MU0015 COMPENSATION AND BENEFITS Question: - 1 what do you mean by Compensation Management? Explain the non- compensation dimensions. Answer: - Compensation Management
Compensation in its simplest form is the payment that one gets for the work done by him either on full time or on part time basis. The issue of compensation has always been a critical issue for both the employer and the employee. Money is a crucial incentive and can be directly or indirectly stated as a medium of fulfilling human needs.
In words of I. Kessler, a renowned compensation manager, “compensation
management refers to payment refers to payment system which determines
employee wage or salary, direct or indirect rewards”.
Compensation dimensions Pay for work and performance:
This includes short-term monetary payments made on weekly, monthly and annual periods in form of awards or bonuses to allow employees to make payment for their desired product and services.
Pay for time not worked:
It has been observed from past experience that the number of days worked per year and the number of hours worked per week have decreased.
Disability income continuation:
An employee becomes unable to perform his normal dulties when he incurs some health or accident disabilities. Medical, surgical and hospital bills creates an additional burden for him in addition to his ongoing self and family expenditure.
Different types of programmes, like savings plans, social security, employer-provided pension plans, annuities, and supplemental income plans provide after retirement income to the employee.
Spouse (family) income continuation:
In compensation, there are some plans, which are designed to provide the dependents of the employee with income source in case of his death or permanent disability to work.
Formulate the Model | Trial and Error | Solve the Model
Use the solver in Excel to find the assignment of persons to tasks that minimizes the total cost.
Formulate the Model
The model we are going to solve looks as follows in Excel.
1. To formulate this assignment problem, answer the following three questions.
What are the decisions to be made? For this problem, we need Excel to find out which person to assign to which task (Yes=1, No=0). For example, if we assign Person 1 to Task 1, cell C10 equals 1. If not, cell C10 equals 0.
What are the constraints on these decisions? Each person can only do one task (Supply=1). Each task only needs one person (Demand=1).
What is the overall measure of performance for these decisions? The overall measure of performance is the total cost of the assignment, so the objective is to minimize this quantity.
2. To make the model easier to understand, name the following ranges.
3. Insert the following functions.
Explanation: The SUM functions calculate the number of tasks assigned to a person and the number of persons assigned to a task. Total Cost equals the sumproduct of Cost and Assignment.
Trial and Error
With this formulation, it becomes easy to analyze any trial solution.
For example, if we assign Person 1 to Task 1, Person 2 to task 2 and Person 3 to Task 3, Tasks Assigned equals Supply and Persons Assigned equals Demand. This solution has a total cost of 147.
It is not necessary to use trial and error. We shall describe next how the Excel Solver can be used to quickly find the optimal solution.
Solve the Model
To find the optimal solution, execute the following steps.
1. On the Data tab, in the Analyze group, click Solver.
Note: can't find the Solver button? Click here to load the Solver add-in.
Enter the solver parameters (read on). The result should be consistent with the picture below.
You have the choice of typing the range names or clicking on the cells in the spreadsheet.
2. Enter TotalCost for the Objective.
3. Click Min.
4. Enter Assignment for the Changing Variable Cells.
5. Click Add to enter the following constraint.
Note: binary variables are either 0 or 1.
6. Click Add to enter the following constraint.
7. Click Add to enter the following constraint.
8. Check 'Make Unconstrained Variables Non-Negative' and select 'Simplex LP'.
9. Finally, click Solve.
The optimal solution:
Conclusion: it is optimal to assign Person 1 to task 2, Person 2 to Task 3 and Person 3 to Task 1. This solution gives the minimum cost of 129. All constraints are satisfied.