Answer 1

Introduction

Compensation- Meaning and significance

Compensation typically refers to a monetary payment made to a person in exchange for their
services. Employees earn pay at their places of employment. It includes income or wages,
commission, as well as any bonuses or benefits that are connected to the employee’s
employment.

Plans that outline how a firm decides on employee benefits and pay are known as compensation
strategies. It contains details on the firm's goals for paying compensation as well as the pay
scales for various roles within the company. Additionally, it describes how the startup company
Agritech, accesses the labor force while deciding on compensation. A corporation can gain a
competitive edge by putting an effective compensation policy into practice. Additionally, it may
encourage staff loyalty.

Importance of competition strategies

Strategies for compensation help to formalize employee compensation. The main justifications
for creating and implementing compensation systems are:

Make sure the company's goals are met.

Employees may be inspired to contribute to achieving business goals by expanding a

remuneration scheme. New hires and seasoned workers can be inspired by rewarding
performance that is in line with the company's goals by structuring compensation. This may also
result in increased output and a happier workplace.

Enhance the recruitment process

The approach for rewarding employees at a firm can also have an effect on hiring and retention.
Candidates might choose this organisation above its rivals, for instance, if it offers competitive
remuneration methods. Having a competitive compensation plan can also help a firm attract the
best-performing personnel.
Ensure budget management

Budget management is the process of comparing a budget's expected expenditures and income
for a certain time period with the actual financial outcomes and making the required adjustments.

Following a compensation strategy can help an organization operate within its budget.

Ensure equity in the company

Remuneration equity equal pay for labor of equal value can be ensured by having a successful
compensation strategy. Companies that use a strategy might be more open about compensation
because it specifies the pay packages and how employees are paid. Others may be motivated to
achieve at higher productivity levels by developing and adhering to a pay scheme in which top
performers earn the highest reward.

Factors that Influence the Compensation Strategies

Supply and demand of labor

A higher price will be paid for specific abilities if there is a lack of supply compared to demand.
The other option is to pay higher salaries when there is a shortage of labour and lower wages
when there is an abundance of it. Similar to this, when there is a high demand for labour
expertise, wages increase; yet, when there is a low demand for workforce expertise, salaries will
be relatively low. Many people abandoned their positions in particular industries in search of
better-paying and more advantageous positions as a result of the COVID-19 pandemic and the
move toward working from home. As a result, salaries for employment in such businesses must
go up.

Government Controls

Several different pieces of legislation can affect how much an organization must pay its
employees. The most relevant for many companies is the minimum wage, however, some laws
require additional pay for various reasons. This varies widely by state.

Productivity
Another factor of compensation management is the productivity of workers. This is the new
concept of linking pay with employee performance. Under it, if the workers are highly
productive, they get high compensation as compared to less productive workers. Productivity is a
key factor as it enhances organization’s image and status.

Employer's affordability

Those organizations which earn high profit and have a larger market share, a large business
conglomerate and multinational companies can afford to pay higher pay than others. Besides,
company’s ability to pay higher pay is impaired by sector- specific economic recession and acute
competition. If an employer cannot pay the employee what they can get elsewhere, the employee
will work elsewhere.

Labor Union

Labor union representatives negotiate on behalf of their members to agree to a fair rate of pay.
Employers that hire members of unions may be required to pay the rate set by the union. These
rates may depend on many factors, such as seniority and location.

Prevailing Wage Rates

Prevailing wage refers to the going rate of labor for a given profession in each geographical area.
In some cases, prevailing wages are set by various pieces of legislation, such as the Davis-Bacon
Act and Service Contract Act, to determine how much government contractors must pay their
employees.

Living Costs

Compensation is concerned with an overall return that an employee obtains from the
organization for rendering contributions towards organizational objectives. Therefore, the
payment should be adequate

Current job market situation

The key factors of workforce demand and supply, without a doubt, influence compensation
decisions. Workers with uncommon skill sets and experience-based knowledge earn greater
wages and salaries than those with common capabilities that are widely available in the market.
However, due to the government’s prescription of minimum pay levels and employee union
negotiating strength, a bigger supply of human resources for particular jobs may not result in
compensation reductions beyond a floor level. Similarly, if the great majority of available
resources are unemployable owing to low ability and talent, this aspect alone does not result in
reduced remuneration. As a result, it is evident that the rule of supply and demand only applies
to the labor market to a limited extent. 

Globalization

Globalization and the Internet have made it possible for companies to get work done in other
countries where the cost of living and labor costs are much lower. Regardless of one's stance on
the issue, globalization impacts compensation in many ways. First, it causes jobs that can easily
be outsourced to be compensated at a lower rate locally. Second, it changes local labor demands,
as some labor cannot be outsourced.

Conclusion

The types of compensation the company offers its employees, including basic pay, supplemental
pay, and benefits, as well as how they are computed, are outlined in the compensation schemes.
Effective compensation plans help recruit and keep personnel, carry out the business strategy,
and assure pay equity within the organisation.

--------------------------------------------------------------------------------------------------------------------

Answer 2

Introduction

The term "international compensation" describes how businesses handle direct and indirect
compensation for employees who are located abroad. While salary and bonuses are considered a
part of direct pay, indirect compensation refers to all the additional perks that a business provides
in an effort to retain more employees and recruit top talent.

The international compensation plans are designed to attain objectives such as:

 Attract and retain employees who are qualified and interested in international
assignments.
  Facilitate the movement of employees from one subsidiary to another, from home to
subsidiaries, and from subsidiaries back home.
 Establish a fair and consistent link between the pay scales at the corporate headquarters,
domestic affiliates, and international companies.
 Align the firm's compensation policy with its business plan.
 Boost and keep up staff inspiration. Compensation must encourage workers to join the
company, be effective while working there, and stay with the company. Increase and
maintain employee motivation. Compensation must motivate employees to join the firm,
be productive while members of the firm and stay with the firm.
 Must be perceived as fair by the employees. Fairness of equity are powerful motivator of
human behaviour, and it may be the most important objective of an international
compensation policy.
 Secure consistency between pay and performance & equity among employees of different
nationalities and categories.
 Assist the employee and family adapt to the host country culture.
 Reduce employee grievances and simplify collective bargaining procedures.
 To ensure that the package is both competitive and comparable. It must always better the
package available comparable.

COMPONENTS OF INTERNATIONAL COMPENSATION

The objectives of all international compensation schemes are complicated and difficult to
achieve, necessitating a high level of competence. The essential elements are:

Base pay:

Base pay, which can be paid in either domestic or local currency, is the main element of a
package of allowances. Whether an employee is from a Parent Country or another nation, the
base salary serves as the building block for all foreign compensation.
The primary factor in the remuneration structure that determines status, rank, or grade is this one.
This is the fundamental component upon which all other elements are erected, and from which
retirement benefits are determined for both local and international compensation.

Incentives

Incentives are used to motivate employees for higher performance and to undertake foreign
assignments. Latest trends in total compensation package have seen a rise in monetary benefits.

Retention and Referral Bonuses

Almost every organisation faces the issue of turnover of employees at some point or the other.
Referral bonus is paid to employees who bring qualified new employees who meet the selection
criterion.

This reduces recruitment cost and time of the organisation and hence referral bonus is paid.
There are many factors leading to retention of employees apart from money such as quality of
work-life, flexibility at work timings, challenging assignments, transport and other benefits and
rise in career graph.

Allowances

• Foreign service premiums: most common for employees on long-term assignments (over
one year). More often paid to parent country nationals (PCNs) than to third country nationals
(TCNs).

• Hardship: in consideration of isolation, crime, natural hazards, political violence, based

on government data upon which rates can be provided by consulting organizations such as
International SOS, a global medical and security assistance company.

• Relocation: compensation for costs such as transport, storage, temporary accommodation,

purchases of appliances and vehicles, associated with moving to the host country.

• Education: for assignees’ children. This may involve compensation for language classes,
books, and school fees. Home country boarding school fees may also be involved for assignees
who opt not to take their children to isolated and or politically violent locations.
• Home leave: provision for the assignee and family to return home periodically during the
length of the assignment.

Benefits

These are also known to be indirect compensation and their purpose is to minimize the payments
and enhance quality of life. Benefits could include use of health clubs, medical treatment to
family, upkeep of house, servants, education benefits for children etc.

Long-term Benefits

• Employee Stock Option Plan (ESOP)- a certain nos. of shares are reserved for purchase
and issuance to key employees

• Restricted Stock Unit (RSU) –Units of stocks are provided with restrictions on when they
can be exercised. It is usually issued as partial compensation for employees

• Employee Stock Purchase Plan (ESPP) –Company sells shares to its employees at a
discount. Company deducts the purchase price of these shares every month from the employee’s
salary

Tax equalization

Employees might get two tax bills

Usually MNC’s pay the extra tax burden

Common method

Compute tax on home country salary & expat salary. Any tax that exceed what would have been
imposed in the home country are paid by the MNC  

Problems, Issues and Challenges are:

Dual tax cost: Expatriates paying taxes in both home and host country.

Need to consider personal and corporate taxes in addition to income tax

Modifying compensation packages to provide the most tax-effective, appropriate rewards within
the overall compensation framework
Issues while considering benefits

Whether or not to maintain expatriates in home country programs, particularly if the company
does not receive tax deduction for it.

Whether companies have the option of enrolling expatriates in host-country benefit programs and
/or making up any difference in coverage

Whether host-country legislation regarding termination affects benefit entitlement

Whether expatriates should receive home country or host country social security benefits

Whether benefits should be maintained on home country or host country basis, who is
responsible for the cost, whether other benefits should be used to offset any shortfall and whether
home country benefit programs should be exported to local nationals in foreign countries

--------------------------------------------------------------------------------------------------------------------

Answer 3a

Introduction

Compensation surveys are popular method that an organization can utilize to ensure employees
are given fair wages and benefit packages. Compensation surveys collect information about
employee salaries and benefits across different industries, regions and jobs. These surveys serve
as benchmarking tools to enable companies to make informed business decisions about
compensation. The results of the survey should provide key insights into job roles and salaries,
that will assist employers in determining and optimizing their own compensation strategies.

Importance of a compensation survey

In every organization, either as a prospective employee or member of the recruitment team there
are many reasons to prioritize a compensation survey. The key importance of conducting a
compensation survey in Food & Health industry are:

 It ensures fair remuneration for the staff

Feedback gathered from a compensation survey gives they a clear idea of what is obtainable in
the Food & Health industry. This means that they will be able to present competitive rewards for
the staff including salary, bonuses, benefits, and paid leave.  One of the major reasons employees
jump shift frequently is the search for better working conditions, especially salary and other
benefits.

 It allows better decision-making

In any business entity, the decisions should primarily be data-driven, and this is what a
compensation survey helps in achieving. By conducting a salary or compensation survey, they
will have valid data for decision-making in the workplace; especially regarding employee
welfare. 

 It keeps abreast of Food & Health industry trends

With a compensation survey, they will have a fair knowledge of the developments in the Food &
Health industry. It will help them to gather important information about the right compensation
package for the right talents at different levels in Food & Health industry. 

 It boosts employee morale

When they reward employees adequately, they are more likely to receive unparalleled loyalty
and commitment to the organization. The right compensation package can boost employees’
morale and motivate members of the workforce to put in their best at any time. The productivity
enhances and employees become more efficient.

 It gives a competitive position in Food & Health industry

Many things combine to create ideal organizations. When talents choose one organization over
the other or describe it as “the ideal place to work”, it often means that such an organization has
an attractive employee reward package.  A compensation survey helps in determining which
company is one of the ideal places to work in Food and health industry.

 Legal Compliance

Compensation surveys also help to ensure that the organization is on the right side of the labor
and industry laws in the nation. It assists you to avoid price-fixing which may put you at the risk
of violating the labor laws.  Compensation surveys are sought after, well prepared, and legally
sound which protects and works in the favour of the organization.
 Conclusion

Compensation survey supports the new compensation system; pay innovations and market,
performance-based reward systems; aligning benefits programs with the market; and attention to
work-life balance issues etc. All these challenges will continue to foster an environment in which
food and health industry can be successful.

--------------------------------------------------------------------------------------------------------------------

Answer 3b

Introduction

Compensation surveys are surveys of the labor market to determine the going rates for
benchmark jobs. The primary source of compensation data are compensation surveys that take
place on a regular basis; quarterly, annually, or biannually.

The secondary, which are becoming more popular, are survey databases that purchase
these surveys and then apply algorithms to come up with larger sample sizes and more specific
data.

Compensation surveys are either focused on general industry, geographic location, or

specific industry. Technology and life sciences companies have the most robust data because the
industry is so competitive, and jobs are ever evolving with the types of products and services
they provide. Some compensation surveys can be purchased without participation and others
require participation. There is a trend of companies demanding for data without sharing or
providing their data.

Types of Compensation Surveys

External Equity is the Comparison of both Infra & Inter-Industry remuneration rates.
Most frequently the payer says that they are paying as per the on-going rates for that very need,
we go for the comparison between the similar jobs in the industry and out of the industry. There
are three main types of compensation surveys i.e. informal, external and commissioned.
Informal Surveys: These are conducted in an informal way and can vary from personal contacts
to specific arrangements for exchanging information with a number of local companies, or with
companies in a particular industry, as even with a wide cross section of fines.

The exchange, method of obtaining data has major advantages. It can provide exactly the type of
reliable information on existing rates of remuneration which firms seek, as well as giving them
an indication of the likely trends in increases of wage during the year. But real usefulness
depends on the types of arrangements for exchange and on the information obtained.

External Survey: These surveys are almost entirely confined to salary earning groups. Few
comparable surveys of wage earners are produced. They fall into three main categories, first
those produced by professional bodies about their own members' pay. Secondly, those prepared
by consultants with their other activities and are mainly for a range of management posts or on a
particular area. Thirdly, published surveys of employment agencies and career registrars based
on applicants salaries. The main problems in these kinds of reports are that they give insufficient
or sometimes no information on survey methods, samples etc. which are meant for better
consideration of results.

Commissioned Method: It is the most reliable method among all the three existing methods.
This is what is done either by commissioned consultant or by the company itself. Due to their
convincing nature more often pay commissions also resort to hire consultants.

While such surveys can be enormously useful, it is crucial that they ask the right questions in the
first place. The data thus observed must clearly be expressed in common terms. Many other
sources like newspaper advertisement etc. are also equally helpful for the guidance on current
rates of pay.

--------------------------------------------------------------------------------------------------------------------