Building Internally Consistent Compensation System by Dr. G C Mohanta


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Building Internally Consistent Compensation System

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Building Internally Consistent Compensation System by Dr. G C Mohanta

  1. 1. Building Internally Consistent Compensation System Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt) Professor Al-Qurmoshi Institute of Business Management Hyderabad 1
  2. 2. Components of Compensation System 2
  3. 3. Types of Equity  Internal Equity - Fairness of the pay structure, relationship among jobs within a single organization  External Equity - Comparisons of similar jobs in different organizations  Individual Equity - Comparisons among individuals in the same job within the same organization 3
  4. 4. Equity Theory 4
  5. 5. Creating Internal Equity through Job Analysis and Job Evaluation 5
  6. 6. Internal Equity in Practice Job analysis Collecting data about jobs Job evaluation Valuing jobs 6
  7. 7. Job Analysis  The systematic, formal study of the duties and responsibilities that comprise the job  The process seeks to obtain important and relevant information about the nature and level of the work performed  It Can be used to identify/determine: • Skill levels • Compensable job factors • Work environment (e.g., hazards; attention; physical effort) • Responsibilities (e.g., fiscal; supervisory) • Required level of education Wednesday, October 09, 2013 7
  8. 8. Types of Data Collected Through Job Analysis  Work Activities – work activities and processes; activity records; procedures used; personal responsibility  Worker-oriented activities – human behaviours, such as, physical actions and communications on the job; elemental motions for methods analysis; personal job demands, such as, energy expenditure Wednesday, October 09, 2013 8
  9. 9. Types of Data Collected Through Job Analysis (Contd.)  Machines, tools, equipment, and work aids used  Job-related tangibles & intangibles – knowledge dealt with or applied; materials processed; products made or services performed Wednesday, October 09, 2013 9
  10. 10. Types of Data Collected Through Job Analysis (Contd.)  Work performance – error analysis; work standards; work measurements, such as, time taken for a task  Job context – work schedule; financial and nonfinancial incentives; physical working conditions; organizational and social contexts  Personal requirements for the job – personal attributes, such as, personality and interests; education and training required; work experience Wednesday, October 09, 2013 10
  11. 11. Job Analysis Result • Job Description – Job based – Tasks – Work performed • Job Specification – Employee based – Knowledge, skills & abilities – Experience 11
  12. 12. Job Description  Output from job analysis used to develop job description and job specification  It defines the responsibilities, requirements, functions, duties, location, environment, conditions and other aspects of jobs  It may be developed for jobs individually or for the entire job families  It describes and focuses on job itself and not on any specific individual who might do the job Wednesday, October 09, 2013 12
  13. 13. Job Specification  It defines worker characteristics (i.e., knowledge, skills and abilities) required to perform the job competently Wednesday, October 09, 2013 13
  14. 14. Job Evaluation  Methods and practices for ordering jobs or positions with respect to their value or worth to the organization  A system for comparing jobs for purpose of determining appropriate compensation levels for individual jobs or job elements 14