Pay strategy new thinking for the new millenniumPresentation Transcript
Presented By: Group #2 Members:Syed Awon Hussain Shah 226Bashir Ahmed 211Muhammad Mumtaz 215Muhammad Naeem 216
Pay Strategy Support organization’s business strategy AndContribute organizational Effectiveness
Changing Environment Organizations Business Individual Organization Design Pay system
Reasons Pay Practices Hard To ChangePay system Change is ComplexOrganizational Hurdles
Disadvantages ofMisaligned Pay Practice Value High Cost in Compensation Inappropriate & Misdirected Behavior
Globalization Impact Moving Products and services across the national boundary in seamless way Greater Competition Quick and Improve Customer Services Advance IT system, Knowledge and Skills are the way to be competitive today.
Cont’d Organizations No Longer Afford Extensive Hierarchies Individuals No Longer have Loyalty Contract
Need of Key Skills • Demand more then Supply • Hot Talent • Negotiation
Diversity Employee from different areas Individual Differences Reward System Teams Collective Response
Muhammad Mumtaz 215
Pay the person For individual worth (knowledge, skills andcompetencies) rather than for the value of a job theyperform.
Cont’d Pay system based on job and job evaluation Individual had stable duties. Add considerable value due to high knowledge and skills Very dangerous and misleading to pay them according to job worth rather then their individual worth.
Job and Job evaluation Stable duties Market value of individual High level of knowledge and skills Job worth High level of performance
Payment method According to market value According to knowledge According to skills According to competencies Considering the internal and external market labor into account More emphasize on external
Challenge in paying individual Developing good measure for Their skills, knowledge and competencies Measure Use by mostly organization, Leadership and communication ability Technical and business knowledge
Future perspective Detailed intranet based description Knowledge and skills to be effective Knowledge and skills profile
Important objectives Motivate individual to learn the skills and knowledge Raise the pay of individual to become more valuable Clearly key to developing pay system and retain valuable human capital.
Bashir Ahmed 211
Reward Excellence Through a pay for performance compensation thatestablishes a clear relationship between a significant amountof pay and attainment of organizational objectives.
Cont’d Important way to attract and retain top performance. potentially powerful motivator. Partial substitute for traditional loyalty employment relationship.
Cont’d Traditional Evidence: • Pay cannot be a motivator. • Does not motivate the employees.New Evidence: • Does not support this view. • Significance amount of pay and behavior.
Elements of reward Career Long term development incentive Promotion opportunities Short term incentive Work/life balance Flexible Base salary and work benefitsenvironment
Traditional Approach to Pay for performance Pay on the basis of merit. Disadvantages: • Failure approach • Poor Measure • Small changes in compensation • No motivational impact • Failure to retain high performance.
Pay for Performance Plan Important for organization reward system. Satisfy needs. Reflect the Strategy, structure and business process. Fits the characteristics of organization .
Types: PSP Cash plan Deferred plan Combination plan
Seniority-Based pay system Primarily Encourage individual to stay with the organization Don’t reward skill development or performance effectiveness. Don’t motivate individual to improve their skills or perform effectively. Fails to develop human capital or organization and retaining the most valuable employees.
Muhammad Naeem 216
Individualizing the pay system To give employees choices in how they are rewarded and what reward they receive.
Cont’d One-size-fits-all approach Give little choice Homogeneous work force Does not fit a divorce work force
One-size-fits-all approach With Diverse Workforce: • Tremendous risk of giving individual reward. • Negative consequences. • Negative for motivation. • Failing to reward with things that they value highly.
Characteristic of individual pay system Attraction Retention motivation
Reward and organizational culture Diverse workforce Similarities and differences among employees. Homogeneous workforce Same type of job Same condition
Strategic reward Embrace everything that employees value in theemployment setting.
Strategic reward Framework
Alternative Considerable amount of choice Give option to individualsWork simply for cash, having extensive benefits, or choosethe type of pay for performance system.
Advantages Tailoring rewards to employees preferences Greater Effectiveness Retaining diverse workforce Negative point Create too diverse workforce that wants to establish a strong unified Culture.
Cont’d Organizations are, • Moving towards a more diverse workforce. • Becoming more global. • Flexibility and individualizations.