...Strategy * The first strategic decision is about the relative proportions of base pay, performance pay, and indirect pay to include in the compensation mix. * Three other choices follow – what method(s) should be used for establishing base pay, what type(s) of performance pay(if any) should be provided, and which elements of indirect pay should be included. Compensation Mix choices: Base pay job evaluation, market pricing, and pay for knowledge Performance pays individual performance, group performance, and organization performance Indirect pay Mandatory benefits, pension plan, health and life insurance, pay for time not worked, employee services, and other benefits. Base pay: * Base pay: is the portion of an individual’s compensation that is based on time worked not on the output produced or results achieved. * Base pay accounts for 75 to 80 percent of the compensation for a typical employee, performance pay about 5 to 10percent, and indirect pay about 15 percent of the total compensation. However these proportions vary across firms. * Base pay is guaranteed by the employer if a person works for a certain amount of time; he or she is paid a prespecified amount of money. In some case, this amount is calculated on a hourly basis, in others daily, in others weekly, or monthly, or annually. * When base pay is calculated on an hourly basis, base pay is known as wage * When base pay is calculated on a weekly, monthly, or annual basis...
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...CHAPTER 15: COMPETENCY-BASED PAY Overview: This chapter looks at pay based on competencies, the knowledge, skills, and abilities that make employees valuable to an organization. INTRODUCTION The distinguished Management educator, Ed Lawler, in an article looking back at the dot-com era and its implications for the future of Compensation Administration concludes that this era "accelerated an inevitable move from focusing on paying individuals for the job they do to paying individuals for the skills knowledge and competencies they have."1 This is not the only article that states that paying for the person would replace paying for the job in the future. There was a whole rash of articles in the late 1980's to the mid 1990's that carried the same theme. It is significant that since then there has not been more attention paid to this idea. Competency pay is a fancy term given to the idea of paying for the person rather than the job. In fact, very few compensation plans pay for only one thing. As discussed in the first chapter of this text, pay can be based upon the job, the person or their performance, and most systems are combinations of all three. The real questions are which one will be the base platform for the other two and what weight will each have in the decision of how much to pay the individual. The past chapter focused upon a compensation system based upon the job. In the chapters that follow this one, we will examine how factors relating to the person and to his or...
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...Skill Analysis “Skill analysis is the systematic process of identifying and collecting information about the skills required of a person’s work in an organization”. [1] The approach to skill analysis still has to define and identify the same decision as those of job analysis. Questions still need to be answered such as, what is skill based pay, what skills employee’s will need to be certified in , who will be involved in the plan, and what effects there will be on direct supervision and how useful will the results be to the organizations? Once this plan is designed, the decision needs to be made how will it benefit the overall objective of the organizational strategy? Skill base pay is a base pay system that “rewards employees for the current job that they hold.” Pay increases are earned based on attaining additional skills. Skill base pay is a used as a motivation tool for employees because mastering skills will lead to more compensation and advancement opportunities. Some advantages of using skill base pay include: flexibility, smaller staffing, empowered employees, increased morale, and faster productivity. Employees have to demonstrate mastery of the required skills in order to move to the next level. This reward is based solely on the employee’s skills, and not the job itself. “Skill based pay plans enables cross-trained employees to more effectively control, and eliminate production or service delivery bottlenecks” [2]. Skill base plans allows...
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...INTRODUCTION Earlier, in many organizations, people were tested based on some conventional tests of abilities and intelligence. But those tests were unable to predict one’s job performance or success in life as well as his career. Even, sometimes it is seen that the selection was biased. So, the term competency has introduced to overcome these defects, suggesting that it made possible the development of valid and unbiased predictors of performance. Competency is the combination of someone’s abilities, skills, knowledge, values and interest. Knowledge is defined variously as expertise, and skills are the practice of understanding through experience and education. So, competency based job analysis become one of the vital factors in today’s HR practices in modern organizations. Competency-based job analysis means describing a particular job in terms of the measurable, observable and behavioral competencies that an employee doing the job must exhibit to the job perfectly. DISCUSSIONS Job analysis Job analysis is the basic and important part of human resource management. It is a term used by human resource managers for the processes of collecting information related to job contents. It is conducted after workforce analysis and availability analysis. It also indicates what activities and accountabilities the job entails. It is an accurate recording of the activities involved. Every job is multifaceted and there are several methods in preparing job analysis. Most organizations...
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...Scales 16 14 References 17 Performance Appraisal A performance appraisal (PA) is a systematic and periodic process that assesses an individual employee’s job performance and productivity in relation to certain pre-established criteria and organizational objectives. According to Michael R. Carrell and Frank E. Kuzmits “Performance appraisal is a method of evaluating the behavior of employees in the work spot, normally including both the quantitative and qualitative aspects of job performance”. To collect PA data, there are two main measures: Objective Measures Subjective Measures Figure: Methods of Performance Appraisal Compensation Determination Definition Employee compensation refers to all forms of pay going to employees and arising from their employment. Direct financial payments include wages, salaries, incentives, commissions and bonuses whereas financial benefits like employer-paid insurance and vacation. It has to main components: Figure: Employee Compensation Different types of compensation include:...
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....2 Customer satisfaction ...............................................................................................................................2 Employee value creation .........................................................................................................................2 Un-parallel product quality ....................................................................................................................3 Compensation Objective ..............................................................................................................................3 Increased employee productivity ........................................................................................................3 Fairness in pay...
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...Chapter 1: Strategic Role of HRM Strategic Role of Human Resources Management Human Resources Management (HRM): management of people in organizations to drive successful organizational performance and achievement of organization's strategic goals - Attract, retain, engage diverse talent - Hire best, develop talent, create productive work environment ** HR Strategy align with Company Strategy Better HR practices = Better Organizational performance Which practices? ○ Profit Sharing Result? Positive Relationship with turnover, productivity, corporate performance ○ Results Oriented Performance Appraisal ○ Employment Security Human Resource Management Responsibilities 1) Traditional: Operational (Administrative) Category - Hire/maintain employees - Offer advice - Plan future workforce requirements - Appraising performance - Disciplining/counselling - Health and safety - Complaints Handling Outsourcing: using outside vendors to handle specified functions on permanent basis Employee counselling, recruitment, payroll, training, benefits administration 2) Strategic Category - Strategic partner ○ Help achieve strategic objectives Strategy: company's plan on how it will balance internal strengths and weaknesses with external opportunities and threats to maintain competitive advantage • HR Challenge: building leadership pipeline (manage talent shortage) Role in Formulating Strategy - HR professionals + line managers do environmental scanning: identify and analyze...
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...Assignment (Establishing Strategic Pay Plans) ALDO YUDA PUTRA ARRY PANDOWO CHAERUN NISA PUTRI MANAGEMENT MAJOR FACULTY OF ECONOMY AND SOCIAL SCIENCES BAKRIE UNIVERSITY JAKARTA 2013 Basic Factors in Determining Pay Rates Employee compensation refers to all forms of pay going to employees and arising their employment. It has two main components, direct financial payments (wages, salaries, incentives, commissions, and bonuses) and indirect financial payments (financial benefits like employer-paid insurance and vacations). Two basic ways to make direct financial payments to employees: 1. Time-based pay 2. Performance-based pay Legal Considerations in Compensation Various laws specify things like minimum wages, overtime rates, and benefits. For example: 1. 1931 Davis-Bacon Act allows the secretary of labor to set wage rates for labourers and mechanics employed by contractors working for the federal government 2. 1936 Walsh-Healey Public Contract Act sets basic labor standards for employees working on any government contract that amounts to more than $ 10.000 3. Title VII of the 1964 Civil Rights Acts makes it unlawful for employers to discriminate against any individual with respect to hiring, compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, or national origin. 4. 1938 Fair Labor Standards Act contains minimum wage, maximum hours, overtime pay, equal pay, record-keeping, and child labor provisions...
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...Assignment #1: Setting the Stage for Strategic Compensation and Bases for Pay Katilia Y. Reed Professor: Kristin Araujo BUS-409 April 30, 2012 1. Describe the three main goals of compensation departments. Internal consistency- Compares all jobs with in a company and defines the relative value of each individual job establishing job structure or hierarchy. This ensures that the workers are being paid in relative comparison to the amount of skill, knowledge, training and ability the worker has as well as in relation to the level of each needed to be applied in order to perform the jobs proficiently Job analysis and job evaluations have to be done systematically in order to determine the levels needed and the wage amount comparable to work amount. Recognition of individual contributions- Establishes pay structures and identifies pay rate differences for jobs of unequal worth and the framework or recognizing differences in employee contribution. This will help to ensure that employees are paid according to their credentials, knowledge or job performance. Pay grades and pay ranges are structural features to the pay structure. Jobs are grouped for pay policy application. There is no single formula to determine what is sufficiently similar in terms of content and value to warrant grouping in to a pay grade. Pay ranges build upon the pay grades establishing minimum, maximum, and midpoint pay rates. Market competitiveness- This is the aspect that attracts new employees as...
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...activities. She came up with the idea for this business during her recovery. She found that while there were plenty of business that sold fitness and conditioning equipment, they lacked in knowledge. They often gave poor advice on how to use the equipment and what was best to purchase based on customer needs. In order to provide high quality service, each Fit Stop will employ a physiotherapist( to provide advice on such problems as injuries or back pain), and a person with a bachelor’s degree in kinesiology( to provide advice on training for sports and other physical activities). The remainder of the staff in the store will consist of a manager, with a bachelor of commerce degree, and sales staff that will have at least high school diplomas. It is expected that 8-12 sales staff will be needed at each store. The stores will be located in shopping mall and will operate on a seven day a week basis. They will be open from 9:00-9:00 weekdays, 9:00-6:00 Saturdays and noon to 6:00 on Sundays. Susan believes that the key to her business success will be highly motivated and knowledgeable employees with a concern for customers and are able to work as a team. The key aspect of the company is to be the most up-to-date and advance supplier of new products, techniques, and customer service. Susan does not know much about compensating her employees, she needs help in determining and developing a compensation system. Road Map...
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...Practices February 20, 2011 “The ultimate goal of a pay system is to align the goals and interests of employees with the goals and interests of the organization” – Robert L. Heneman The Impact of Compensation Practices The business arena is ever changing. Where people work, how they work, the relationships in the workplace and compensation for their work continues to change. Hence, “It will be the challenge of compensation professionals to devise ways to reward and motivate employees who work under increasingly flexible arrangements” (Bennett, 1995). Most people interchange and have the perspective that pay and compensation are the same when in reality, compensation is more than just monetary rewards. Compensation is often misunderstood, and can also be misapplied. More often than not, it is out of synch with the values and processes of an organization. This is because despite continued organizational changes, the actual strategies for administering and implementing compensation is misaligned with the rapid changes in the company. “Pay can no longer be seen as a mere expense and cost of doing business, but instead must be viewed as an investment that is closely linked to the long-term success of the organization” (Flannery, et. al., 1996). As Cable and Judge (1994) note, “compensation systems are capable of attracting (or repelling) the right kinds of people because they communicate so much about an organization’s philosophy, values and practices”. Traditional...
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... REPORT Title: Business Report To : CEO of ‘Fitright; INTRODUCTION This is a business report for the Fitright Company based on an Organizational scenario. It is an auto parts supply Company located in Beijing, China. The CEO wants to know the best guidelines for the recruitment and selection process and competent procedures in place of Guanxi practices. The aim of assignment is to provide a practical recommendation to CEO of Fitright for the HRM Activities advantages in response to the questions given in the task areas. As a resource person of HRM, I have mentioned my opinions as an advice to follow best procedure Fitright would achieve and maintain a substantial competitive advantage to become a successful organization. About Human Resource Management (HRM) What is HRM? Human Resource Management (HRM) is an activity of the people who work in the organization. It can be performed by the management and link managers within the organization. It is different organizational functions to be used simple and easy way to employee management solution. The aim of the HRM is to develop the people in a competent way through work. What is Strategic Human Resource Management (SHRM)? Strategic Human Resource Management (SHRM) is an organizational functions joining the people about the HRM strategies to the organizational strategies more systematically and specifically with the organization. The SHRM activities help to interact...
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...to complete this assignment. First and foremost, a special thanks to my module lecturer miss for conducting interesting and knowledge feeding sessions, with videos and real time examples that were shown and discussed respectively which helped me to complete my task with ease. Last but not least, I would also like to extend my gratitude towards my family and friends who helped and supported in making the completion of this report a possibility. HUMAN RESOURCE MANAGEMENT INDIVIDUAL ASSIGNMENT Executive summery The purpose of this report is to explain about main element of human resource management to general manager of Knowledge Ltd. Knowledge Ltd established in 2000 based in United Kingdom. Report wills discuses about personnel management, human resource management and differences between those two things. HRM department has to do lot of function and when practicing them HRM department take lot of responsibilities. Those responsibilities can identify under main five roles. HRM department can‟t take decision as they like way because legal and regulation framework impact with them. Therefore this report attends about them. Human resource planning very helpful to manages employees because it based on various reasons. Recruit and selection process help to fire best person for the vacant position but this report discuses various effectiveness about it with KFC and P&G. Assume that company fired new employee, after then the company must monitor his or her performances. Not...
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...Evaluations” by Carmen Campbell for Professor David Gebhardt My position pays what? How does my job rank among other jobs in the area? Responsibilities which encompass a job determines compensation, from which, a company will pay an employee’s for their time, skills or services used to complete assigned work. Job evaluation consists of factors which describe the responsibilities required of a particular job and the value the company has assigned to factors the employee accomplishes. As an employer and an employee understanding the factors associated with job evaluation are important to determine if the responsibilities and pay are associated with services provided are fair. For simplicity we will use the following factors to compare two evaluation methods: skill, effort, responsibility and working condition. (U.S. Equal Employment Opportunity Commission, 2010). The way a company choses their pay scales vary; however we will compare the Hay Method and the Factor Evaluation System. Job evaluation encompasses numerous areas of a job and the skills factor is a starting point for a company to determine importance of skills possessed by the employee. Skills refer to required abilities to accomplish assigned tasks. Skills are “measured by factors such as the experience, ability, education, and training required to perform a job.” (U.S. Equal Employment Opportunity Commission, 2010). Skills required can vary from heart surgery to mopping the floor to reprogramming...
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...information, resources and skills who seek to combine efforts to achieve a common goal. It has 5 characteristics: 1. Shared Goal 2. Interdependence- members cannot achieve goals by themselves. To meet goals you must rely on other members. 3. Bounded- identifiable membership (know who’s on the team). 4. Stability- teams work together for a meaningful length of time. (Tenure). 5. Authority to manage own work and internal processes. Teams operate in larger social system context. (Larger organization) A working group by contrast, consists of people who learn from one another and share ideas but are not interdependent in an important fashion and are not working towards a shared goal. Help others but maintain the goal of achieving independent goals. 4 Challenges proving importance of teams: 1. Customer Service- Transactional models of teamwork are characterized by discrete exchanges, are short term in nature and contain little interactions between customer and the vendor. In contrast relational models of teamwork occur over time , are more intense, and are built upon a relationship between the people involved. 2. Competition- Industry leaders often enjoy vast economies of scale and earn tremendous profits. Teams withing organizations need to work even harder to compete with industry leaders and even often to specialize more. 3. Information Age- In the knowledge era employees are knowledge workers and teams are knowledge integrators. Managers have...
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