1. Compensation and Benefits

2. Total Compensation Equation
A+B+D=E
Where:
A. Guaranteed Cash (Regular salary, fixed and guaranteed
allowance, fixed and guaranteed bonuses, or 13th month
pay)
B. Variables or discretionary compensation
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C.
D.
E.
Commissions, profit shares, performance
bonus, management incentive
Total Cash (A + B)
Benefits
Total Renumeration (C + D)
(Sison, 2003)

3. Benefits
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Social Security
Health Insurance/Health Plan
Life Insurance/Accident Insurance
Retirement benefits
Car and Car-related benefits
Allowances (Meals and Transportation; Standby allowance, provincial allowance, Clothing,
etc)
Leave benefits (VL, SL, Nuptial, Maternity,
Paternity, Birthday, Emergency, Sabbatical,
Union)

4. Examples of Additional Pay Benefits
(CENTRO ESCOLAR UNIVERSITY)
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Longevity Pay
Summer Pay
Class Advisers Pay
Enrolment Advisers Pay
Big Classes Pay
Mid-year Bonus
Christmas Bonus
Incentive Leave Pay
Holiday Pay
Special Examination Pay

5. Examples of Benefits Package
(MERALCO BENEFITS PACKAGE)
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Medical, Dental and Hospitalization
Interest-Free Educational Loan
Health Maintenance Plan
Shuttle Bus Service
Housing Programs
Recreation and Sports Facilities
Central and Satellite Libraries
Canteen/ Commissary services
Theater Facilities

6. NORM OF EQUITY: Belief that employees should be paid
according to their contributions to the organizations.
Compensation Systems
e.g. piecerate
Performance
Skills
“Competencybased”
Compensation
SALARIES AND BENEFITS
“Broadbanding”
Money
Job
classification
Range & Levels
BASIS
Task
Status
Star roles;
Market-based
results
FORM
Demand & Supply
conditions
Seniority
Age &
Experience
Other
economic
forms
“Appropriate”
compensation
“Extraordinary”
compensation
Job analysis:
Job value (worth)
– job pricing
Benefits
Perquisites
Tenurebased pay
Paid time off;
Insurance;
Retirement;
Others (e.g.
childcare)
Local market conditions;
“Value-to-the firm”
compensation
Intrinsic/
Psychic
Equity;
Stock
Ownership;
Profit shares
Car;
Expense accnt;
Other perks
Symbols of gift
exchange
Type and complexity of
knowledge required;
Number of employees
supervised
MARKET FORCES
CULTURE
SIZE & STRUCTURE
Status
Independence;
Power

7. Compensation Systems: Issues & Concerns
• Whether to rely on direct, shorter
term economic incentives vs. longer
term economic rewards;
• Amount of information provided to
employees on compensation and
reward distribution (Pay secrecy)

8. Compensation Systems: Issues & Concerns
• The extent to which reward systems can
be used as a powerful social and
psychological force to motivate people
and influence reactions.
• The application of “cafeteria benefits
approach” as a scheme for structuring
employee benefits
• Salaries vs. Wages