pay strategy new thinking for the new millennium
TRANSCRIPT
Presented By:
Group #2 Members:
Syed Awon Hussain Shah 226
Bashir Ahmed 211
Muhammad Mumtaz 215
Muhammad Naeem 216
Support organization’s business strategy
And
Contribute organizational Effectiveness
Pay Strategy
Organizations
Business
Individual
Organization Design
Pay system
Changing Environment
Pay Practices Hard To Change
Pay system Change is Complex
Organizational Hurdles
Reasons
Value
High Cost in Compensation
Inappropriate & Misdirected Behavior
Disadvantages of
Misaligned Pay Practice
Moving Products and services across the national
boundary in seamless way
Greater Competition
Quick and Improve Customer Services
Globalization Impact
Advance IT system, Knowledge and Skills are the way to be
competitive today.
Organizations No Longer Afford Extensive Hierarchies
Individuals No Longer have Loyalty Contract
Cont’d
• Demand more then Supply
• Hot Talent
• Negotiation
Need of Key Skills
Employee from different areas
Individual Differences
Reward System
Teams
Collective Response
Diversity
Muhammad Mumtaz 215
For individual worth (knowledge, skills and
competencies) rather than for the value of a job they
perform.
Pay the person
Pay system based on job and job evaluation
Individual had stable duties.
Add considerable value due to high knowledge and
skills
Cont’d
Very dangerous and misleading to pay them according to
job worth rather then their individual worth.
Stable duties
Market value of individual
High level of knowledge and skills
Job worth
High level of performance
Job and Job evaluation
According to market value
According to knowledge
According to skills
According to competencies
Considering the internal and external market labor into
account
More emphasize on external
Payment method
Developing good measure for
Their skills, knowledge and competencies
Measure Use by mostly organization,
Leadership and communication ability
Technical and business knowledge
Challenge in paying
individual
Detailed intranet based description
Knowledge and skills to be effective
Knowledge and skills profile
Future perspective
Motivate individual to learn the skills and knowledge
Raise the pay of individual to become more valuable
Important objectives
Clearly key to developing pay system and retain valuable human
capital.
Bashir Ahmed 211
Through a pay for performance compensation that
establishes a clear relationship between a significant amount
of pay and attainment of organizational objectives.
Reward Excellence
Important way to attract and retain top performance.
potentially powerful motivator.
Partial substitute for traditional loyalty employment
relationship.
Cont’d
Traditional Evidence:
• Pay cannot be a motivator.
• Does not motivate the employees.
New Evidence:
• Does not support this view.
• Significance amount of pay and behavior.
Cont’d
Elements of reward
Long term
incentive
Short term
incentive
Base salary and
benefits
Career development
Promotion opportunities
Work/life balance
Flexible work
environment
Pay on the basis of merit.
Disadvantages:
• Failure approach
• Poor Measure
• Small changes in compensation
• No motivational impact
• Failure to retain high performance.
Traditional Approach to Pay
for performance
Important for organization reward system.
Satisfy needs.
Reflect the Strategy, structure and business process.
Fits the characteristics of organization .
Pay for Performance Plan
Variable Pay Plans
Variable Pay
Plan
Profit Sharing
Stock ownership
Or
Stock Option
Team/Group Incentive
Cash plan
Deferred plan
Combination plan
Types: PSP
Primarily Encourage individual to stay with the organization
Don’t reward skill development or performance effectiveness.
Don’t motivate individual to improve their skills or perform effectively.
Fails to develop human capital or organization and retaining the most valuable employees.
Seniority-Based pay
system
Muhammad Naeem 216
To give employees choices in how they are rewarded and
what reward they receive.
Individualizing the pay
system
One-size-fits-all approach
Give little choice
Homogeneous work force
Does not fit a divorce work force
Cont’d
With Diverse Workforce:
• Tremendous risk of giving individual reward.
• Negative consequences.
• Negative for motivation.
• Failing to reward with things that they value highly.
One-size-fits-all
approach
Attraction
Retention
motivation
Characteristic of individual pay
system
Diverse workforce
Similarities and differences among employees.
Homogeneous workforce
Same type of job
Same condition
Reward and organizational
culture
Embrace everything that employees value in the
employment setting.
Strategic reward
Strategic reward
Framework
Considerable amount of choice
Give option to individuals
Alternative
Work simply for cash, having extensive benefits, or choose
the type of pay for performance system.
Tailoring rewards to employees preferences
Greater Effectiveness
Retaining diverse workforce
Negative point
Advantages
Create too diverse workforce that wants to establish a strong
unified Culture.
Organizations are,
• Moving towards a more diverse workforce.
• Becoming more global.
• Flexibility and individualizations.
Cont’d
Any Question….?
Thank you