compensation slides human resource management

These slides deal with the compensation benefits for employees

1. Compensation Management/Total Reward System

2. What is the conceptual foundation of compensation and reward systems?

3. What is Compensation/Reward System? Each element of compensation and benefits is known as “reward”

4. Total Reward System (Direct Compensation and Indirect Compensation) Direct Compensation (Directly Performance Based) Indirect Compensation Base pay. This is typically a flat rate, either as an hourly wage or salary. Benefits. This is indirect compensation that provides something of value to the employee. Benefits may include health insurance; payments to employees if they are unable to work because of sickness or accident; retirement pay contributions; and provision of a wide variety of desired goods and services such as cafeteria service, tuition reimbursement, and etc. Wage and salary add-ons. This includes overtime pay, premium pay for working weekends and holidays, and other add-ons. Incentive pay. Also called variable pay, incentive pay is pay for performance, and it commonly includes items such as piece work in production and commissioned sales.

5. Current trends in Compensation Management Please categorize the following terms as direct or indirect compensation:

6. Equity Theory and Perceived Fairness Equity theory focuses on distributive justice (what people receive as a result of their knowledge, skills, and effort on the job).

7. The relevance of equity theory to employee motivation has been supported, with some interesting exceptions.

8. Forms of Equity

9. Setting Pay Rates Discussion Questions You have been asked to evaluate whether your organization’s current pay structure makes sense in view of what competing organizations are paying. How would you identify the organizations with which to compare your organization? Top management has decided that the organization is too bureaucratic and has too many layers of jobs to compete effectively. You have been asked to suggest innovative alternatives to the traditional “job-based” approach to employee compensation.

10. 1. Market-based approach/External approach This approach involves conducting formal or informal salary surveys to determine what others in the relevant labour markets are paying for particular jobs. Then, they use these figures to price their own jobs. 2. Job Evaluation Method/Internal approach consists of following methods : Job ranking method Classification method/Grading method Factor Comparison method Point factor method

11. Example Job Ranking Method The job ranking system ranks positions based on their overall value to the firm. Chief Executive Officer (CEO) Chief Financial Officer (CFO) Chief Operating Officer (COO) Director of Marketing Human Resources Manager: Senior Software Engineer Customer Service Representative Administrative Assistant In this example, jobs are ranked based on their perceived value and contribution to the organization. The CEO, CFO, and COO roles are ranked higher due to their strategic importance, specialized skills, and significant impact on the organization's success. Jobs lower in the ranking, such as Customer Service Representative and Administrative Assistant, are considered to have less overall organizational impact or require fewer specialized skills. The job ranking method helps establish a hierarchy within the organization based on the relative worth of different positions.

12. Example Classification method/Grading method The classification method involves grouping jobs based on predetermined job classes or grades. Executive Leadership: Chief Executive Officer (CEO): Chief Financial Officer (CFO): Management: Director of Marketing: Human Resources Manager: Professional/Technical Administrative/Support Operational/Entry-Level In this example, jobs are classified into distinct categories or grades based on the nature of the work, level of responsibility, and required skills. The Executive Leadership category includes top-level executives, while Management includes roles with significant leadership responsibilities. The Professional/Technical category is for specialized roles, and the Administrative/Support and Operational/Entry-Level categories encompass roles with varying levels of administrative and operational tasks.

13. Example Factor Comparison Method Skill Responsibility Working Condition Software Developer High Medium Low Marketing Specialist Medium Medium high Administrative Assistant Low Low Low The factor comparison method is a job evaluation technique that compares jobs based on a set of factors, assigns a numerical value to each element, and computes the total score for each task. Let’s use a scale of 1 to 5.

14. The point factor method is a quantitative tool for determining the relative value of various positions within an organization. It entails allocating numerical values (points) to several elements deemed significant in establishing work worth. These elements commonly include skills, responsibilities, working circumstances, and other important job characteristics.