hrm-one year full time program 2015-2016- phase 4-rewards and compensation 2
TRANSCRIPT
“A return in exchange between an employer and employees, as an entitlement for being an employee of the company or as a reward for a job well done”
A Compensation Program must be tailor made to meet the needs of the organization and its employees.
Globalisation Employees are being exposed to the latest
trends in global practices in compensation Compensation structures are becoming
flatter and simple With global downturn there has been a
pressure on increasing productivity. In India there is a move towards total
rewards structure Stock options – The sheen and the tarnish
Attract capable employees Reward employees for past
performance Retain present employees and
reduce unnecessary turnover
Maintain equity - both internal and external
Maintain budgets Comply with legal regulations Maintain competitiveness in the
labour markets
Motivate employees' future performance
Market
Forces
Work
Value
Organisation
Policy
Individual
Performance
• Labour supply & demand
• Different industries
Market Forces
• What do we want to pay
• What can we afford to pay
• Ratio of labour costs to total costs
• Do we provide remuneration by way of benefits
• Will we have an incentive/bonus scheme
• Collective bargaining agreement
Organisation Policy
• Knowledge and experience
• Task complexity
• Responsibility
• Interpersonal skills
• Other ability and skill levels
Work Value
• Bargaining power
• Actual achievements of the individual
Individual Performance/Merit
Labour Market
Cost of living
Labour Unions
Government legislation
Society
Economy
Business Strategy
Job Evaluation
Performance Appraisal
Employee
FACTORS INFLUENCING EMPLOYEE REMUNERATION
Minimum Wages Act, 1948 Payment of Wages Act, 1936 Adjudication of Wage Disputes Wage boards Pay Commissions Payment of Bonus Act, 1965
WAGE is the remuneration paid for the service of labour in production, periodically to an employee or worker. Wages normally refer to hourly rate paid to such groups as productivity and maintenance employees
SALARY usually refers to the weekly or monthly rates paid to clerical, administrative employees
TOTAL COMPENSATION --- Is the package of quantifiable rewards an employee receives for his / her labour or contribution BASE PAY The fixed pay the employee receives on a regular basis
PAY INCENTIVES Rewards the employee receives for good performance
BENEFITS / INDIRECT COMPENSATION Perquisites
Total Compensation
IncentivesIndirectCompensation/Benefits
BaseCompensation
© 2007 Thomson/South-Western. All rights reserved.9–15
TOTAL COMPENSATIONTOTAL COMPENSATIONTOTAL COMPENSATIONTOTAL COMPENSATION
DirectDirectDirectDirect IndirectIndirectIndirectIndirect
BonusesBonusesBonusesBonuses
GainsharingGainsharingGainsharingGainsharingSecurity Plans• Pensions
Security Plans• Pensions
Employee Services• Educational assistance• Recreational programs
Employee Services• Educational assistance• Recreational programs
CommissionsCommissionsCommissionsCommissions
Wages / SalariesWages / SalariesWages / SalariesWages / Salaries
Insurance PlansInsurance Plans• MedicalMedical• DentalDental• LifeLife
Insurance PlansInsurance Plans• MedicalMedical• DentalDental• LifeLife
Time Not WorkedTime Not Worked• VacationsVacations• BreaksBreaks• HolidaysHolidays
Time Not WorkedTime Not Worked• VacationsVacations• BreaksBreaks• HolidaysHolidays
© 2007 Thomson/South-Western. All rights reserved.9–16
NON FINANCIAL BENEFITSNON FINANCIAL BENEFITSNON FINANCIAL BENEFITSNON FINANCIAL BENEFITS
JOBJOBJOBJOB ENVIRONMENTENVIRONMENTENVIRONMENTENVIRONMENT
ResponsibilityResponsibilityResponsibilityResponsibility
RecognitionRecognitionRecognitionRecognition Congenial work Environment & Fair Treatment
Congenial work Environment & Fair Treatment
Safety and HealthSafety and Health
Challenging workChallenging workChallenging workChallenging work
Interesting workInteresting workInteresting workInteresting work
Competent SupervisionCompetent SupervisionCompetent SupervisionCompetent Supervision
Good Policies and Good Policies and PracticesPractices•
Good Policies and Good Policies and PracticesPractices•
Career ProspectsCareer ProspectsCareer ProspectsCareer Prospects
Job Analysis
Write job descriptions
Determine job specification
Rate worth of all jobs. Done by either :
Non Quantative methods - Ranking
- Classification Quantitative methods - Factor comparison
- Point rating
Check for both external as well as internal equity through market surveys
Establish final pay policy and rules of administration
Determine wage / salary structure
Fix individual pay levels
Comparison of jobs by use of systematic procedures to determine relative worth.
Creating internal equity
Jobs evaluated grouped into classes, familiar or grades
Within grades,jobs arranged in order of importance.
…Salary surveys organisation’s salaries to those offered in other organisations compare an.
Does the organisation want to compare itself with :-
Organisations in the same or related industries?
Organisations in the same geographic area?
Best Practice Companies?
Domestic Companies?
Multinationals?
Group similar jobs into Pay Grades or Job ClassesJobs of equal difficulty.
Establish the Wage CurveWage Curve shows relationship between value of job and average wage paid for the job.
…is valuable in providing information that makes comparison of jobs possible. It is a process of analyzing and assessing the various jobs systematically to ascertain their relative worth in an organization.
Objectives of Job Evaluation
Job Analysis
Employee Classification
Wage Survey
Job-evaluation Programme
Job SpecificationJob Description
Job – Evaluation Process
QUANTITATIVE NON- QUANTITATIVE
Point Ranking Method
Factor ComparisonMethod
Ranking Method
Job Grading Method
METHODS OF JOB EVALUATION
Obtain job information Select raters and jobs Rank jobs Combine ratings
Try not to rely on guesstimates
Best for small organizations
The evaluators rank the jobs from
‘most valuable’ to ‘least valuable’
Rank Job1 General manager2 Marketing manager3 Production manager4 Accounting manager5 Plant engineer6 Accountant7 Sales representative8 Plant supervisor9 Receptionist
Based on a job as a whole
Job classes or grades are pre established and jobs fitted in based on their relative worth
Decide how many classes the job structure should be broken into
Write definitions of each class
Compare jobs with definitions and place into the appropriate class
CL. DESCRIPTION
I Simple work, no supervisory responsibility, no public contact
II Simple work, no supervisory responsibility, public contact
III Work of medium complexity, no supervisory responsibility, public contact
IV Work of medium complexity, supervisory responsibility, public contact
V Complex work, supervisory responsibility, public contact
System starts with the selection of job factors, construction of degrees for each factor and assignment of points to each degree
Different factors are selected for different jobs with accompanying differences in degrees and points.
The job is placed in a particular grade, depending on the number of points it scores
A number of factors common to all jobs are selected
Relative weights are assigned to each factor
Each factor is broken down into degrees, defined and a point value assigned to each
Point scores for jobs can then be calculated
FACTOR Education
Experience
Job complexity
Relation with others
Working Condition
WEIGHT 50% 25% 12% 8% 5%
1st 50 25 12 8 5
2nd 100 50 24 16 10
3rd 150 75 36 24 15
4th 200 100 48 32 20
5th 250 125 60 40 25
Experience:
4th 1 yr. - 3 yrs. 100
1st upto 3 mths. 25
2nd 3 mths - 6 mths 50
3rd 6 mths - 1 yr. 75
5th 3 yrs & more 125
o Factors for comparison are first selected (usually 5 : mental requirement,physical exertion, skill requirement, responsibility and job conditions)
o Each factor is ranked individually with other jobs
o Total points are then assigned to each factor
o The relative worth of a job is then obtained by adding together all the point values
…are the monetary benefits paid to employees in recognition of their outstanding performance. They are defined as “variable rewards granted according to variations in the achievements of specific results”.
INDIVIDUAL GROUP ENTERPRISE Piecework
Standard Hour Plan
Bonuses
Lump sum merit pay
Sales incentives
Team compensation
Gainsharing
Scanlon Plan
Improshare
Profit Sharing
Employee stock ownership Plans (ESOP)
Piece Rate - Straight Piecerate – Employee receives a
certain rate for each unit produced
Differential Piecerate- Employee whose production exceeds the standard amount of output receives a higher rate for all of their work than the rate paid to those who do not exceed the standard amount
Standard Hour Plan - Sets rates based on the completing of a
job in a predetermined standard time. Bonus – Payment that is supplemented to
the base wage Lump Sum Merit Pay –Employee receives a year end merit
payment which is not added to the base pay
Sales Incentive Plan –Can be straight commission or combined
salary and commission
Scanlon Plan – Bonus incentive plan using employee and management committees to gain cost reduction improvements. Financial incentives are provided based on an established formula.
Improshare – Gainsharing program where bonuses are based on the overall productivity of the work team
EMPLOYEE BENEFITS
Employee benefits and services include any benefits that the employee receives in addition to direct remuneration
It is the benefits and services that employees received as a part of their total compensation package, pay or direct compensation, is based on critical job factors and performance. Benefits and services, however, are indirect compensation because they are usually extended as a condition of employment and are not directly related to performance.
An employee enjoys them in addition to the salary he/she receives.
They are not given for specific jobs performed but to make jobs more attractive.
They are not linked to productivity so do not reward performance in any way, criteria used is other than performance.
They have an indirect impact on workers’ efficiency. If impact is direct, it is not a fringe benefit.
EMPLOYEE WELFARE……is the services, facilities and amenities a may be established in or in the vicinity of an undertaking to enable the persons employed in them to perform their work in a healthy , congenial surroundings and to provide them with amenities conducive to good health and high morale.
Inside the work place Outside the work place
Conditions of the work environment Conveniences Worker’s health services Women and Child welfare Workers reunion Employment follow up Economic service Labour management participation
Housing Water, sanitation, waste disposal Roads, lighting, parks, recreation, parks, etc Schools Markets, co-operative Bank Transport Communications Health and Medical services Indoor Recreation Security Community leadership development
Loans
Education of Children
Fair price shops
Leave Travel concession