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COMPENSATION MANAGEMENT,JOB EVALUATION,DA
AGENDA ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
BASIC TERMS USED IN HR
[object Object],JOB DESCRIPTION
[object Object],[object Object],JOB ANALYSIS
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],JOB EVALUATION
JOB EVALUATION METHODS Comparison Method   Analysis Method Entire Job  Job Factors Job Against Scale Job Against Job Classification Point Method Ranking Factor  Comparison
DEFINITION ,[object Object],[object Object],[object Object],[object Object],[object Object]
FACTORE CAN BE FURTHER DEFINED ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CONT. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
POINT METHOD ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
FACTOR DEGREES AND POINT SYSTEMS
WHAT IS A DEGREE LEVEL? ,[object Object],[object Object],[object Object],[object Object]
HOW DO YOU ASSIGN POINT VALUES TO THE ENTIRE SYSTEM? ,[object Object],[object Object],[object Object],[object Object],[object Object]
POINT VALUES TO FACTORS ALONG A SCALE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
RESPONSIBILITY ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Job Evaluation - Concept This potential to blend internal forces and external market forces is both a strength and a opportunity to job evaluation system.
Job Evaluation - Objectives ,[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object]
1 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Common Methods of Job Evaluations ,[object Object]
Importance of job evolution 1 > To involve the people occupying the positions under evaluation. This is especially so if you think your organizations job descriptions are poorly written or out of date. The people in positions and their immediate supervisors have the best idea of what the job is really about. 2 >Job evaluation is most effective as a participative exercise and this in itself can improve employment relations. It is therefore recommended that  job evaluation is introduced or revised jointly by allowing management and employee representatives to discuss relevant issues initially in a non-negotiating forum  3>T o ensure  integration of internal fairness and external competitiveness .
Up to date, accurate job descriptions are absolutely essential and should be reviewed for accuracy with the current incumbent before evaluation. More complex job evaluation techniques require more information and often the primary source of this is job descriptions, so the more complex the job evaluation scheme, the more detailed the job description needs to be. . Keep accurate records of decisions taken, to ensure openness, and transparency.  Build confidence in the process and outcomes by briefing people Many organizations choose to engage consultants to manage parts or the entire process. These consultants often have access to the expensive but comprehensive data bases containing detailed information about remuneration levels in different sectors. job evaluation methods are not to be  confused with performance management or appraisal, where the primary concern is with how well a job is performed . Aspects of job evolution
[object Object],[object Object],[object Object],[object Object],[object Object]
Managerial Jobs: Characteristics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Job evaluation process The major objectivity of job evaluation process is to establish satisfactory wage and salary differentials, so job analysis should precede the actual programme of evaluation.  Objective of job evaluation Job description Job analysis Job evaluation Job specification Wage survey Employee classification
Job Evaluation Methods ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Job Evaluation Methods 1/5/2008 Advantage Disadvantage Ranking Fast, simple, easy to explain. Cumbersome as number of jobs increases. Basis for comparisons is not always acceptable. Classification Can group a wide range of work together in one system. Descriptions may leave too much room for manipulation. Point Compensable factors call out basis for comparisons. Compensable factors  communicate what is valued. Can become bureaucratic and rule-bound.
Manager: Key Evaluation Factors ,[object Object],[object Object],[object Object],[object Object]
Hay’s Method – 3 Factors Jobs exist to achieve an end result Accountability Accountability Therefore, the job holder requires a level of knowledge and experience commensurate with the scale and complexity of the result Problem Solving To achieve this end result, job holders must address problems, create, analyse and apply judgement 1 3 2 Accountability Problem Solving Know-How
Hay’s Method - Process Depth & Range of Know-How Planning & Organising Communicating & Influencing Freedom to Act Nature of  Impact Area of Impact (Magnitude) Thinking Environment Thinking Challenge KNOW- HOW PROBLEM SOLVING ACCOUNTABILITY + + = Job  Size
Compensation Plan of Executives ,[object Object],[object Object]
Implications ,[object Object],[object Object],[object Object]
Criticism ,[object Object],[object Object],[object Object]
[object Object],[object Object],PAY STRUCTURE
Contd… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What is Compensation System? ,[object Object],[object Object],[object Object]
ELEMENTS OF A COMPENSATION SYSTEM
Objectives of compensation system ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
How Compensation System is used ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Components of compensation system ,[object Object],[object Object],[object Object]
Continue… ,[object Object],[object Object]
Different types of compensation system ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Compensation Plans ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Continue………. ,[object Object],[object Object],[object Object],[object Object],[object Object]
Sources of Compensation Data ,[object Object],[object Object],[object Object],[object Object]
Compensation Methods ,[object Object],[object Object]
Compensation System
Time Rate System
Piece Rate System
Compensation Structure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Compensation Administration ,[object Object],[object Object],[object Object],[object Object],[object Object]
Principles of Administration of Compensation ,[object Object],[object Object],[object Object],[object Object]
Continue… ,[object Object],[object Object],[object Object]
Financial and Non Financial Incentives ,[object Object],[object Object],[object Object],[object Object],[object Object]
Continue….. ,[object Object],[object Object],[object Object],[object Object],[object Object]
Advantages and Disadvantages Incentives Advantages Disadvantages Financial 1.Focus on hitting target 2.Achievement a given value 1.Rewards are sometimes small 2.Can demoralize if not earned Non Financial 1.Can recognize employee priorities and lifestyle 2.Can encourage attachment to business 1.Can be  taken for granted 2.May be inappropriate
Reasons For Introducing An Incentive Scheme ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What Type Of Work Needs An Incentive Scheme? ,[object Object],[object Object],[object Object]
Continue…. ,[object Object],[object Object],[object Object]
ACT’S GOVERNING WAGE ADMINISTRATION IN INDIA ,[object Object]
PAYMENT OF WAGES ACT(1936) ,[object Object],[object Object]
SALIENT FEATURES:-   ,[object Object],[object Object]
Continue…. ,[object Object]
MINIMUM WAGES ACT(1948) ,[object Object],[object Object]
Continue…. ,[object Object]
  Payment of Gratuity Act, 1972 ,[object Object],[object Object],[object Object]
N.H.P.C. – National Hydroelectric Power Corporation ,[object Object],[object Object]
Compensation structure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Methods of compensation system ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Administration of compensation ,[object Object],[object Object],[object Object],[object Object],[object Object]
Executive plans for compensation ,[object Object],[object Object],[object Object],[object Object],[object Object]
DIFFERENT TYPES OF COMPENSATION PLANS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
PROCESS OF DESIGNING A COMPENSATION PLAN ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CRITERIA OF DEVELOPING A COMPENSATION PLAN ,[object Object],[object Object]
Continued… ,[object Object],[object Object]
Continued.. ,[object Object],[object Object],[object Object]
Continued… ,[object Object],[object Object]
DETERMINANTS OF COMPENSATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Continued… ,[object Object],[object Object]
A Monetary Compensation plan must fulfill four conditions: ,[object Object],[object Object],[object Object],[object Object]
ELEMENTS OF TOTAL COMPENSATION Total Compensation Base Compensation Incentive Compensation / Variable compensation  Supplementary compensation paid to large group of employees
A. BASE COMPENSATION ,[object Object],[object Object],[object Object],[object Object],[object Object]
Continued… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
B. INCENTIVE COMPENSATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Continued… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Continued… ,[object Object],[object Object],[object Object],[object Object],[object Object]
EXAMPLES: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
C. SUPPLEMENTARY COMPENSATION ,[object Object]
ASPECTS TO BE CONSIDERED FOR ACCOMPLISHING EFFECTIVENESS OF THE MONETARY REMUNARATION SYSTEM
[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object]
METHODS OF REMUNARATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
FACTORS DETERMINING THE LEVEL OF REMUNERATION ,[object Object],[object Object],[object Object],[object Object],[object Object]
KINDS OF WAGES ,[object Object],[object Object],[object Object],[object Object]
Time-Work/Day-Work System ,[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Straight Piece-Work System ,[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Differential Piece Rate System ,[object Object],[object Object]
Continued… ,[object Object],[object Object],[object Object],[object Object]
Taylor’s Differential Piece Rate System ,[object Object],[object Object],[object Object]
Continued… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Merrick Differential piece-rate system Output Payment ,[object Object],Normal Rate ,[object Object],10% above the normal rate ,[object Object],30% above the normal rate
Gantt task bonus plan Output Payment ,[object Object],Time-Rate (guaranteed) ,[object Object],Bonus  of 20% above the time-rate ,[object Object],High piece rate
Profit –Sharing ,[object Object],[object Object]
Profit Sharing Vs  Co-partnership Basis Profit Sharing Co-Partnership Scope Allow labor only a share in the profit Has a wider scope and it includes profit sharing plus in the management also Features Brings about no handicap. No risk. No share in losses. Worker as a shareholder is tied down to the company. Reduces mobility. Cash Bonus We usually have cash bonus Indicates that a worker as a shareholder has a right to share in the profit as well as a voice in the bonus. Gets wage + dividend. Usually in kind. Promotion of Industrial Democracy  One step short of co-partnership Gives wider diffusion of ownership Application of Scheme Applicable to any type of business Only to company enterprises Interest of worker Workers have no stake, hence no personal extent to that extent Labor enjoys a sense of ownership in the joint enterprise.  Workers are personally interested in the success of the company.
Profit Sharing Vs Bonus Basis Profit Sharing Bonus Meaning Employer gives to the workers a portion of surplus profit of the business in addition to wages. A bonus to workman beyond their wages. Basis Profit showing is usually based on definite agreement between  the employer and the worker. Payment of bonus depends on the sweet will of the employer or is provided of law. Legal provision No Act has been passed concerning profit sharing. Bonus Act has been passed in the year 1965. Statutory Obligation A voluntary payment although depends on agreement. Was originally , a voluntary payment has become a statutory obligation under the Payment of Bonus Act 1965.
06/02/09
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],06/02/09
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/02/09
06/02/09
 
Concept: ,[object Object]
Definition ,[object Object],[object Object]
History: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
METHODS OF DA CALCULATION ,[object Object],[object Object],[object Object],[object Object]
Contd…
Contd…. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Importance: ,[object Object],[object Object]

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Compensation Management 1

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  • 7. JOB EVALUATION METHODS Comparison Method Analysis Method Entire Job Job Factors Job Against Scale Job Against Job Classification Point Method Ranking Factor Comparison
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  • 12. FACTOR DEGREES AND POINT SYSTEMS
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  • 17. Job Evaluation - Concept This potential to blend internal forces and external market forces is both a strength and a opportunity to job evaluation system.
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  • 21. Importance of job evolution 1 > To involve the people occupying the positions under evaluation. This is especially so if you think your organizations job descriptions are poorly written or out of date. The people in positions and their immediate supervisors have the best idea of what the job is really about. 2 >Job evaluation is most effective as a participative exercise and this in itself can improve employment relations. It is therefore recommended that job evaluation is introduced or revised jointly by allowing management and employee representatives to discuss relevant issues initially in a non-negotiating forum 3>T o ensure integration of internal fairness and external competitiveness .
  • 22. Up to date, accurate job descriptions are absolutely essential and should be reviewed for accuracy with the current incumbent before evaluation. More complex job evaluation techniques require more information and often the primary source of this is job descriptions, so the more complex the job evaluation scheme, the more detailed the job description needs to be. . Keep accurate records of decisions taken, to ensure openness, and transparency. Build confidence in the process and outcomes by briefing people Many organizations choose to engage consultants to manage parts or the entire process. These consultants often have access to the expensive but comprehensive data bases containing detailed information about remuneration levels in different sectors. job evaluation methods are not to be confused with performance management or appraisal, where the primary concern is with how well a job is performed . Aspects of job evolution
  • 23.
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  • 25. Job evaluation process The major objectivity of job evaluation process is to establish satisfactory wage and salary differentials, so job analysis should precede the actual programme of evaluation. Objective of job evaluation Job description Job analysis Job evaluation Job specification Wage survey Employee classification
  • 26.
  • 27. Job Evaluation Methods 1/5/2008 Advantage Disadvantage Ranking Fast, simple, easy to explain. Cumbersome as number of jobs increases. Basis for comparisons is not always acceptable. Classification Can group a wide range of work together in one system. Descriptions may leave too much room for manipulation. Point Compensable factors call out basis for comparisons. Compensable factors communicate what is valued. Can become bureaucratic and rule-bound.
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  • 29. Hay’s Method – 3 Factors Jobs exist to achieve an end result Accountability Accountability Therefore, the job holder requires a level of knowledge and experience commensurate with the scale and complexity of the result Problem Solving To achieve this end result, job holders must address problems, create, analyse and apply judgement 1 3 2 Accountability Problem Solving Know-How
  • 30. Hay’s Method - Process Depth & Range of Know-How Planning & Organising Communicating & Influencing Freedom to Act Nature of Impact Area of Impact (Magnitude) Thinking Environment Thinking Challenge KNOW- HOW PROBLEM SOLVING ACCOUNTABILITY + + = Job Size
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  • 37. ELEMENTS OF A COMPENSATION SYSTEM
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  • 56. Advantages and Disadvantages Incentives Advantages Disadvantages Financial 1.Focus on hitting target 2.Achievement a given value 1.Rewards are sometimes small 2.Can demoralize if not earned Non Financial 1.Can recognize employee priorities and lifestyle 2.Can encourage attachment to business 1.Can be taken for granted 2.May be inappropriate
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  • 81. ELEMENTS OF TOTAL COMPENSATION Total Compensation Base Compensation Incentive Compensation / Variable compensation Supplementary compensation paid to large group of employees
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  • 89. ASPECTS TO BE CONSIDERED FOR ACCOMPLISHING EFFECTIVENESS OF THE MONETARY REMUNARATION SYSTEM
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  • 106. Profit Sharing Vs Co-partnership Basis Profit Sharing Co-Partnership Scope Allow labor only a share in the profit Has a wider scope and it includes profit sharing plus in the management also Features Brings about no handicap. No risk. No share in losses. Worker as a shareholder is tied down to the company. Reduces mobility. Cash Bonus We usually have cash bonus Indicates that a worker as a shareholder has a right to share in the profit as well as a voice in the bonus. Gets wage + dividend. Usually in kind. Promotion of Industrial Democracy One step short of co-partnership Gives wider diffusion of ownership Application of Scheme Applicable to any type of business Only to company enterprises Interest of worker Workers have no stake, hence no personal extent to that extent Labor enjoys a sense of ownership in the joint enterprise. Workers are personally interested in the success of the company.
  • 107. Profit Sharing Vs Bonus Basis Profit Sharing Bonus Meaning Employer gives to the workers a portion of surplus profit of the business in addition to wages. A bonus to workman beyond their wages. Basis Profit showing is usually based on definite agreement between the employer and the worker. Payment of bonus depends on the sweet will of the employer or is provided of law. Legal provision No Act has been passed concerning profit sharing. Bonus Act has been passed in the year 1965. Statutory Obligation A voluntary payment although depends on agreement. Was originally , a voluntary payment has become a statutory obligation under the Payment of Bonus Act 1965.
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