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Compensation Management - Terms and Concept

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  1. 1. COMPENSATION & BENEFITS Hemankashi Bharmani HR Specialization
  2. 2. PAY LEVELPay set relative to employees workingon similar jobs in other organization. - McGraw HillPay Level refers to the average of thearray of rates paid by an employer. ∑ Base + Bonuses + Benefits +Options ∑ Employees - Academic definition
  3. 3. Pay Level refers to the range ofsalary paid to employees working onsimilar job. - Hemanshi M. Bharmani INTERNAL EXTERNAL FACTORS FACTORS• Compensation • Conditions of the Strategy of labor market organization PAY • Area wage rates• Worth of job LEVELS • Cost of living• Employee’s • Collective relative worth bargaining• Employers • Legal ability to pay requirements
  4. 4. STRATEGICCOMPENSATION Strategic compensation represents both intrinsic and extrinsic rewards employees receive for performing their job.- Intrinsic Compensation reflects employees psychological mind-sets that results from performing their job.- Extrinsic Compensations includes both monetary and non monetary rewards. - Joseph J. Martocchio It defines the intentions of the organization on reward policies, processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve its business goals. - Hemanshi M. Bharmani
  5. 5. Strategic Compensation -Example IBM – In 1990’s IBM CEO, believed that employees have become too complacent. He instituted four new incentives and other pay policies to focus his employees more on the competition. - Pay to market - Fewer, “broadband” jobs - Let managers manage - Incentivize employees
  6. 6. MERIT PAYMerit Pay or Merit Raise is any salaryincrease awarded to an employee basedon his or her individual performance. - Gary DesselerMerit Pay is defined as basing anemployee’s salary on his or herperformance, over a predeterminedperiod, and according to an agreed uponcriteria. -Hemanshi M.Bharmani
  7. 7. JOB FAMILIES Job Family is defined as two or more class series within an organization that have related or common work content.- Example: Administration, Occupation (secretarial, clerical). - Richard HendersonA job family is defined as a series ofprogressively higher, related jobsdistinguished by levels ofknowledge, skills, and abilities(competencies) and other factors, andproviding promotional opportunities over time. - Hemanshi M. Bharmani
  8. 8. Why Job Families are made?It is designed to take advantage of successful human resources strategies suc - General Job Description - Broad salary structure - Competency/skill based salary management - Comprehensive position management
  9. 9. JOB STRUCTUREJob Structure is comprised of jobs thatare slotted into Job Families and JobSub Families based on the nature ofthe job. - Job Family is a group of jobs in which the work performed is of a similar nature.- Job Sub Family is a group of jobs in which the work performed is of a similar nature and within a similar function. - Boston University
  10. 10. The Commonwealths job organization structureconsists of seven Occupational Families. TheOccupational Families are divided into CareerGroups. Career Groups are comprised of Roles.An Occupational Family is a broad grouping of jobsthat share similar vocational characteristics.A Career Group is a sub-group of an OccupationalFamily.A Role describes a broad group of occupationallyrelated positions that represent different levels ofwork or career progression.Occupational Career Roles Families Group - Hemanshi M. Bharmani
  11. 11. COMPENSABLEFACTORS A compensable factor is any job element that is considered essential to properly evaluating the amount of pay that should be rendered as part of employment. - Common job characteristics that an organization is willing to pay for, such as skill, effort, responsibility, and working conditions. - Hemanshi M.
  12. 12. PAY-FOR-PEFORMANCEPLAN pay that varies with some measure of individual or organizational performance also called variable pay plans these plans have a positive impact on performance if they are designed well. Short term Pay-for-Performance Plan Lump- Individua IndividualMerit Sum l Spot IncentivePay Bonuse Awards s s - McGraw Hill
  13. 13. Any plan that ties pay to productivityor profitability is know as pay forperformance plan. - Hemanshi M.Bharmani
  14. 14. PAY MIXPay Mix are the various types ofpayments, or pay forms, that make uptotal compensation. -Milkovich & Newman The combination of various types ofrewards - such as base pay,performance incentives, stock options,and benefits - that an individual receives.Different types of jobs have a differentpay mix; and the pay mix varies fromcompany to company. - Hemanshi M.Bharmani
  15. 15. ORGANIZATIONCULTURE “A pattern of shared basic assumptions that a group has learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” - Schein’s Organization Culture refers to the underlying values and beliefs that guide workplace behaviors.
  16. 16. Bibliography http://highered.mcgraw- html Gary Dessler / Biju Varkkey Strategic Compensation - Joseph J. Martocchio Compensation Management in a knowledge based world - Richard Henderson Compensation Management – Mousumi S. Bhattacharya Organization Culture - Edgar Schein