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Thoughts on Employee Compensation

I have a very specific way I compensate employees, which I'd like to share. I've found that this method does a great job of aligning an employee's interests with the company's, which is a "nirvana" of sorts considering how misaligned an employees interests can often be with a company's.

I'm going to give you an example based on hourly pay, but this can just as easily be applied to annual salaries.

So let's say that I'm interviewing someone who wants to make $20/hour (roughly equivalent to $40,000/year).

First, I'll explain to them that one of my main goals is to align their interests with the interests of the company, and to do that I have a somewhat unconventional way of compensating employees.

Then, I ask them to tell me what percentage of their compensation they're willing to make "performance based." (Don't call it a "bonus" because it's not - this is different.) Let's say that a potential employee is willing to make $5/hr performance based, and wants the other $15/hr to be fixed (obviously the more an employee is willing to make performance based, the better it is for the company, and ultimately, the employee).

How to calculate employees provident fund (epf)? What is PF?

On The Orange Octopus

PF is Provident Fund is a part of your salary, which is deducted every month and deposited on your behalf. If you work in a private firm then the company pays the same amount as it is deducted from your account and when you leave the firm you can apply and withdraw the amount saved. It's actually your personal saving of your earnings. If you are in government service then you will get the lump sum when you retire

.As per new rules, it is calculated along with other allowance like conveyance and medical which are common to all the employees.

How to Calculate PF?

First you have to calculate the Basic Salary which is approximately 50% of the CTC. 12% of Employee Share towards PF 8.33% of Employee Share as Family Pension Funds 3.67% of Employer Share for EPF

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