional
Hi everyone, Human resource executives need to be able to quickly review and analyze all critical KPIs in one place. Compensation metrics are the tools you use to measure, analyze, and decide how effective your compensation practices and policies are and what you can do to improve them. They help you “understand how pay is distributed across your team, so you can make informed decisions that will help you attract and keep employees.”
Takeaways from the above video
Overview of compensation
Compensation is a remuneration awarded to an employee in exchange for their services to the organization. This can be in direct and indirect or in cash or non-cash forms. This is the biggest expense for an organization towards its employees.
Total Compensation = Fixed pay + Variable pay + Benefits
Compensation Ratio
The compensation ratio, mostly termed as compa ratio, is the most common metric used in defending the salary range in the organization. It simply compares the salary of an individual employee to the median of the market salary given for the specific job.
Broadly, it is categorized into three buckets:
(A) <1 - Where salary is less than median
(B) =1 - Where salary is equal to median
(C) >1 - Where salary is more than median
It can be calculated as:
Compensation Ratio = (Actual Salary/Median of Market Salary) * 100
Factors affecting compensation ratio
Computation of compensation is a bit technical and complicated, so you should always keep the complication in mind. The complexities can be:
1. Job title
2. Responsibilities vs. Job Title
3. Tenure
4. Experience
5. Geographic variation
6. Employee Branding
7. Individual quality
8. Compensation mix
Benchmarking of Compensation
Benchmarking of compensation gives liberty to recruitment managers to attract and retain potential candidates as well as to reduce the turnover rate. It helps in cost savings of the recruitment process.
While setting the compensation range, benchmarking is an important aspect on which you must focus. You should compare the employee’s salaries with appropriate benchmarks from the market data. Job roles and responsibilities play an important role in this exercise as they may vary from company to company. Compensation can be in both monetary and non-monetary forms.
Compensation Budgeting
Compensation budgeting should not be overrated and oversimplified; it should be moderate and should consider all aspects as it has a financial impact on the organization as well as employees. A short-sighted approach can lead to a budget shortfall and employee dissatisfaction. Successful compensation budgeting requires a comprehensive approach in favor of both the employee and the company.
In short, thoughtful and comprehensive budgeting can eliminate the hustle for recruitment managers, provide insightful data to CXOs to manage the business, and keep employees motivated and committed to the success of the organization.
Thought of the day: “No one learns as much about a subject as one who is forced to teach it.” — Peter Drucker (Father of Modern Management)
Please Like, Share, and Follow HR SUCCESS TALK for daily updates
YouTube
https://youtube.com/channel/UCxy1zD-RFZlxT0I1279cHjg
Happy Learning!
Regards,
Vijay Tiwari
Team - HR SUCCESS TALK
Topic: Compensation & Benefits Dashboard
Speaker: Praveen Ratna, SHRM and HRCI certified HR professional
Hi everyone, Human resource executives need to be able to quickly review and analyze all critical KPIs in one place. Compensation metrics are the tools you use to measure, analyze, and decide how effective your compensation practices and policies are and what you can do to improve them. They help you “understand how pay is distributed across your team, so you can make informed decisions that will help you attract and keep employees.”
Takeaways from the above video
Overview of compensation
Compensation is a remuneration awarded to an employee in exchange for their services to the organization. This can be in direct and indirect or in cash or non-cash forms. This is the biggest expense for an organization towards its employees.
Total Compensation = Fixed pay + Variable pay + Benefits
Compensation Ratio
The compensation ratio, mostly termed as compa ratio, is the most common metric used in defending the salary range in the organization. It simply compares the salary of an individual employee to the median of the market salary given for the specific job.
Broadly, it is categorized into three buckets:
(A) <1 - Where salary is less than median
(B) =1 - Where salary is equal to median
(C) >1 - Where salary is more than median
It can be calculated as:
Compensation Ratio = (Actual Salary/Median of Market Salary) * 100
Factors affecting compensation ratio
Computation of compensation is a bit technical and complicated, so you should always keep the complication in mind. The complexities can be:
1. Job title
2. Responsibilities vs. Job Title
3. Tenure
4. Experience
5. Geographic variation
6. Employee Branding
7. Individual quality
8. Compensation mix
Benchmarking of Compensation
Benchmarking of compensation gives liberty to recruitment managers to attract and retain potential candidates as well as to reduce the turnover rate. It helps in cost savings of the recruitment process.
While setting the compensation range, benchmarking is an important aspect on which you must focus. You should compare the employee’s salaries with appropriate benchmarks from the market data. Job roles and responsibilities play an important role in this exercise as they may vary from company to company. Compensation can be in both monetary and non-monetary forms.
Compensation Budgeting
Compensation budgeting should not be overrated and oversimplified; it should be moderate and should consider all aspects as it has a financial impact on the organization as well as employees. A short-sighted approach can lead to a budget shortfall and employee dissatisfaction. Successful compensation budgeting requires a comprehensive approach in favor of both the employee and the company.
In short, thoughtful and comprehensive budgeting can eliminate the hustle for recruitment managers, provide insightful data to CXOs to manage the business, and keep employees motivated and committed to the success of the organization.
Thought of the day: “No one learns as much about a subject as one who is forced to teach it.” — Peter Drucker (Father of Modern Management)
Please Like, Share, and Follow HR SUCCESS TALK for daily updates
YouTube
https://youtube.com/channel/UCxy1zD-RFZlxT0I1279cHjg
Happy Learning!
Regards,
Vijay Tiwari
Team - HR SUCCESS TALK