employees on a current or deferred basis, for their performance of assigned tasks
Legal Compliance with all appropriate laws and regulations
Cost effectiveness for the organization
Internal, External and Individual equity for employees
Performance enhancement of the organization Basic Gross Net DIRECT INDIRECT Base Pay Wages Salaries
Variable Pay Bonuses Incentives Stock/shares Options Benefits Medical Insurance Provident Fund Retirement Pensions EOBI
HR Manager Line Manager Develops and Administers Compensation system Conducts job evaluation and wage surveys Develops wage / salary structures and policies Attempt to march performance and rewards Recommend pay rates and increments based on guidelines from HR unit Evaluate employee performance based compensation purposes
Compensation Philosophies Strategic Compensation Design Compensation and Organizational Culture Cost Effectiveness and Labor Market Positioning Competency Based Pay Broad banding and Career Development knowledge, Skills and the Attitude needed by any individual employee to carry out their job effectively. These can be incorporated into a pay system to reward individuals who positively contribute to the overall values and objectives of an organization. Rewarding the way people work, not just recognizing what they can deliver Broad banding is the term applied to having extremely wide salary bands, much more encompassing than with traditional salary structures Broad banding evolved because organizations want to flatten their hierarchies and move decision- making closer to the point where necessity and knowledge exist in organizations. In flattened organizations, fewer promotional opportunities exist so the broad banding structure allows more latitude for pay increases and career growth without promotion ENTITLEMENT PERFORMANCE Seniority Based No raises for length of service Across the board raises No raises for longer service for poor performers Guaranteed movement of scales Market adjusted pay structure Industry comparisons only Broader Industry comparisons Santa Claus Bonuses Bonuses tied to performance results
Some companies are now seeking to design compensation plans that not only reward performance but also improve it. They want techniques that look forward, beyond their current situation and even beyond pay systems themselves. This approach is called strategic compensation design. It involves focusing on what an organization needs to do to become more competitive and then on developing a compensation plan to help It is commonly assumed that compensation and rewards systems reflect the cultures of the organizations that implement them Company's culture to be highly individualistic, and the more idio-centric Employees are paid more for doing jobs that require more variety of tasks, more knowledge and skills, greater physical effort, or more demanding working conditions Yesterday Today Tomorrow Fixed salary Variable pay as add-on to salary Low fixed salary, more variable pay Bonuses/perks for executives only Variable pay emerging throughout organization Variable pay common throughout the organization Fixed benefits, reward long tenure Flexible benefits Portable benefits Company-based career moving up Industry-based career, moving around Skill-based, interim employment Hierarchical organizations Flatter team-based organizations Network virtual organizations Cookie cutter pay plans Total compensation (Look at benefits, too) Customized, integrated pay systems; pay, benefits, intangibles
INTERNAL: Job Analysis, Job Descriptions, Job Evaluation, Internal Work Structure EXTERNAL: Market definitions, Market surveys, Policy lines, Pay structures INDIVIDUAL: Seniority based, Performance based, Incentive guidelines, Incentive programs PROCESS: Planning, Budgeting, Communicating, Evaluating PRINCESS & THE PEASANT A peasant wanted to marry a princess. Her father, the King was furious and ordered that the peasant should have his head cut off for impertinence. Peasant was handsome and the Queen was sentimental who wanted her daughter to be happy so she persuaded the King to give the peasant a sporting chance. It was agreed that he should draw one of the two cards out of a box and accept what was written on it as his fate. One card would say Marriage and the other Death. If he refuses to draw he dies. The King cheated and marked both cards Death and put them in the Box. PRINCESS & THE PEASANT When the time came the peasant appeared unafraid. He drew a card and married the princess and lived happily ever after TERM OF THE DAY Expatriate Repatriate Impatriate Inpatriate