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MU0015 — Compensation Benefits

MU0015 — Compensation Benefits

 Summer 2013

Master of Business Administration- MBA Semester 4

MU0015 — Compensation Benefits

(Book ID: B1336)

Note: Assignment (60 marks) must be written within 6-8 pages. Answer all questions. Kindly note that answers for 10 marks questions should not exceed 400 words.


Q1. Discuss the elements of compensation package.

Answer : Elements of compensation package : When most of us hear the term “compensation”, we typically only think of the money we receive in our paycheck each payday. However, “Total Compensation” goes beyond salary, it is the complete pay package for employees.. Total compensation can be defined as all of the resources available to employees, which are used by the employer to attract, motivate and retain employees. Elements of compensation package are :

1. Base salary

2. Bonus

3. Benefits and insurances

4. Employee  perks




Q2. Describe the importance of employee satisfaction. Explain the link between employee satisfaction and compensation.

Answer : Employee satisfaction :

Employee satisfaction or job satisfaction is, quite simply, how content or satisfied employees are with their jobs. Employee satisfaction is typically measured using an employee satisfaction survey. These surveys address topics such as compensation, workload, perceptions of management, flexibility, teamwork, resources, etc.

These things are all important to companies




Q3. What is pay structure? Explain why it is necessary to develop a proper pay structure. Mention the factors to be determined and steps for developing pay structures.

Answer : Pay structure : A pay structure is a collection of pay rates or pay ranges. Structure setting and adjustment is the process of developing, adjusting, and maintaining a pay structure. Salary structures are a necessary part of effective management. They help make sure that the pay levels are externally competitive and internally fair.

Reason for developing a proper pay structure :

Salary structures are a necessary part of effective management. They help make sure that the pay levels are externally competitive and internally fair. Salary structures also allow companies to reward performance and development while controlling cost. Well-designed salary structures will attract highly skilled people to your company and keep them motivated within the




Q4. Explain the components of wages. Explain employee participation in wage fixation.

Answer : Components of wages :

Minimum wages need to be fixed in sweated industries & fair wage agreements need to be promoted in the more organized industries. Equal pay should be ensured for equal work. Wage differentials should be provided.

Remuneration should be linked to productivity.

1. Fixing of minimum wages

2.Minimum rate of wages

3. Working hours and overtime

4. Employer’s obligation



Q5. Describe Cost-to-Company and list its components.

Answer : Cost to company :

Simply speaking, CTC is the amount that you cost your company. That is, it is the amount that the company spends — directly or indirectly — because of employing an employee. Thus, it is the money given to employee (in-hand component), plus the money spent because of employee. Cost to Company or CTC is the salary package of an employee. It indicates the total amount of expense an employer (organization) is spending for an employee in a year. CTC is not the actual salary of an employee, it also includes all the facilities an employee is getting during the service period.




Q6. What is meant by strategy? Write a brief note on Strategic compensation planning.


Answer : Strategy :

Strategy is a high level plan to achieve one or more goals under conditions of uncertainty. Strategy is important because the resources available to achieve these goals are usually limited. Strategy is also about attaining and maintaining a position of advantage over adversaries through the successive exploitation of known or emergent possibilities rather than committing to any specific fixed plan designed at the outset.

Henry Mint berg from McGill University

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