...Foundations of a Compensation Strategy Dana Williams BUS434: Compensation & Benefits Management Instructor Gwendolyn McCants-Allen July 7, 2014 An effective compensation strategy is made up of many different components and will directly support the organizations business strategy. As stated by Steve Elliott, the compensations strategy is “externally competitive, legally compliant, compatible with the culture and appropriate for the workforce” and above all it is perceived as fair (Miller, 2014, p. 1). When a company is creating a compensation strategy there are four components that should be reviewed in order for the company to be competitive in the global economy. The four components are; as stated by Henderson, (2006), “1) the work that must be performed by some work unit or individual, 2) the kinds and levels of knowledge and skill required, 3) the quality of people needed to promote organizational success, and 4) the rewards the organization can offer to its members that promote a work culture that ensures accomplishment of organizational strategy” (p. 5). In order for the compensation strategy to be effective, the process needs to create a clear link between the job description, performance evaluation, internal salary comparison and the external salary survey. A good starting point in creating a compensation strategy is to create a job description for each position within the company. A job description can be defined as a written statement that...
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...value they bring to the organization * Strategic impact—maximize productivity and effectiveness in achieving organization’s strategic goals There are three key components of developing job-based compensations plans: achieving internal equity, achieving external equity, and achieving individual equity. This illustration summarizes how these are interrelated and the steps involved in each component. The large majority of U.S. firms rely on this or a similar scheme to compensate their work force. One category of compensation tools is a job-based approach. This approach assumes that work gets done by people who are paid to perform well-defined jobs. Each job is designed to accomplish specific tasks and is normally performed by several people. Because all jobs are not equally important to the firm and the labor market puts a greater value on some jobs than on others, the compensation system’s primary objective is to allocate pay so that the most important jobs are paid the most. * Establish a job-based compensation scheme that is internally consistent and linked to the labor market. * Understand the difference between a compensation system in which employees are paid for the skills they use and one in which they are paid of the job they hold. * Internal versus External Equity Will the compensation plan be perceived as fair within the company, or will it be perceived as fair relative to what other employers are paying for the same type of labor? * 2. Fixed...
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...Analysis Job Analysis Performing a job analysis is a crucial component of Human Resource Management. This undertaking has a significant impact on the company and employee. According to Dr. Tara Carprenter and Tim Barnhart (2007 para. 1); “job analysis consists of identifying a job’s component parts and then discovering what employee behaviors are required for successful performance (Carpenter, Tara Dr. & Barnhart, Tim).” This analysis will then transition and lead to additional HR functions such as recruiting, compensation determination, hiring selection, training needs and performance appraisals. The ultimate goal of job analysis should be to improve performance and productivity. When beginning the process of job analysis, one needs to collect data to understand the position and the departmental requirements. Managers can collect the data using a variety of methods including; interviews, questionnaires, historical data analysis, reports and records. Managers need to outline tasks, responsibilities, knowledge required, skills, experience and performance standards. Developing an outline will considerably assist the HR team in determining its recruitment strategy and compensation package. In the attached job analysis chart, the Essential Function Importance Level (EFIL) methodology was utilized to assist in the creation of a job analysis for a Fraud management position. The EFIL model provides a formula to determine level of importance of each...
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...--------------------------------------------------------------------------------------------------------- FIN 111-Tutorial Questions (Spring 2012) Lecture 1- Introduction to Financial Management Q 1. 1- The Financial Management Decision Process What are the three types of financial management decisions? For each type of decisions, give an example of a business transaction that would be relevant. Q 1. 2- Sole Proprietorship and Partnership What are the four primary disadvantages to the sole proprietorship and partnership forms of business organization? What are the benefits are there to these types of business organization as opposed to the corporate form? Q 1. 5 - Goal of Financial Management What goal should always motivate the actions of the firm's financial manager? Q 1. 6- Agency Problems Who owns a corporation? Describe the process whereby the owners control the firm's management. What is the main reason that an agency relationship exists in the corporate form of organization? In this context, what kinds of problems can arise? Q 1.9- Not For Profit Firm Goals Suppose you were a manager of a not for profit business (a non-profit hospital), What kinds of goals do you think would be appropriate for this firm? Q1. 14- Executive Compensation Critics have charged that compensation to the top management in Australia is simply too high and should be cut back. For example, focusing on large corporations, Ralph Norris of Commonwealth Bank has been one of the best compensated...
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...This is a proposal for a compensation plan for InterClean as we move toward our new structure. We have merged with EnviroTech and we are evolving into not just a company that offers product but also a service. We have invested in training and will continue to do so to retain our employees and having a solid compensation plan in place will assist us in doing so over the years. This plan will be used by management for a variety of purposes to further the existence of the company. It maybe adjusted according the business needs, goals, and available resources. This proposal for our new compensation plan will used to recruit and retain qualified employees; increase or maintain morale/satisfaction, reward and encourage peak performance, achieve internal and external equity, reduce turnover and encourage company loyalty. Recruitment and retention of qualified employees is a common goal at InterClean. To some extent, the availability and cost of qualified applicants for open positions is usually determined by market factors beyond the control of the employer. While we are setting compensation levels for new hires and advertize those salary ranges, it does so in the context of other employers seeking to hire from the same applicant pool. The morale and job satisfaction can be affected by compensation package. Sometime there is a balance that must be reached between the monetary value we are willing to pay and the sentiments of worth felt be the employee. In an attempt to save money...
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...East West University TERM PAPER On Compensation strategy of RAHIMAFROOZ HRM412 Submitted to: SSM Sadrul Huda Assistant Professor Department of Business Administration Submitted by: Mahbuba Chowdhury 2004-3-10-013 Sec-01 Md. Tarekul Islam 2005-2-10-161 Sec-01 Shamsun Nahar Airin 2005-2-10-231 Sec-02 Tangina Jesmin 2005-3-10-029 Sec-02 Date of Submission: 14.08.2008 Acknowledgment At first we present our due regards to the Almighty, who has provided us the brilliant opportunity to build and complete this term paper successfully with good health & sound mind. We would like to acknowledge our instructor SSM Sadrul Huda for his guidance starting to data collection and preparing for the writing; our regards and heartfelt thanks to him. Moreover, we are grateful to our administration as they provide us with the facility to use computer lab for browsing net & study room for teamwork. May be it would have been impossible to finish the report in time if we didn’t get the facility. Letter of Transmittal August 10, 2010 SSM Sadrul Huda Assistant Professor Dept of Business Administration East West University 45 Mohakhali C/A, Dhaka 1212 Dear Sir, Here is the term paper that you have asked us to prepare as a group for our course Compensation Management (HRM- 412). We have done group work for this term paper and did it as per as the rule. We are encouraged...
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...Human Resources Systems: Systems that maintain employee records; Track employee skills, job performance, and training; and support planning for employee compensation and career development. Examples System Description Organizational Level Training and development Track employee training, skills, and performance appraisals operational Career pathing Design career paths for employees knowledge Compensation analysis Monitor the range and distribution Of employee wages, salaries, and benefits Management Human resources planning Plan the long-term labor force needs of the organization Strategic Types of HR information systems: The function of human resources (HR) departments is generally administrative and common to all organizations. Organizations may have formalized selection, evaluation, and payroll processes. Efficient and effective management of "human capital" progressed to an increasingly imperative and complex process. The HR function consists of tracking existing employee data which traditionally includes personal histories, skills, capabilities, accomplishments and salary. To reduce the manual workload of these administrative activities, organizations began to electronically automate many of these processes by introducing specialized human resource management systems. 1. The Payroll Module: It automates the pay process by gathering data on employee time and attendance, calculating various deductions and taxes, and generating periodic pay cheques and...
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...Career Development Plan Part VI—Compensation HRM/531 Human Capital Management December 20, 2010 University of Phoenix 1 Career Development IV: Compensation Compensation Plan In the challenging and unpredictable economic market, companies are trying to redefine sales strategies, incentives, and pay compensation. Labor commands a high level of overhead for a company; therefore, pay policies, benefits, and compensations are critically important to be evaluated closely because it impacts the way of life for all employees. Developing a workable compensation plan enables both workers and employers to achieve mutual goals. When employers reach set goals, rewards and incentives set forth within the compensation plan are based upon the level of achievement. To succeed in uncertain times, companies must adapt to the needs of current and potential employees. To do this, a comprehensive compensation plan, which motivates its employees, keeps costs at a minimum, and provides equality for all will provide employers with an advantage. To achieve a successful sales compensation plan, the sales goals are defined clearly, realistically, and challenging to the employee. Tracking and measuring goals help to determine performance levels that impact an creating an employee’s pay structure. To do accomplish this, InterClean incorporated a scoring system that includes experiences, education, and other qualifications. The compensation plan for new sales team will consist of the...
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...International Human Resource Management: Chapter – 6: COMPENSATION MANAGEMENT Introduction: One of the key components of IHRM is the compensation administration in MNCs. Today, compensation and employee benefits contribute to 40-50% of the total costs. Compensation is strategically reported and monitored at the broad – levels and with the investors to assess the health of the organization. What is compensation management? Effective and efficient process of managing the earnings – financial and non financial rewards of the employees in an organization based on their performance towards organizational goal is called compensation management. International Compensation is an internal rate of return (monetary or non monetary rewards / package) including base salary, benefits, perquisites and long term & short term incentives that valued by employee’s in accordance with their relative contributions to performance towards achieving the desired goal of an organization. It influences: • • • Organizational culture Recruitment and selection of competent employees Motivation and performance Objectives of compensation: Compensation decisions are strategic decisions and play a key role in achieving performance and sustainable competitive advantages for national as well as international firms. Therefore the key objectives are: • • • • • Attract employees who are qualified , experienced and interested in international assignments. Facilitate the movement of expatriate’s from one...
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...framework based on expectancy theory examined the relationship between satisfaction with compensation and work motivation. The dimensions i.e. fixed pay, flexible pay, and benefits were examined with regard to satisfaction with compensation. The work motivation on the other hand was studied using the effort and performance dimensions. Literature research as well as practical survey consisting of self-administered questionnaire was used to study the population in question, which were managerial cadre employees of the sales departments of the cellular service providers in Lahore. The relationships between satisfaction with compensation and work motivation were analyzed by using Chi Square and correlations. The main findings of the study were: 1) satisfaction with compensation can be factor of work motivation. 2) flexible pay is not a motivating factor in the jobs which the employees were holding. 3) benefits do not have a significant impact on work motivation. Key words: Compensation, Satisfaction, work motivation, expectancy theory 1. Introduction In the 21st century organizations, by and large, people pay much more attention to their life style and the money they earn from the work than their predecessors. However, it still remains unclear whether many of them would continue working if it were not for the money they earn. Employee expectations of a compensation plan are that it is fair and equitable, that it provides them with tangible rewards commensurate...
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...Foundations of a Compensation Strategy Datrise D. Boyd Bus 434: Compensation & Benefits Management Professor Furlong, J. Sept 10, 2012 Foundations of a Compensation Strategy The sole purpose of a compensation strategy is to “develop a compensation program that recognizes the lifestyle and standard of living of all employees,” (Henderson, R., 2006, pg 3). To define a compensation strategy even simpler, organizations use this strategy to determine how rewards to their employees are distributed. Considering that, compensation is an excellent way to motivate those employees not performing well to do better and those that are working hard to work harder. It is critical that a good compensation strategy be developed and put in place so that companies have a fair process of rewarding each employee for their hard work and determination. “The most effective compensation strategy is one that develops a clear link between the following components: job description, performance evaluation, external salary survey, and internal salary comparison,” (assignment instructions). The position selected for this paper is Human Resource management but first let the discussion focus on the three links mentioned previously. The job description is where potential candidates learn the expectations of the inquired position such as general tasks, functions, and responsibilities. It can also include the position point of contact, specifications such as qualifications or skills needed, or a salary...
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...CHAPTER 19 International Human Resource Management and Labor Relations Chapter Objectives After studying this chapter, students should be able to: 1. Describe the nature of human resource management in international business. 2. Detail how firms recruit and select managers for international assignments. 3. Explain how international businesses train and develop expatriate managers. 4. Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers. 5. Analyze retention and turnover issues in international business. 6. Explain basic human resource issues involving nonmanagerial employees. Describe labor relations in international business. LECTURE OUTLINE OPENING CASE: An Emerging Voice for Workers The opening case discusses the changing nature of the Chinese workforce, as workers become more aware of their value to employers. Key Points 1. China is becoming the largest manufacturing center in the world, providing a large number of workers who are willing to work long hours for low pay. 2. Although this is changing, as the workers become more aware of their value to the employer. 3. Wages and working conditions have been improving, which in turn leads to more spending on the part of workers, serving as an economic stimulus...
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...The internship report titled “Compensation practice and Employee satisfaction in Banking Industry’’, is submitted as an partial prerequisite of the BBA program of University of development alternative The purpose of this internship report is to highlight the overall compensation & employee satisfaction activities of “Exim Bank”, along with the brief description of Exim Bank Limited. Writing this report has been a great pleasure & an interesting experience. It enabled me to know the insight activities of Human resource Department. The research method used for this report was survey. After a good effort I came up with a final questionnaire. This questionnaire was given to the groups of different employees for the research. This project helped me tremendously to understand the implication of my book knowledge in the practical field. It has also shaped some of my basic views like how to communicate & carry oneself in the world of business. I realize that certain information enclosed in this report is confidential & should be confined within academic discourse & interest. I am extremely grateful to you for your valuable guidance, diligent effort & awareness whenever it was required. I tried my best to follow your instruction, schedule, format & discipline obediently & sincerely. To complete this study, I have used structured questionnaire & each of the respondents has been interviewed through it. To represent an apparent sight I have used tables & graphs while analysis...
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...STUDY OF COMPENSATION MANAGEMENT IN HDFC BANK | |TABLE OF CONTENTS |Page no. | | | Acknowledgement |4 | | | Certificate |5 | |1. |Introduction | | | |Objective |6 | | |Limitation | | | |Scope | | | |Research methodology |7 | | | | | |2. |Details of the Project | | | |2.1 Introduction to compensation management...
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...Learning Organizations and Organizational Learning Organizations and Organizational Introduction The world today is experiencing the most rapid pace of change in its history. The purpose of this essay is to discuss what organizational structure is suitable in the business circumstances of today. This essay is to mainly break down piece by piece what learning organizations are and how they come together. To support this argument, firstly organizations will be defined, and then the properties that make an organization effective will be identified. Next organizational structure will be appraised, and what constitutes business environment will be established. Once that has been fully established a quick summary will be provided to reiterate the main source if this paper. Definition Organizational structure is defined as ‘the organization’s formal framework by which job tasks are divided, grouped and coordinated’ (Robbins et al., 2000: 351). Generally an organizations’ structure is considered to be the managerial framework that directs the non-managerial employees. Traditionally western organizational structure can be argued to have developed from the feudal system of government where a strict pyramidal power and class structure existed. Termed as mechanistic organizations they are described by Robbins et al. as being ‘characterized by high specialization, extensive departmentalization, narrow spans of control, high formalization, a limited information network, and little participation...
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