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Managing Compensation

This document outlines the key concepts in managing compensation. It discusses strategic compensation planning, including linking compensation to organizational objectives and pay-for-performance. It also covers determining compensation through job evaluation systems and compensation structures. Specific topics include wage mixes, internal and external factors that influence compensation, motivating employees through compensation, and government regulations related to compensation.

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vinay1878
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137 views

Managing Compensation

This document outlines the key concepts in managing compensation. It discusses strategic compensation planning, including linking compensation to organizational objectives and pay-for-performance. It also covers determining compensation through job evaluation systems and compensation structures. Specific topics include wage mixes, internal and external factors that influence compensation, motivating employees through compensation, and government regulations related to compensation.

Uploaded by

vinay1878
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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MANAGING COMPENSATION

Prof. Mita Singh

SYLLABUS
Strategic Compensation Planning Determining Compensation Wage-Mix Job Evaluation Systems Compensation Structures Governments regulations

Strategic Compensation Planning


Strategic Compensation Planning is the compensation of employees in ways that enhance motivation and growth, while at the same time aligning their efforts with the objectives,philosophies, and culture of the organization. Value Added Compensation

Three Aspects of Strategic Compensation Planning Linking Compensation to Organizational Objectives Pay-for- Performance Standard Motivating Employees through Compensation

Goals of a strategic compensation policy


To reward employees past performance To remain competitive in the labor market To maintain salary equity among employees To mesh employees future performance with organizational goals To control the compensation budget To attract new employees To reduce unnecessary turnover

Policies to achieve the Goals


The rate of pay within the organization and whether it is to be above, below or at the prevailing market rate. The ability of the pay program to gain employee acceptance while motivating employees to perform to the best of their abilities. The pay level at which employees may be recruited and the pay differential between new and more senior employees. The intervals at which pay raises are to be granted and the extent to which merit and/or seniority will influence the raises. The pay levels needed to facilitate the achievement of a sound financial position in relation to the products or services offered.

Pay-for- Performance Standard


A pay for performance standard is a standard by which managers tie compensation to employee effort and performance. It refers to wide range of compensation options, including merit based pay,bonuses,salary commissions, job and Pay banding, team and group incentives, and various gain sharing programs.

Motivating Employees through Compensation Pay Equity An employees perception that compensation received is equal to the value of the work performed. Expectancy theory and Pay holds that employees should exert greater work effort if they have reason to expect that it will result in a reward that is valued. Pay secrecy

Relationship between Pay Equity And Motivation

My Input/ Output Ratio

Comparis on Persons Input/ output ratio

My Input/ Output Ratio

Comparison Persons Input/ output ratio

My Input/ Output Ratio

Comparison Persons Input/ output ratio

Inequity (feelings of being Underpaid)

Equity (Feeling of being paid fairly

Inequity (Feelings of being Overpaid)

The greater the perceived disparity between my input/output ratio and the comparison Persons input/output ratio, the greater the motivation to reduce inequity.

Pay-for-performance and Expectancy Theory

Expectancy linkage

Value linkage

High effort

High Performance

Valued Monetary rewards

Pay satisfaction

Bases for Compensation


Hourly Work Work paid on an hourly basis. Piece work -work paid according to the number of units produced. Salaried employees- those whose compensation is computed on the basis of weekly, biweekly, or monthly pay periods.

Determining Compensation WageMix

INTERNAL FACTORS

EXTERNAL FACTORS

Compensation strategy of organization Worth of job Employees relative worth Employers ability to pay WAGE MIX

Conditions of the labor market Area wage rates

Cost of living
Collective bargaining Legal requirements

Job Evaluation Systems


Job Ranking System Job Classification System Point system Work Valuation Job Evaluation for Management Positions Hay profile method a job evaluation technique using three factors knowledge ,mental activity and accountability to evaluate executives.

Compensation Structures
Wages and Salary Surveys Wage Curve Pay Grades Rate Ranges Competence-Based pay

Governments regulations
Payment Of Wages Act 1936.-The regular and timely payment of wages (on or before 7th day or 10th day after last day of the wage period in respect of which the wages are payable) The Minimum Wages Act 1948 - provides for fixation and enforcement of minimum wages in respect of scheduled employments.

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