Professional Documents
Culture Documents
Compensation
Compensation improves performance, motivation & satisfaction of employees program for compensation HR responsibility helps to attract, maintain and retain workforce
Compensation
Want to ensure absolute pay is competitive with other Co. and relative pay s/b comparable within the Co. for those that do similar work if worker doing similar work have diff pay rates = dissatisfaction
Objectives of Compensation
Effective programs help:
acquire qualified resources retain present employees reward desired behaviors control costs comply with legal requirements
Objectives of Compensation
HR dept uses job descriptions & evaluations to determine internal equity of pay external equity is achieved by research, conducting surveys to see what other Co are doing
Job Evaluations
Systematic process to determine relative worth of jobs (i.e. level & ranking) to put into categories want to look at duties, responsibilities, and working conditions
Job Evaluations
3 approaches traditionally used 1) Job Ranking
2) Job Grading
simplest, least accurate ranks jobs subjectively according to relative worth analysis try to consider skill, effort, responsibility, and working conditions
similar to ranking categorizes jobs according to their worth try to match job descriptions to grading descriptions pay levels increase with job importance
Job Evaluations
3) Point System evaluates critical factors of each job & points are assigned more widely used many steps involved
Job Evaluations
Examples: safety, equipment , assisting trainees, or accuracy, efficiency, etc, break down responsibility, skills , effort and working conditions into sub-factors
b)determine levels for each factor and attach points to there levels (i.e.. p.398 0-5)
can reward diff levels of responsibility
Job Evaluations
4) review point levels degrees (i.e. across to see relative importance) of subfactors 5) analyst develops point manuals contains written explanation of each job element + defn of what is expected within each subfactors
Job Evaluations
Labor Canada Private Consultants Canada Employment groups Professional organizations Trade & Industrial Associations
want to watch surveys are relevant not out dated, job titles may be misleading between companies
Pay Levels
Job evaluations & survey info are combined using a scatter diagram points long the bottom & $ along the side after all key jobs are plotted a straight line is drawn to indicate the trend between key jobs for other jobs look at where points and $$ meet on straight line = salary
Compensation Structure
Easy to administer of a large no. of jobs can group into job classes the average pay for the jobs within that class = midpt then add/subtract a specified % to be top and bottom of the range (i.e. 15%)
Compensation Structure
Anyone falling below the new bottom is given an increase those above the new top are normally give a wage freeze as new jobs come up job evaluation is done to determine which group the new job belongs employees move within this range based on merit as indicated by their performance appraisals
Pay Differences
Allowed for:
performance differences seniority job revaluation rehabilitation assignment (i.e. back after lengthily illness) demotion pay phased in wage reductions temp & training positions
Pay Secrecy
Many employers prefer not to publish salary levels and specifics for employees levels & ranges can be helpful to motivate employees
New Approaches
Skill/Knowledge Based Pay
need to Id tasks to be performed then ID required skill to complete ID tasks skills are then priced to determine pay rates employees only paid for skills they are able to perform as skill increase pay does too lots of workforce flex - due to cross over skills can reduce disruptions
New Approaches
Variable Pay - objective to improve behaviour to increase performance to keep compensation competitive and control costs performance based can incorporate group individual, business units, Co financial and stock price performance variable components get added together to determine pay
New Approaches
Broad Banding
salary structure that combines large no. of pay grades into a few broad bands advantages:
encourages broadening of skills de-emphasis on promotions eases internal transfers supports a new organizational climate
International Pay
Challenge to develop HR policies to take into account pay difference between countries while maintaining transnational objectives