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HRH Strategic Compensation

and Management of Rewards


Lemuel Lozada | HPAd 207
Outline
• Definitions
• Components of compensation
• Theories of compensation
• Compensation program
• Significance and objectives
• Determination of wages/salaries
• Implementation
• Responsibilities as managers
Reward
• A wide construct that represents everything that a particular employee might consider of importance that
an employee is willing to offer in return for his/her contributions (Chiang and Birch, 2008)
• An incentive plan to reinforce the desirable behavior of workers or employers and in return for their
service to the organization (MBASkool.com)
• The totality if financial and non-financial compensation paid to an employee in return for work or service
rendered at work (UK Essays)
Intrinsic Reward

Extrinsic Reward
Compensation
• All extrinsic rewards that employees receive in exchange for their work (Byars & Rue, 1994)
• What the organization intends to pay for and how it intends to do so (Yoder & Standoher, 1982)

PAY INCENTIVES BENEFITS


Pay
The basic compensation an employee receives

Payment based on time


Wage worked (e.g. hourly or daily)

Payment which is consistent


Salary for a defined period despite
the number of hours worked
Incentives
Rewards offered in addition to salary/wage for efforts beyond
normal expectations

Bonuses

Commissions

Profit Sharing
Benefits
Rewards that employees receive as a result of their employment and position
within an organization

Paid Leave Insurance Premiums

Sick Leave Retirement Pensions


Theories of Compensation
Expectancy Theory Agency Theory
(Vroom, 1964) (Eisenhardt, 1989)
Motivation to work is influenced Employer and employee should
by past and/or expected align their interests in order to
rewards determine the rewards

Equity Theory Wage Theory


(Adams, 1963)
Rewards are based on social
Employee will work if he/she
costs (inflation) and social
perceives that rewards are
benefits
proportional to input and comparable
to other’s reward/input ratio and that
reward procedures are fair
Compensation and Health Worker Goals

Motivation

Efforts

Performance Rewards Satisfaction


Significance of a Compensation Program
Recruitment Better compensation package will attract more qualified applicants

Higher pay rates will allow for higher selection standards, thus
Selection higher quality of health workers

Opportunities for pay increases after training will motivate health


Training and Development workers to improve their capabilities through training

Rate of pay, when tied to performance, can motivate people to


Performance Evaluation work better

Better compensation program will promote health worker


Labor Relations satisfaction instead of negative behaviors
Development of a Compensation Program
Reward health workers in accordance
with their contribution to the
organization
Provide incentives for improved
performance
Help in attracting quality
Help in retaining the number quality of
health workers
health workers

Provide opportunities for health workers


to achieve reasonable personal goals

Pre-employment Employment Post-employment


Determinants of Wages and Salaries
Republic Act 6758
External Environment Salary Standardization Law
“it is the policy of the State to provide equal pay for substantially equal
work”

“All government personnel shall be paid just and equitable wages ; …


Internal Environment giving due consideration to higher percentages of increases to lower
level positions and lower percentage increases to higher level
positions”

“Basic compensation shall generally be comparable with those inn


private sector doing comparable work”
Individual
“a review of government compensation rates taking into account
possible erosion of purchasing power due to inflation and other factors

“step increases shall be granted based on merit and/or length of


service”
Job Evaluation
Qualification 1. Education and experience required of position
2. Nature and complexity of work

Effort 3. Kind of supervision received


4. Mental and/or physical strain required
5. Nature and extent of internal and external relationships
6. Kind of supervision exercised
Responsibilities 7. Decision-making responsibility
8. Accountability for accuracy of records/reports
9. Accountability for funds, properties, and equipment

Working Conditions 10. Hardship, hazard, and personal risk


Job Grading
• Classification of evaluated jobs into pay grades
• Salary grades from 1 to 33 were established
• Each grade ranges from step 1 to step 8
Job Pricing and Salary Structure
1989 Salary Structure
Job Pricing and Salary Structure
2019 Salary Structure

222,278.00 399,739.00
(2018) (2019)
Implementation of Compensation Program
Procedures
• Preparation of job descriptions
• Merit system
• Performance evaluation
• Grievance procedures
Implementation of Compensation Program
Problems Encountered
• Job descriptions used for job evaluation may be inaccurate
• Non-compliance with some provisions by LGUs
• Faulty position classification
• Unsound practices
• Poor selection of rewards
• Misinformation about procedures
• Non-functioning grievance machinery
Responsibilities of Managers
Job Analysis Performance Evaluation
Make sure that job descriptions are
comprehensive, accurate, and up- Monitor worker’s performance on a
to-date regular and continuing basis

Performance Development Communication


• Plan with the worker what and • Have comprehensive knowledge
how to improve about the programs
• Assist with improvement process • Communicate the program to all
workers
Responsibilities of Managers
Selection and Giving of Rewards Control
• Identify basic needs of workers as a • Review program for adequacy
basis for reward and compliance
• Recommend pay increase to • Monitor compliance with
deserving workers processes and tools
• Give recognition/praise when needed • Discuss findings and give
recommendations

Resolving Complaints Advocacy


• Encourage workers to express their • Work for provision of resources
negative reactions rather than ignoring and development of required
them competencies
• Try to solve problems at your level • Work for correction of inequities
of the compensation program
References
• MBA Skool. Reward Management. Retrieved from https://www.mbaskool.com/business-concepts/human-
resources-hr-terms/16624-reward-management.html
• D’souza S.D. (May-June 2018) Employee Rewards in HRM and its impact on Employee Engagement in an
Organization. International Journal of Trend in Scientific Research and Development.
• Essays, UK. (November 2018). The Concept And Definition Of Reward Management Essay. Retrieved from
https://www.ukessays.com/essays/management/the-concept-and-definition-of-reward-management-
essay.php?vref=1
• Gerhart B., Minskoff H., Olsen R. Employee Compensation, Theory, Practice, and Evidence. Center for Advance
Human Resource Studies
• Philippine Gazette
• Abrera M. Mga Misteryo ng Kadiliman sa Office. News Hardcore. GMA News Online
• HPAd 207 Module

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