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MU0015 — Compensation Benefits

Spring 2013

Master of Business Administration- MBA Semester 4

MU0015 — Compensation Benefits – 4 Credits

(Book ID: B1336)

Assignment (60 Marks)

Note: Each question carries 10 marks. Answer all the questions.


Q1. Discuss the elements of compensation package. (10 marks)

Answer :  Both as a recruiter and as a career coach, I have heard women downplay the importance of compensation.  Even if you don’t believe this Scottish Proverb, it should be your life mantra. Paying attention to money matters is important.

For most people, your compensation and your ability to earn it and increase it over time are your biggest assets. Do you understand all of the


Q2. List and explain various economic theories of wages. (10 marks)

Answer : wage theory, portion of economic theory that attempts to explain the determination of the payment of labour.

A brief treatment of wage theory follows.


The subsistence theory of wages, advanced by David Ricardo and other classical economists, was based on the population theory of Thomas Malthus. It held that the market price of labour would always tend toward the minimum





Q3. What is pay structure? Explain why it is necessary to develop a proper pay structure. Explain the method to develop pay structure. (2+ 4+ 4 marks)


Answer : Pay Structure: A structure of job grades and pay ranges established within an organization. May be expressed as job grades or job evaluation points.


why it is necessary to develop a proper pay structure

An organization needs talented and skilled individuals to build a successful business. Because these talented people are highly




Q4. Explain the components of wages. (10 marks)


Answer : Annual Wage Supplement

The Annual Wage Supplement (AWS) is commonly known as the 13th month payment. It is a single annual payment to employees that supplements the total amount of annual wage earned by them.


Payment of AWS depends on the contractual agreement between the employer and the employee i.e. whether it is provided for in the employment contract or collective agreement.





Q5. Describe Cost-to-Company and its components. (10 marks)


Answer : Your company offered you a salary of Rs. 6 Lakhs per year. That means you should be getting Rs. 50,000 in hand every month. Even if you consider income tax, you should be getting about Rs. 40,000 in hand.


But you get only Rs. 32,000 in-hand every month! Why? Where did the promised money vanish? Is your company cheating you?





Q6. What is Executive Compensation? Mention the different components of executive

compensation. (10 marks)


Answer : Components of Executive Compensation

The components of the compensation program for executive officers are described below. Generally, compensation is substantially weighted towards equity compensation, and in particular towards performance based


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