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- 1. Traditional Bases for Pay: Seniority and Merit Compensation Management Chapter No.03 By:- Israr K Raja Preston University, Islamabad
- 2. Seniority/Longevity Pay Historical overview Who participates Effectiveness of seniority pay systems Design of seniority pay and longevity pay plans Advantages of seniority pay Fitting seniority pay with competitive strategies
- 3. Historical Overview Collective Bargaining Job Control Unionism Public Sector Automatic Pay Adjustments Easy to implement in Government without any political pressure
- 4. Who participates Most of the Unionized private and public sector Municipal Government State Government Federal Government Administrative Professional Managerial
- 5. Effectiveness of Seniority Pay Systems Disappearing from for profit organizations due to competitiveness Stay in Public Organizations
- 6. Design of Seniority pay and Longevity Pay Plans The object of seniority pay is to reward job tenure or employees time as members of the company. The Longevity pay rewards employees who have reached pay grade maximum and who are not likely to move into higher grades
- 7. A Sample Seniority Policy for Junior and Advanced Clerk Jobs $8.60/hr 24 months $7.95/hr 9 months $7.50/hr 6 months Advanced Clerk $7.25/hr 15 months $6.85/hr 9 months $6.50/hr 3 months Junior Clerk
- 8. Advantages of Seniority Pay Employees perceived it fairly Very objective Greater cooperation among coworkers Easy to estimate and make arrangement for pay No favoritism Better motivation
- 9. Fitting seniority pay with competitive strategies Not fit for competitive strategies Not related to performance Not related to the companies performance Employees don’t have any incentive
- 10. Merit Pay Merit pay assumes that employees compensation overtime should be determined by difference in job performance Who participates? Elements of merit pay
- 11. Who participates? In private for profit sector of the economy. It fits well with new environment where reward is on individual achievement
- 12. Elements of Merit Pay Objective as well subjective performance Workers’ accomplishments Meeting the quotas Skills and abilities Strong relationship between performance and raise Funds must be available Adjustment according to COL and inflation Commitment of management Job Design Raise reflects the prior performance There must be explicit performance standards
- 13. Performance Appraisal Types of performance appraisal plans The performance appraisal process
- 14. Types of performance appraisal plans A Trait-Oriented Performance Appraisal A Paired Comparison Performance Appraisal A Critical Incidents Performance Appraisal A Behaviorally Anchored Rating Scale Goal-Oriented Systems (MBO)
- 15. A Trait-Oriented Performance Appraisal Rating Form Employee’s Name: Supervisor’s Name: Employee’s Position: Review Period: INSTRUCTIONS: For each trait below, circle the phrase that best represents the employee. 1. Diligence a. outstanding b. above average c. average d. below average e. poor 2. Cooperation with others a. outstanding b. above average c. average d. below average e. poor 3. Communication skills a. outstanding b. above average c. average d. below average e. poor 4. Leadership a. outstanding b. above average c. average d. below average e. poor 5. Decisiveness a. outstanding b. above average c. average d. below average e. poor
- 16. A Paired Comparison Performance Appraisal Rating Form INSTRUCTIONS: Please indicate by placing a X which employee of each pair has performed most effective during the past year. Refer to the duties listed in the job description for animal keeper as a basis for judging performance. _____ Bob Brown _____ Mary Green _____ Bob Brown _____ Jim Smith _____ Bob Brown _____ Allen Jones _____ Mary Green _____ Jim Smith _____ Mary Green _____ Allen Jones _____ Jim Smith _____ Allen Jones X X X X X X
- 17. A Critical Incidents Performance Appraisal Rating Form INSTRUCTIONS: For each description of work behavior below, circle the number that best describes how frequently the employee engages in that behavior. 1. The incumbent removes manure the unconsumed food from the animal enclosures. 1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often 2. The incumbent haphazardly measures the feed items when placing them in the animal enclosures. 1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often 3. The incumbent leaves refuse dropped by visitors on and around the public walkways. 1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often 4. The incumbent skillfully identifies instances of abnormal behavior among the animals, which represent signs of illness. 1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often
- 18. A Behaviorally Anchored Rating Scale for the Cleaning Dimension of the Animal Keeper Job INSTRUCTIONS: On the scale below, from 7 to 1, circle the number that best describes how frequently the employee engages in that behavior. The incumbent could be expected to thoroughly clean the animal enclosures and remove refuse from the public walkways as often as needed. The incumbent could be expected to thoroughly clean the animal enclosures and remove refuse from the walkways twice daily. The incumbent could be expected to clean the animal enclosures and remove refuse from the public walkways in a sketchy fashion twice daily. The incumbent could be expected to rarely clean the animal enclosures or remove refuse from the public walkways. 7 | 6 | 5 | 4 | 3 | 2 | 1
- 19. The Impact of Equal Pay Raise Percentage Amounts for Distinct Salaries ANNE BROWN 1996 1997 1998 1999 2000 $52,500 $55,125 $57,881 $60,775 $63,814 $36,750 $38,587 $40,516 $42,542 $44,669 JOHN WILLIAMS At the end of 1995, Anne Brown earned $50,000 per year as a systems analyst, and John Williams earned $35,000 per year as an administrative assistant. Each received a 5 percent pay increase every year until the year 2000.
- 20. Performance Appraisal Process Expected Appraisal Discussion Awarding
- 21. Nondiscriminatory Performance Appraisal Conduct job analyses to ascertain characteristics necessary for successful job performance Incorporate these characteristics into a rating instrument Train supervisors to use rating instrument properly Several cases demonstrate that formal appeal mechanism and review of rating by upper level personal help make PA process more accurate and effective
- 22. Performance Appraisal Practices Conduct Job Analysis to ascertain characteristics necessary for successful job performance Incorporate these Characteristics into a rating instrument Train Supervisor to use the rating instrument properly Reviewing of rating by Upper Level Personnel
- 23. Sources of Performance appraisal Information Employees Supervisor Coworkers Supervisees Customers
- 24. Errors in Performance Appraisal Process Bias Errors Contrast Errors Errors of Central Tendency Errors of Leniency or strictness
- 25. Strengthening the Pay-for-Performance Link Link PA plans to business goals Analyze jobs Communicate Establish effective appraisals Empower employees Differentiate among performers
- 26. Limitations of Merit Pay Plans Failure to differentiate among performers Poor performance measures Supervisors’ biased ratings Lack of open communication between management and employees Undesirable social structures Factors other than merit Undesirable competition Little motivational value
- 27. Linking Merit Pay with Competitive Strategy Lowest-cost competitive strategy Differentiation competitive strategy