Compensation and reward Management

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Course TypeCourse CodeNo. Of Credits
Foundation ElectiveSBP2MB7262

Semester and Year Offered: 4th Semester 2nd year

Course Coordinator and Team:

Email of course coordinator:

Pre-requisites: None

Aim: The course provides students with a sound conceptual understanding of the role that compensation and reward plays in managing people. The course deals with different theories and practices of reward and salary compensation. It discusses how to develop different systems of compensation and incentive schemes leading to employee motivation enhancing their contribution to organisational performance.

Course outcome:

  1. To acquaint the domain of compensation and reward system and factor affecting them
  2. Enable participants to determine compensation in any given situation
  3. Appreciate the role and importance of compensation as a reward system
  4. Able to coordinate compensation with other HR initiatives

Brief description of modules/ Main modules:

Unit 1: Context and Theories of compensation

Wage theories; Theories of motivation

Unit 2: Models of Compensation

Factors of compensation; Internal equity; External competitiveness

Unit 3: Compensation and Corporate Strategy

Organisational objective and compensation policy

Unit 4: Pay Structures

Purpose/ basis of criteria; Developing pay structures; Job family, graded pay structures and pay bands; Pay for performance; Benefits as compensation

Unit 5: Pay as Incentive Systems

Design incentive compensation package; Types of incentive: Individual vs. team based incentive schemes

Unit 6: Executive Compensation

Issues of executive compensation

Unit 7: Compensation and Budgeting

Tax, ESOPs

Assessment Details with weights:

Nature of Assessment


Problem Solving Assignments


Mid Term Assessment


End Term Assessment



Reading List:

  • Armstrong, M. (2010). Armstrong’s Handbook of Reward Management, 3rd edition, Kogan Page
  • Chingos, P.T. (2002). Paying for Performance, John Wiley and sons
  • Milkovich, G., Newman, J. and Gerhart, B. (2014).Compensation, 11th Edition, McGraw Hill Higher Education


  • Additional Cases and Readings / Articles are provided to the participants in form of a course manual as the commencement of the session.