Compensation

COMPENSATION Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. Compensation is a tool used by management for a variety of purposes to further the existence of the company. Compensation may be adjusted according the business needs, goals, and available resources. Compensation may be used to:  Recruit and retain qualified employees.  Increase or maintain morale/satisfaction.  Reward and encourage peak performance.  Achieve internal and external equity.  Reduce turnover and encourage company loyalty.  Modify (through negotiations) practices of unions.  Recruitment and retention of qualified employees is a common goal shared by many employers. To some extent, the availability and cost of qualified applicants for open positions is determined by market factors beyond the control of the employer. While an employer may set compensation levels for new hires and advertise those salary ranges, it does so in the context of other employers seeking to hire from the same applicant pool. Morale and job satisfaction are affected by compensation. Often there is a balance (equity) that must be reached between the monetary value the employer is willing to pay and the sentiments of worth felt be the employee. In an attempt to save money, employers may opt to freeze salaries or salary levels at the expense of satisfaction and morale. Conversely, an employer wishing to reduce employee turnover may seek to increase salaries and salary levels. Compensation may also be used as a reward for exceptional job performance. Examples of such plans include: bonuses, commissions, stock, and profit sharing, gain sharing. Compensation will be perceived by employees as fair if based on systematic components. Various compensation systems have developed to determine the value of positions. These systems utilize many similar components including job descriptions, salary ranges/structures, and written procedures. The components of a compensation system include: 1.JOB DESCRIPTIONS A critical component of both compensation and selection systems, job descriptions define in writing the responsibilities, requirements, functions, duties, location, environment, conditions, and other aspects of jobs. Descriptions may be developed for jobs individually or for entire job families. 2.JOB ANALYSIS The process of analyzing jobs from which job descriptions are developed. Job analysis techniques include the use of interviews, questionnaires, and observation. 3.JOB EVALUATION A system for comparing jobs for the purpose of determining appropriate compensation levels for individual jobs or job elements. There are four main techniques: Ranking, Classification, Factor Comparison, and Point Method. 4.PAY STRUCTURES

Useful for standardizing compensation practices. Most pay structures include several grades with each grade containing a minimum salary/wage and either step increments or grade range. Step increments are common with union positions where the pay for each job is pre-determined through collective bargaining. 5.SALARY SURVEYS Collections of salary and market data. May include average salaries, inflation indicators, cost of living indicators, salary budget averages. Companies may purchase results of surveys conducted by survey vendors or may conduct their own salary surveys. When purchasing the results of salary surveys conducted by other vendors, note that surveys may be conducted within a specific industry or across industries as well as within one geographical region or across different geographical regions. Know which industry or geographic location the salary results pertain to before comparing the results to your company. 6.POLICIES AND REGULATIONS DIFFERENT TYPES OF COMPENSATION Different types of compensation include:  Base Pay  Commissions  Overtime Pay  Bonuses, Profit Sharing, Merit Pay  Stock Options  Travel/Meal/Housing Allowance  Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes.

THE PAY MODEL:

COMPENSATION STRUCTURE OF THE BANK OF KHYBER A number of researchers have reported that compensation and reward polices of an organization are positively linked with job satisfaction and employee performances .The study was an attempt to test the relationship between HR practices and employee performance in Pakistan’s banking sector. The management of The Bank Of Khyber is also emphasizing the growth and development of its bankers with various initiatives. The objective of this study was to facilitate the decision makers in The Bank Of Khyber across Pakistan

to follow the compensation and reward practices which can improve the job satisfaction performance of The Bank Of Khyber employees. In this study it is important to find out the determinants which can enhance the employee performance in The Bank Of Khyber.

METHODOLOGY The questionnaire were distributed for measuring impact of compensation practices employee performance and satisfaction. The participants included employee of The Bank Of Khyber. A total 10 questionnaires were distributed for the analysis.

Sample size : n=15

s.no

age

Flexi time

34 41 28 30 45

Marital status married married married married married

No No Yes No Yes

Working conditions Yes Yes Yes No Yes

Incentive/ bonuses Yes Yes No Yes Yes

Job security No Yes No No Yes

1 2 3 4 5 6 7 8 9

28 27 26 37

unmarried unmarried unmarried married

Yes No No No

Yes No No Yes

No No No Yes

No No No Yes

10 11 12

32 28 42

married unmarried married

no Yes Yes

Yes Yes Yes

Yes No Yes

No No Yes

13 14

29 37

married married

No Yes

Yes Yes

No Yes

No Yes

15

32

unmarried

yes

Yes

Yes

No

Salary structure Agree Neutral Neutral Agree Strongly agree Neutral Neutral Neutral Strongly agree Agree Agree Strongly agree Neutral Strongly agree Agree

The objective of Table is to show composition of respondents to have a better understanding about their response and results for the study. The majority respondents are male.. The martial status of the respondents is an important demographic in the study ,as having a married life and children increase responsibility on individuals and mostly work life conflict situation arises when there is an imbalance between work and family life.

CONCLUSION The impact of Compensation Practice and Performance Evaluation System on the employee of BoK, have given us a chance to conclude that;  

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The pay difference between the different hierarchical levels is a frustrated factor among the employees of BOK. Job security is a major factor of dissatisfaction. No job security was provided to employees which can be the major downfall of employees performance because employees were afraid of being laid off at any time so as result of which they perform their duties half-heartedly Job timing hours increase turnover .Mostly employees .especially married one have complaints against work timings. As they are married and most of them have children so they didn’t get proper timing to relax ,or they have extra work burden on them so its difficult for them to manage their responsibilites Compensation Discrimination was observed. No proper bonuses and incentive were given to employees to keep them motivated RECOMMENDATIONS On the basis of above conclusion some recommendations are made for BOK for designing a compensation package which can be acceptable for all.

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Employees should be compensated purely on the basis of their performance. Whatever an employee offers in terms of his services to the organization should be compensated on the basis of it.it will help to motive employees to work more harder n to work with whole-heartedly. There should be less Pay Scale difference between the different Hierarchical level in BOK. Compensation Discrimination should be avoided it will provide motivated employees to BoK Employers should encourage their workers to take two weekends a year off (in addition to vacation time) with the intention of sharing quality time with family or seeking personal or professional growth Employees should be provided job security to keep them committed towards their duties and which also helps to keep them motivated in the long run.

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Employees should be provided proper flexi time to relax for some time. Besides base wage employees should be provided incentives ,bonuses and rewards to keep them motivated in long run.

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Employees should also be give increments after a specified period of their services on the basis of their performance in the organisation.

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Employees should be provided incentives and bonuses in order to keep them motivated in long run.