Conduct a salary survey of what other employers are paying for comparable jobs
Employee committee determines the worth of each job in your organization through job evaluation
Group similar jobs into pay grades
Price each pay grade by using wage curves
Fine-tune pay rates
Pay Grade Structure for Job-Based System Rs 10,000 Rs 30,000 Rs 50,000 Corporate Policy Line Midpoint 250 350 450 550 650 Job Evaluation Points Maximums Pay Grade Width Monthly Pay
WHAT DETERMINES HOW MUCH YOU PAY?
Ability to Pay
Cost of Living
Equity theory describes how an employee determines if his or her pay is fair
An employee judges if his or her pay is fair by examining 4 factors:
The employee’s pay (and other rewards)
The employee’s contributions
Other employees’ pay (and other rewards)
Other employees’ contributions
Equity Perceptions Self Other
Pay should be based upon contributions made by the Employees. Higher effort should be rewarded with higher pay.
Application to Compensation
Pay should be tied to the performance level of individual Employee
EQUITY THEORY PREDICTIONS
Outputs Inputs < Outputs Inputs Outputs Inputs = Outputs Inputs Outputs Inputs > Outputs Inputs Under-reward Equity Over-reward Person B Person A
Pay above Market rate
Attracts better employees
Minimizes voluntary turnover
Fosters strong culture and competitive superiority
Additional compensation costs
Sense of entitlement
Pay at Market Rate
Higher quality of human resources at midrange of market-driven compensation costs
Does not attract higher performers
Turnover will vary with labor demands of competing firms
Pay below Market Rate
Lower compensation costs
Useful in labor markets where unemployment is high
Low morale/job satisfaction
Higher turnover; especially among high performers
Conditions Necessary for Perceptions of Pay Fairness
MANAGERS AND COMPENSATION
Line Managers and Compensation
Evaluate the worth of jobs.
Negotiate starting salaries.
Recommend pay raises and promotions.
Notify HRM department of job changes.
The HRM Department and Compensation
Establish rates of pay.
Oversee job evaluation process.
Conduct salary surveys.
Establish procedures for administering pay plans.
Ensure compliance with antidiscrimination laws.
Communicate benefits information
PACKAGES PRIVATE LIMITED
Established in 1956.
Provides premium packaging solutions for exceptional value to individuals and businesses.
Employ over 3000 people and had sales of over US $ 100 million in 2004.
PAPER & BOARD
CARTON BUSINESS UNIT
CORRUWAL BUSINESS UNIT
FLEXIBLE BUSINESS UNIT
Nestle Pakistan Ltd.
Tetra Pak Pakistan Ltd.
Tri-pack Films Ltd.
DIC Pakistan Ltd.
Packages Lanka Pvt. Ltd.
IGI Insurance Ltd.
IGl Investment Bank Ltd.
Coca-Cola Beverages Pakistan Ltd.
Less Than 10 Years Service 1,358
Between 11 And 20 Years 582
Between 21 And 30 Years 512
Above 30 Years 439
Executive And Management Staff 506
Mission Statement of HR department
Attracts and retains outstanding people by creating a culture that fosters openness and innovation, promotes individual growth, and rewards initiative and performance.
To develop a duality work force & to keep them with the company
MANAGEMENT OF COMPENSATION AND BENEFIT AT PACKAGES
Every body works deliberately towards the environment for getting the reward.
Different things motivates different sort of people.
For some people money matters
On the other hand for others verbal appraisal is of great importance.
One of the most important thing which motivates majority of people is “money”.
“ Pay” in the other words.
Managing of benefits and compensation is a very essential and important both for the employees and employer.
Its not an easy task to retain and maintain the skilled and capable employees.
Compensation managers have to manage this program in such a way which makes employees not only to stay longer with the organization but also improves productivity.
ESTABLISHING PAY RATES AT PACKAGES
Establishing Pay Rates
It is a very tricky and important phenomena.
Packages considered all the internal and external factors like companies Market position, its resources, company’s year performance and progress after viewing all these factors pays has been decided and they tend to satisfied every employees needs and expectations
Workers Min 7000/- per month
Skilled workers Min 8000/- per month
Executive Min 20,000/- per month
Traditional Bases for Pay at Packages
There are two types of traditional bases for pay
Seniority pay system
Seniority pay system reward employees with additions to base pay periodically according to employee’s length of service performing their job.
Merit pay system
Merit pay programs assure that employees compensation over time should be determined, at least in part by differences in job performance.
Bases for Pay Cont....
Most of the firms now-a-days using merit pay system so do PACKAGES.
Merit pay system has many advantages
It rewards individual achievement
People motivated when they were recognized.
Its very good both for the employee and employers
People start working more effectively if they know that their pay has been decided on the bases of their performance.
That's why this pay system has been used in packages.
Bases for Pay Cont........
Seniority pay system has also been used in packages but only for the exceptional case who work for the organization for so many years and put extra effort and was very loyal so in those case seniority pay system can be used.
INCENTIVE OR VARIABLE PAY PLANS AT PACKAGES
Incentive or Variable Pay Plans
Incentive pay or variable pay rewards employees for partially or completely attaining a predetermined work objective.
Companies use incentive pay to reward individual employees , teams of employees, or overall companies based on their performance.
Unfortunately in packages incentive or variable pay plans are not so developed and company only provides with bonuses to their employees on their performance.
All confirmed employees avail annual bonuses.
The criteria for the bonuses is that company give bonuses maximum 7 multiply with their base salary
The bonuses has been given twice a year in January and in august most probably.
Its on the base of individual incentive plans, concept of group incentive plan is not much used in packages.
For example if someone’s salary is 9000 and get bonus 6 on its base salary then
9000 x 6=54000 will be the bonus of that person.
But again its performance base so getting the 6 or 7 is not an easy task employees performance has been observed and evaluate very keenly.
Many incentive plans apply to other categories of employees including sales professionals, managers, and executives
Incentives for Operation Employees
Operations employees are the people who actually do the work.
The most widely used incentive for operational employees plan is the PIECE WORK PLAN.
In this plan worker is paid a piece rate for each unit he or she produces.
Other is straight piecework in which a person is paid a sum for each item he or she makes or sells.
In packages these sort of incentives some times used but not frequently
Its been used when there is urgent need for more production etc.
Incentives for Managers and Executives
Managers play a central role n influencing divisional and corporate profitability
Most firms therefore put considerable thought into how to reward them.
Most managers get short-term bonuses and long-term incentives in addition to salary.
SHORT TERM INCENTIVES AT PACKAGES
Short Term Incentives
The Annual Bonuses:
Packages use this incentive plan for motivating the short term performance of managers and executives.
There are 3 basic issues to considered where awarding short-term incentives:
Fund size and
Packages strictly follow this pattern.
Short Term Incentives Cont….
In packages like most other firms they include both top and lower level managers and mainly decided who’s eligible in one of two ways.
The size of the bonuses varies because bonuses is on your base salary so top managers who’s base salary is more than the lower will get more bonus then the lower.
This techniques has been used in packages.
Short Term Incentives Cont….
The firms must also decide the total amount of bonuses money to make available fund size.
Some use a nondeductible formula, they use the straight percentage usually of the company’s net income to create the short term incentive fund.
Others use a deductible formula on the assumption that the fund should start to accumulate only after a firm has met a specified level of earnings.
Packages uses the nondeductible formula but it has been viewed that some times bonuses has been deducted on the bases of less profit.
Short Term Incentives Cont….
After reviewing the above two factor then performance has been evaluated and then decided that which person is eligible for how much bonuses.
Typically a target bonus is set for each eligible position and the actual award reflects the persons performance.
DIRECT & INDIRECT FINANCIAL REWARDS AT PACKAGES
Direct Financial Rewards
This is the monetary reward that employees receive in return for their mental and physical services offered to the organization .