Assessing Job WorthMeaning:- The basis for pay programs is a pay structure a hierarchy of jobs with pay range or rates assigned- Pay structure are designed so that the greater the worth of a job the higher the pay, grade and range
Methods of Assessing Job Worth Traditional approach Consider internal and external equity and organizational philosophy toward compensation Broad banding Replace narrow wage scale with wider ranges of pay. Pay can be flexibly changed to match performance skills and duties Pay for knowledge Sets a wage based on a specific skill or knowledge set Team pay Group compensation based on the team performance. This encourage employees to strive towards a common performance goal
Developing Wage Structure and Salary Developing pay structure is a process which involves series of steps: job analysis by location job documentation development of a global job worth hierarchy and establishment of salary are specific to each location
Wage and salary structure Contn..
Establish wage benchmarks with comparable industries and use a valid job evaluation system to create a job hierarchy for your organization.
Consider the use of a Pay for Performance system like merit pay, profit sharing, bonuses or incentives.
The worth of a job to the employee is not always strictly financial, often they are low cost intangibles. Be sure that compensation is legal and does not discriminate based on race, age or sex.
Wage and salary structure Contn.. The focal point of a salary structure is the midpoint. The organization can determine the minimum and maximum ranges. The end result of all of the above is a salary structure that should reflect the organization’s philosophy on how it wishes to relate its salary program to the market. In addition, this salary structure should demonstrate the internal job value of positions, and how the organization wishes to mix base salary, benefits and incentives and provide global clarity oh how job valued. Creating a salary structure is not the only step in the creation of compensation plan. An organization must also decide how to administer this compensation plan. This means deciding how and when to give employee increase.
Guidelines for employee salary increases, there are several types of base salary increase: General increases are a monetary or percent increase to their base salary. It is not globally popular A cost-living increases is a type of general increase given to all eligible employees. Promotion increases are given when an employee is moved from one job to another with a higher salary grade. Step increases can be based solely on longevity or some combination of longevity and performance. Merit increases are also known as pay for performance.
Definition of Wages and Salary ILO defined the term wage as “the remuneration paid by the employer for the services of hourly, daily, weekly, fortnightly employees”. (Blue collar workers) The term salary is defined as the remuneration paid to the clerical and managerial personnel employed on monthly or annual basis. (White collar workers) Earnings are the total amount of remuneration received by en employee during a given period. It includes salary and other allowances. Nominal wage is the wage received in monetary terms. Real wage is the amount of wage arrived after discounting nominal wage by the living cost. Take home salary is the amount of salary left to the employee after making authorized deductions like contribution to the PF, LI premium, income tax and other charges. Statutory minimum wage is the amount of remuneration fixed according to the provisions of the minimum wages act, 1948.
Objective of wage and salary administration To acquire qualified and competent personnel To retain the present employees To secure internal and external equity To ensure desired behavior To keep labour and administrative costs To protect in public as progressive employers To pay according to the content and difficulty of the job To facilitate pay roll To simplify collective bargaining To promote organization feasibility
Salary and wage management Acquire qualified personnel Retain present employees Ensure equity Reward desire behavior Control cost Comply with legal regulation Facilitate understanding
Perquisites Benefits enjoyed over and above the salary. These are allowed for the executives. Perquisites are offered to retain the competent executive Incentives Incentives are paid in addition to salaries and wages. Also called payments by results Incentives depends upon productivity, sales, profit or cost reduction efforts Incentives are two types individual and group incentive program. Performance based pay Performance based pay otherwise known as merit increase. The organization must be able to measure difference in job performance and these differences must be significant enough to merit the time effort required to measure them and pay salary accordingly. Fringe Benefits (for motivation and not mandatory) These include such employee benefits such as PF, gratuity, medical care, hospitalization accident relief, group insurance, canteen, uniform, recreation, fly pension, and maternity leave.
Performance Appraisal Meaning Performance appraisal is method of evaluating the behavior of employees in the workspot, in both quantitative and qualitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up an individual’s job. it indicates how well an individual is fulfilling the job demands performance is always measured in terms of results and not efforts
Features of performance appraisal It is the systematic description of an employee’s job relevant strength and weakness To find out how well the employee is performing the job and establish a plan of improvement Appraisals are arranged periodically according to the definite plan Performance appraisal is a continuous process
Need for performance appraisal Provide information about the performance ranks. Decision regarding salary fixation, confirmation, promotion, transfer and demotion are taken based on performance Provide feedback information about the level of achievement and behavior of the subordinate Provide information which helps to counsel the subordinate Provide information to diagnose deficiency in the employee regarding skill, knowledge, determine training and developmental needs for the employee growth To prevent grievances and in disciplinary activities
Purpose and objectives To create and maintain a satisfactory level of performance. To contribute to the employee growth and development. To help the superiors to have a proper understanding about their subordinates. To guide the job changes with the help to continuous ranking. To facilitate fair and equitable compensation based on performance. To facilitate for testing and validating selection tests, interview techniques through comparing their scores with performance appraisal ranks. To provide information for making decisions regarding lay-off, retrenchment etc.