ABSTRACT
Having defined compensation management, the main objectives have been enumerated under three categories, followed by a discussion on principles of compensation management which have also been categorized under three headings, viz. external relativities, internal relativities and individual worth. Then, methods of wage payment which have been divided into three categories, i.e. time rate methods/time wages, piece rate system/payment by results, and incentive plans or bonus (premium) schemes, have been discussed at length, followed by a discussion on combination plan, profit sharing, ownership plans/stock options and supplementary compensation. Thereafter, the national wage policy in India has been given fairly good treatment in chronological order. It is followed by a brief discussion on wage policy at the organizational level and wage policy in India. Components/functions of compensation management/wage and salary (W&S) administration which includes formulations and revision of compensation policies and recommending the same to the top management for its approval, determining pay/salary levels, designing and monitoring pay/ grade structures, etc. Thus, compensation management/W&S administration helps an organization in accomplishing its goals by formulating such compensation strategies and policies that may ensure that employees are rewarded fairly, equitably and consistently according to their worth to the organization. Compensation management is also concerned with the design, implementation and maintenance of compensation processes and practices that ultimately lead to the improvement of the performance of the organization. The chapter comes to an end after writing the chapter review, discussion questions, individual and group activities and case study.
