Compensation Administration  External competitiveness (how much other

organizations are paying for similar positions)

What is Compensation?
 Budgetary constraints
 The term is known as a reward that is earned by the
employees given by the company.  Once a compensation program is designed, it needs
to be administered and monitored on an ongoing
 This refers to all the monetary and non-monetary basis. It includes setting up payroll processes,
rewards an organization provides to its employees in tracking employee data, and making payments
exchange for their work. correctly.

 In a business, this term refers to the remuneration  Evaluating a compensation program’s effectiveness
given by a company to an employee. is essential to ensure it reaches its desired
objectives. It can be achieved through surveys,
 In some cases, compensation can be interpreted as
focus groups, and data analysis.
expenses.
Objectives of Compensation
 It can also be referred to as a kind of appreciation in
exchange for the employee’s contribution or  The objectives are to ensure that employees are
achievement to the company. Compensations could paid lawfully and equitably for their work and to
be in a number of different forms, such as money attract and retain the best talent. A well-designed
and goods. compensation system will also motivate employees
to perform at their best and contribute to the
 In addition to that, this could also be an indicator to
organization’s success.
imply a company’s image. A company that has a
good compensation regulation could help the To achieve these objectives, compensation in HRM
business to compete and flourish in their targeted must take into account the following factors:
markets.
 The market value of the job
Compensation According to Experts
 The skills and experience needed for the job
 Hamali (2018) explains that it comprises several
principles such as allowance, promotions, structure,  The employee’s performance
and compensation scale.
 The company’s financial health and profitability.
 Nurcahyo (2015) defines it as a return to an
employee’s services that has fulfilled the company’s Objectives of Compensation
target and goals.
1. Ensure Employees are Fairly Compensated: This is
 Wibowo (2011) describes compensation as an an essential objective of compensation in HRM.
appreciation for the employee’s contribution to the Employees should be paid based on the market value of
company in exchange for work performed. their job, as well as their skills, experience, and training.
They should also be paid based on their performance.
Compensation Management
2. Attract the Right Employees: Another critical
 Is designing, administering, and evaluating objective of compensation in HRM is to attract the best
compensation programs to ensure they are fair and talent. To do this, companies need to offer competitive
effective. It can indeed become a tricky task, as salaries and benefits packages. HR professionals must
many different factors must be considered. also be able to sell the company’s culture and values to
potential employees.
Some of these include:
3. Create A Reward Structure: The third objective of
 The organization’s overall business strategy compensation in HRM is to create a reward structure
that motivates employees to perform at their best. This
 The types of jobs and skills required
can be done through various methods, such as bonus
 Internal equity (how fair the compensation is within programs, commission structures, and stock options.
the organization)
4. Promote Loyalty: The fourth objective of Types of indirect financial compensation:
compensation in HRM is to promote loyalty among
employees. Employees are not just looking for a high  Bonuses
salary. They also want to feel like they are valued team
 Commissions
members and that their work is paramount to the
company.  Stock options
5. Adhere to Legal Compliance: The final objective of
compensation in HRM is to adhere to all legal
compliance requirements. This includes things like Benefits
minimum wage laws, equal pay laws, and anti-
discrimination laws.  These are non-monetary ways of compensating
employees. Benefits are usually given to employees
Types of Compensation who work full-time. They are designed to help with
health care costs, retirement, and vacation time.
There are four types of compensation: Companies decide which gifts to offer based on their
employees’ needs and wants.
 Direct financial compensation
Type of benefits:
 Indirect financial compensation
 Health insurance
 Benefits
 Retirement plans
 Perks
 Paid time off
Direct Financial Compensation:
 Employee assistance programs
 This is the money that employees earn for their time
and labor. It is paid directly to them, either in the  Internet reimbursement
form of an hourly wage or a salary. It entails salary
negotiations between the employer and the  Travel reimbursement
employee. The pay scale differs from organization to
organization and is usually based on the company’s  Relocation assistance
size, location, industry, and the employee’s
experience and skills.
Perks
Type of direct financial compensation:
 These are also non-monetary ways of compensating
 Hourly wages
employees. Such benefits are given to employees to
 Salary make their job more enjoyable. Perks are usually
given to employees who work full-time. They can
 Profit shares include free food, gym memberships, and
transportation reimbursement. Companies decide
Indirect Financial Compensation which perks to offer based on their employees’
needs and wants.
 This is the money employees earn in addition to their
regular wages or salaries. Generally, bonuses are Types of Perks:
given based on an employee’s performance or
achieving specific goals. For example, a salesperson  Company car
may receive compensation for meeting or exceeding
their sales targets. Commissions are typically paid to  Gym membership
employees who are in sales or customer service
 Free meals
positions. They are a percentage of the employee’s
sales or revenue.  Transportation reimbursement

 Childcare assistance
  Student loan repayment assistance

 Pet insurance reimbursement

 Employee discounts

Purpose of Compensation

 Motivate Workers to Work Better

 Employees as Essential Company’s Asset

 Complying with Company Legality Regulations

Principles of Compensation

1. To be legal. - Get approval from the government or

based from existing laws and policies.

2. To be adequate. - Sufficient funds for the fulfillment

of employee needs

3. To be motivational. - Increase the level of

motivation and job satisfaction

4. To be equitable. -No discrimination

5. To provide security. – Guarantee of getting paid.

Factors Affecting Compensation

 Mental requirements;

 Physical requirements;

 Skill requirements;

 Responsibility level; and

 Working conditions (hazards, risks, time)

Philippines Compensation Laws Additionally, The Republic Act of the Philippines has
enacted laws on Social coverage for Filipino citizens,
 The Department of Labor and Employment (DOLE) especially the working population. Below are the social
regulates the benefits and compensation policy in acts for Filipino employees:
the Philippines. This government agency follows the
rules stated in the Labor Code of the Philippines –  Republic Act 9679 or the “ Home Development
an all-encompassing legal code intended to protect Mutual Fund Law of 2009, also known as Pag-IBIG
the workers in the country. (Pagtutulungan sa Kinabukasan: Ikaw, Bangko,
Industriya at Gobyerno) Fund.”
Parts of the labor code are the benefits and
compensation rules that employers ought to follow when  Republic Act No. 10606 or the “National Health
employing Filipino workers. It includes: Insurance Act of 2013”

 Working hours in the country must not be over 8  Republic Act No. 11199 or the “Social Security Act of
hours/day. Employers must designate a 1-hour lunch 1997”
break in the middle of the day for employees to rest
and take their meals. Although, employers may These basic regulations ensure the employees’ welfare
provide a break that is not less than 20 minutes in while giving the employers the authority to plan their
the following instances: constituents’ schedules and reasonable compensation
for them.
 For Non-manual work
Guaranteed Benefits in the Philippines
 The establishment that the employee works for
16 hours a day  Knowing the statutory benefits for employees in the
Philippines is the first and necessary step to
 An urgent work involving machinery and ensuring that your employees remain compliant with
equipment may result in business losses when the country’s policies. Below are some noteworthy
left unattended. items to look into.

 Work involves handling perishable goods. Leave Benefits

A 5 to 20 minutes additional coffee break may also be Employees in the Philippines are given five days of
provided to employees. These shorter breaks will be service incentive leave every year with pay that they can
considered a part of the employee’s working time. use for their vacation and sick leave. Moreover,
Regular working hours are between 8 AM to 5 PM. employers grant the following leave benefits for their
workers in the Philippines.
 Employees may be required to work a night shift, for
which employees will be receiving additional pay.  Vacation Leave – 15 days
Night shift employees will be receiving an extra 10%
from their basic pay if they are to work around 10  Sick Leave – 15 days
PM to 6 AM.
 Regular Holidays – 12 days
 Employers must have special pay on holidays and
 Special Non-working days – 6 days
overtime based on the hours rendered by the
employees. The payment will depend on when the  Maternity leave – 105 days of paid leave. Additional
overtime took place. For regular work days, the full pay 15 days of leave for single mothers. In cases
overtime pay will be 25% additional to the worker’s of miscarriage, women employees are entitled to 60
hourly rate. If the overtime falls on a rest day of a days of paid leave.
special non-working holiday, there will be a 30%
addition to the employee’s hourly rate.  Paternity Leave – 7 days of paid leave for the first
four deliveries of his legitimate spouse.
 In cases of undertime, employees will not be allowed
to have overtime the day after to make up for the  Parent Leave for Solo Parent – 7 days for any solo
hours they have missed previously. This is because parent who has worked with the company for at least
the overtime rate is much higher than the regular one year
hourly rate they missed.
 Special Leave Benefits for Women under The The Home Development Mutual Fund (HDMF),
Magna Carta Of Women Act (Republic Act No. commonly known in the Philippines as PAG-IBIG, is a
9710) – 2 months of full pay based on her gross national savings program that aids its citizens with
monthly compensation following a surgery caused affordable shelter and financing. Insured members are to
by a gynecological disorder, provided that the pay contributions to the program and will be used to fund
following requirements have been met: their savings. Their payments are tax-exempted annual
dividends which they can refund in full should they
1. Has worked for an aggregate of six months in the last terminate their membership in the program. The same
12 months before the operation funds may also be used for loans of any purpose should
the insured members apply for it.
2. Has filed a leave of absence from the employer within
a required period stated in the company regulations or  The contribution rate will be 1 % for employees
collective agreement. earning PHP 1,500 per month and below and 2% for
those earning above PHP 1,500 per month.
3. Has undergone a physician-certified surgery for a
Employers are expected to contribute a 2% rate,
gynecological disorder.
regardless of salary.
 Leave for Victims of Violence Against Women and
 The program offers reasonable interest rates for
Their Children (Republic Act No. 9262) – employees
housing loans. Members can choose a fixed rate
who are victims can have a leave of up to 10 days
based on the years they want the property to be
with full pay. It shall cover the days that the
repriced. Rates range from 5.75% at a one-year
employee has to attend to medical and legal
fixing to 10% at a 30-year fixing.
concerns.
 A calamity loan will be granted for members who
have been struck by natural calamities. Members
Social Security Contributions may loan up to 80% of their Total Accumulated
Value (TAV), with an interest of 5.95% per annum.
The Social Security in the Philippines covers a wide
range of financial aid, from maternity, sickness, and  Members may also avail of a short-term Multi-
disability to retirement, funeral and death benefits. The purpose loan. Like the calamity loan, they can loan
system also offers qualified members salaries, housing, up to 80% of their TAV. The interest rate, however,
business, and educational loans. will be at 10.5% per annum.

 Employee and Employer contributions vary based on

the income tax slabs the Social Security Services
Philhealth Coverage
indicated. Employee contribution ranges from PHP
135 – PHP 1,125, while Employer contributions are The Philippine Health Insurance Corporation (Philhealth)
from PHP 265 – PHP 2,155. is the country’s government-controlled, tax-exempt
medical insurance covering a range of packaged
 Insured members will receive a pension from the
services for its citizens. Employers and employees
system once they’ve retired.
contribute to the program to fund their accounts which
 Allowances will also be given to people with they may use in cases of medical emergencies. Below
disabilities, either monthly or in a lump sum amount. are some of the benefits that the program offers:

 A maternity cash benefit will also be granted to new  Subsidizes hospitalization based on the amount
mothers for every day that they are unable to work incurred
after childbirth or miscarriage.
 Inpatient benefits (provided that the hospital
 Cash benefits will be given to the declared employee admitted is a Philhealth partner)
beneficiaries of the deceased member.
 Outpatient benefits (day surgeries, hemodialysis,
 A funeral grant of Php 20,000 will be given to radiotherapy, etc.)
whoever paid the insured members’ burial
 Z benefits (treatment for cancer)
arrangements.

Pag-IBIG Loans and Contribution

 SDG (Sustainable Development Goals)- related
benefits (Malaria package, HIV-AIDS package, etc.)
Training and Development Lecture 01 Aims and Objectives of T&D

Intro to Employee Training and Strategic Development 1. Develop the competence of employees and improve
their performance.

2. Help people grow in the organization so that future

Training human resource needs can be met from within.
- Imparting of specific skills, abilities and knowledge to 3. Reduce the learning time of employees starting in
an employee new jobs in order for them to be fully competent and
- an attempt to improve current and future employee economically productive immediately
performance through learning, changing attitudes and Core Effects of T&D
behaviour
1. Employees become more efficient > contribute to the
Development growth of the company.
- learning opportunities designed to help employees 2. Growth renders stability > trained employees tend to
grow stay.
Training and Education are different but they are 3. Training makes employees versatile > 1 employee
complementary. No training program is complete may do multiple jobs or functions whenever needed.
without an element of education.
4. Mitigating accidents, scrap and damage to
Usually, employee training revolves around improving equipment. Even dissatisfaction, absenteeism,
Knowledge, Skills, and/or Attitudes (KSA). complaints and such is minimized.

Strategic Human Resource Management - a future-

Knowledge - the cognitive or mental ability used to oriented process of developing and implementing HR
retain and process information. programs that address and solve business problems and
directly contribute to major long -term business
Skills - Physical abilities used to perform tasks objectives.

Attitude - feelings, emotions, or belief about something

or someone

Training Employees may fall under these three

categories :

1. Learning facts and concepts (Knowledge)

2. Learning how to do something (Skills)

3. Learning or forming a new viewpoint or belief

(Attitude) Particular benefits of HR strategic management include
Identifying which training method based on the need of the following:
the employees and the company is of utmost 1. Avoiding costly and disruptive surprises that interfere
importance. with achieving goals.

2. Addressing key issues in a timely manner to avoid

crises.
3. Promoting employee productivity and overall
organizational success.

4. Providing a sense of direction to positively affect how

work gets done.

5. Keeping employees focused on organizational goals.

6. Providing a strategic focus to guide training and

development initiatives.

7. Giving leaders tools to help focus and implement

their strategic initiatives.

Training & development pertains to any attempt to

improve current or future employee performance by
increasing an employee's ability to perform through
learning, usually by changing the employee's attitude or
increasing his or her skills and knowledge.

Strategic Human Resource Management is the avenue

by which proper planning for an effective Employee
training and Development is done in consideration of
company goals and objectives.