Made by Group 7 - Fatimah Azzahra 1711011099 and Olinda Calista Yetri 1711011119 Dr. Nova Mardiana, S.E., M.M. Human Resource Management International Class Faculty of Economic and Business University of Lampung

1. RECOGNIZING EMPLOYEE
CONTRIBUTIONS WITH PAY
Human Resource Management
A P R E S E N T A T I O N B Y G R O U P 7

2. Dr. Nova Mardiana, S.E,
M.M.
GROUP 7
Meet The Team
Fatimah Azzahra
1711011099
Olinda Calista
1711011119

3. 1. Discuss how pay influences individual employees, and describe
three theories that expain the effect of compensation on individuals.
2. Describe the fundamental pay programs for recognizing
employees' contributions to he organization's success.
3. List the advantages and disadvantages of the pay programs.
4. Describe how organizations combine incentive plans in a
balanced scorecard.
5. Discuss issues related to performance-based pay for executives.
6. Explain the importance of process issues such as communication
in compensation management.
7. List the major factors to consider in matching the pay strategy
to the organization's strategy.
LEARNING
OBJECTIVES

4. HOW DOES PAY INFLUENCE
INDIVIDUAL EMPLOYEES?
REINFORCEMENT
THEORY
EXPECTANCY
THEORY
AGENCY
THEORY

5. PAY FOR PERFORMANCE
PROGRAMS
Three Design
Features
Potential
Consequences
Contigencies
1. Payment Method
2. Frequency of
Payout
3. Ways of
Measuring
Performance
1. Performance
Motivation of
Employees
2. Attraction of
Employees
3. Organization
Culture
4. Costs
1. Management
Style
2. Type of Work

6. MERIT PAY
Advantages Disadvantages
1. Communicates company
objectives
2. Let employee know where
they stand
3. Aids in employee retention
1. Concerns about favoritism
2. Uses time and resources
better spent elsewhere
3. Communication troubles

7. INDIVIDUAL
INCENTIVES
Advantages
Disadvantages
1. Employees are individually motivated
for a higher level of performance
2. Organizational ability will increase
3. Greater job satisfaction and
organizational productivity
4. Reduces organizational expenses
5. Can be easily administered and applied
1. Employee give less importance to quality
2. Goal conflict occurs
3. The quality of work life is reduced
4. The living standard of employees will be
uncertain
5. Doesn't promote teamwork
6. Bonuses are nor directly linked to the
performance

8. PROFIT SHARING AND
OWNERSHIP
Advantages
Disadvantages
1. Bring employees together to work to a
common goal.
2. Motivation levels of the employees are
high
3. The employee focus is on profitability
4. Increases commitment
5. Bridges the gap between employee and
employer
6. Promotes the well-being of employee
1. Salaries of individual employees go up
equally
2. May affect personal earnings of the
employees
3. Employee's focus is more on the profit
rather than quality
4. People get their share of profit regardless
of their contribution

9. GAINSHARING,
GROUP
INCENTIVES,
AND TEAM
AWARDS
Advantages
Disadvantages
1. Enhances group work
2. Helps to enhance team spirit
3. Encourages a sense of cooperation and
responsibility
4. Encourages employee participation
1. No reward is solely on individual's own
effort
2. Individual job performance will not be
improved
3. Conflict and disagreement may be seen in
the workplace among teammates
4. The problem of self-deception can occur

10. "Track financial results while
simultaneously monitoring progress in
building with the capabilities and acquiring
the intangible assets they would need for
future growth." - Kaplan and Norton
BALANCED
SCORECARD

11. Business magazines often
publish lists of top executives
who did the most for their pay
and those who did the least.
Pressure from regulators and
shareholders to better link pay
and performance.
Regulators in a number of
countries have also sought to
limit the size of bonus
payments.
MANAGERIAL
AND
EXECUTIVE
PAY

12. PROCESS AND CONTEXT ISSUES
E M P L O Y E E P A R T I C I P A T I O N I N
D E C I S I O N M A K I N G
C O M M U N I C A T I O N P A Y A N D P R O C E S S

13. ORGANIZATION STRATEGY AND
COMPENSATION STRATEGY
PAY STRATEGY DIMENSIONS
ORGANIZATION STRATEGY
CONCENTRATION GROWTH
Risk sharing (variable pay)
Time orientation
Pay level (short run)
Pay level (long-run potential)
Benefits level
Centralization of pay decisions
Pay unit of analysis
Low
Short-term
Above market
Below market
Above market
Centralized
Job
High
Long-term
Below market
Above market
Below market
Decentralized
Skills

14. THANK YOU!