Beruflich Dokumente
Kultur Dokumente
Prof. V. Viswanathan
Aligning
Companies are examining the method and basis for compensating employees Seeking to develop high performance and high commitment work systems Expanded roles for employees requires the employees to accept more responsibility and accountability
alignment
Other initiatives are : flatter organization structure, more fluid organization design, faster paced/quicker response customer focus have also driven sweeping changes Compensation is critical component to financial success Careful attention must be paid on the development of reward systems that reflect the financial capability of the company and reinforce new directions associated with strategies
Alignment.
Changing the systems is a difficult task for any organization Compensation needs to reinforce thd directions set by the leadership Efforts to make compensation too great a driver for change may lead to unintended consequences If it is too heavily compensation driven, the focus may be lost
Alignment
Compensation philosophy is the set of values and beliefs that an organization has in regard to compensation decision-making It has a set of guiding principles A few may not have such a philosophy Collection of decisions that the firm has made over a period of time constitutes a compensation set of beliefs and values a philosophy whether documented or not
Alignment.
Difference in philosophies are also widespread Widespread use of incentives vs. narrow use Mid point philosophy Business settings often explain the differences in philosophy Some firms are more generous to certain levels to exempt employees, while other believe in principles of achieving equity across all employees
Alignment
Openness with which compensation decisions are made and the degree of stakeholder involvement in those decisionsnis another example of philosophical differences between organizations Competition is the key issue It is important to approach this strategically by developing a philosophy along with set of objectives
Alignment
Business and operating inputs Industry and labour market practices and trends Employee inputs and preferences Once a philosophy and objectives are developed, the 4 elements of compensation can be determined
Alignment.
Base pay structure Variable pay plans are systems for sharing the economic benefits of improved productivity, cost reduction, quality and overall business performance in the form of cash Most variable pay plans incorporate existing or develop enhanced nsystems of employee involvement Fringe benefit structure are set at corporate level and are influenced by legal requirements
Alignment
Fringe benefits represent a substantial cost of total compensation a strategic cost Organizations derive little if any behavioural change from this portion of compensation fringes can influence attraction and retention
Alignment..
Compensation admn. Includes a collection of activities required to sustain the effectiveness of a strategy Issues ranging from labour market surveying to performance management to skill certification and peer review come under this Involving stakeholders can reinforce the values and beliefs underlying the philosophy/strategy
Aligning..
Decisions should be fully integrated into the organizations business and operations strategy through its comp. philosophy The design of compensation systems should be subsequent to, and not precede, this key anslysis and decision point. For the high performance firm, an appropriate level of employee involvement can further reinforce the beliefs and values
Checklist - business
Potential markets/products Anticipated volume Reinforce/enhance work design Maintain cultual change processes Other operating issues
Checklist - philosophy
Relationship within total company Relationshio to selection and retention Portion of pay guaranteed and at risk Percentage of work force bonus eligible
Strategic pay
Pay structure has strategic value that assigns different pay rates for jobs of different values which differentiate individual employee contribution. A well designed pay structure is one which attract and retain potential emplloyees Pay structure is the method of administering pay philosophy
pay
Two leading typres of pay structures are the internal equity method, which uses a tightoly constructed grid to ensure each job is compensated according to the jobs above and below it in a hierarchy and market pricing, where each job in an organization is tied to the prevailing market rate
pay
Job descriptions are required for all its position so that people know where thye fall within the orgn Pay structure helps answer questions about who is who, what each persons role is, and why people are compensated differently. It also helps HR personnel tofairly administer any given pay philosophy
pay
For example, a company might want to pay everyone at market value; or pay some people at market and some above it. Opportunities for incentives are also dealt with in the pay structure. For example, people with strategic roles will likely to have opportunities for higher incentives
Pay structure
Effective administration of pay structure requires a balance between the pay levels for employees inside the company (internal equity) and the pay level those employees could command in the companys recruiting markets (external equity)
Pay structure
Business considerations for pay structure design includes: Strategic issues Competitive practices The organizational culture Affordability of pay
Pay structure
Strategic issues objectives of the company and the extent to which salary will be used to attract/retain employees capable of achieving business success Salary practices of competition in consideration, surveys that report data regarding how they structure their salary admn program
Pay structure
Technical considerations for pay structure design include the number of range levels, width of the ranges from minimum to maximum value ( range spreads), the distance between adjacent range mid point values (mid point differentials) and the degree of overlap between adjacent ranges
Pay structure
The no. of ranges in a salary structre is a characteristic that describes the no. of levels needed to distinguish the value of jobs in the orgn. The no of ranges required to compost the complete structure is determined by (a) no. of skill and/or responsibility distinctions evident in the organizations job worth hierarchy,
Pay structure
The no. of supervisor-subordinate relationships in the companys organizational structure The degree of emphasis on career development and progression The resources available to administer the pay program Generally, the more range levels, the more administration required
Traditional structure
Have narrow range spreads, small midpoint differentials and broad overlap between adjacent ranges Tend to place greater emphasis on internal equity as opposed to external equity focus on job content evaluation to arrage t job worth hierarchy
Traditional structure
Likely to make many more distinctions between company jobs than may acaually exist in relevant recruiting markets Are best suited to companies that recognize and reward employee performance with promotions to jobs assigned to higher salary ranges, as opposed to moving an employees salary deeper within the range over time
Modern - broadbanding
Broadbanding is a method of grouping jobs and determining pay that makes compensation admn more flexible more responsive to the needs of changing organizations eliminates hierarchical grades Jobs with similar responsibilities and skill requirements are grouped in bands of job families and pay is linked to the market the approach reinforces and value the em ployees role within the University and the development of competencies to perform the role successfullyu