New chap03


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New chap03

  1. 1. 3Internal alignment, often called internalequity, refers to the pay relationshipsbetween the jobs / skills / competencieswithin a single organization. Therelationships form a pay structure that cansupport the workflow, is consistentamong employees, and directs theirbehavior toward organization objectives.
  2. 2. 3 Compensation Strategy:Internal Equity…If done properly, it: Supports Work Flow Supports Fairness Directs Behavior Toward Organization Objectives (Motivation)
  3. 3. 3Pay structure, refers to the array of payrates for different work or skills within asingle organization. The number of levels,differentials in pay between the levels, andthe criteria used to determine thosedifferences create the structure. They mayvary greatly between organizations.
  4. 4. 3 Internal Consistency: A Typical Engineering Job Structure HierarchyEntry Level I Engineer: Limited use of basic principles. Close supervision. Senior Engineer: Full use of standard principles and concepts. Under general supervision. Systems Engineer: Wide applications of principles and concepts, plus working knowledge of other related disciplines. Under very general direction. Lead Engineer: Applies extensive knowledge as a generalist or specialist. Exercises wide latitude. Advisor Engineer: Applies advanced principles, theories, and concepts. Assignments often self-initiated.Recognized Consultant Engineer: Exhibits an exceptional degree of ingenuity,Authority – creativity, and resourcefulness. Acts independently to uncover and resolveLevel VI operational problems.
  5. 5. 3What Shapes Internal Structures? EXTERNAL FACTORS: Economic Pressures Government Policies, Laws, Regulations Stakeholders Cultures and Customs (not really relevant in the US today) ORGANIZATION FACTORS: Strategy HR Policy Available Technology Employee Acceptance Human Capital Cost Implications (People) INTERNAL STRUCTURE: Levels Differentials Criteria
  6. 6. 3 Which Structure has the Greatest Impact on Performance? On Fairness? Structure A Structure B Layered (Classical) De-layered (Broadband)Chief Engineer Chief EngineerEngineering ManagerConsulting EngineerSenior Lead EngineerLead Engineer Consulting EngineerSenior EngineerEngineerEngineer Trainee Associate Engineer
  7. 7. 3 Strategic Choice: Hierarchical vs Egalitarian Egalitarian Hierarchical (Broad bands)Levels Many FewerDifferentials Large SmallCriteria Person or Job Person or JobSupports: Close Fit Loose FitWork Organization Individual Performers TeamsConsistentApplication Performance Equal TreatmentBehaviors Opportunities for Promotion Cooperation
  8. 8. 3Benefits of an Internally Aligned (Equitable) Structure Undertake training Increase experience Reduce turnover Pay structure Facilitate career progression Facilitate performance Reduce pay-related grievances Reduce pay-related work stoppages
  9. 9. 3 What Research Tells Us About the Effects of Various Structures Equity Theory Tournament Theory Institutional Model: Copy Others
  10. 10. 3-Perceived Equity of a Pay Structure (Equity Theory) MY PAY OTHERS’ PAY My qualifications Their qualifications My work performed Their work performed My product value Their product value
  11. 11. 3- Which Structure Fits Your Organization Best?How the work is organizedConsistent among employeesDirects behavior toward organization objectives