Download ESTABLISHING REWARDS AND PAY PLANS

ESTABLISHING REWARDS
AND PAY PLANS
ESTABLISHING REWARDS AND PAY PLANS
• INTRODUCTION
• TYPES OF EMPLOYEE REWARDS
• WHAT IS COMPENSATION ADMINISTRATION?
• JOB EVALUTION AND THE PAY STRUCTURE
• SOME SPECIAL CASES OF COMPENSATION
• EXECUTIVE COMPENSATION PROGRAMS
• INTERNATIONAL COMPENSATION
• SUMMARY / QUESTION ANSWER
TYPES OF EMPLOYEE REWARDS
• Intrinsic versus Extrinsic Rewards.
• Financial versus Non-financial Rewards.
• Performance-based versus Membershipbased Rewards.
WHAT IS COMPENSATION ADMINISTRATION?
• Compensation
• Job Evaluation
• Rewards
• Goals of Compensation Administration
• Government Influence on Compensation Administration
- Fair Labour Standards Act
- The Civil Rights and Equal Pay Acts
JOB EVALUTION AND THE PAY STRUCTURE
• What is Job Evaluation?
• Isolating Job Evaluation Criteria
• Methods of Job Evaluation
- Ordering Method
- Classification Method
- point Method
• Establishing the Pay Structure
- Compensation Surveys
- Wage Curves
- The Wage Structure
SOME SPECIAL CASES OF COMPENSATION
• Incentive Compensation Plans
- Individual Incentives
- Group Incentives
- Plant-wide Incentive
• Paying for Performance
• Team-based Compensation
EXECUTIVE COMPENSATION PROGRAMS
• Salaries of Top Managers
• Supplemental Financial Compensation
• Supplemental Non-financial
Compensation: Perquisites
INTERNATIONAL COMPENSATION
• Base Pay
• Differentials
• Incentives
• Assistance Programs
JOB EVALUTION
Job Evaluation is the process whereby an
organization systematically establishes
its compensation program. In this
process, jobs are compared in order to
arrive at each job’s appropriate worth
within the organization.
REWARDS
• Employees exchange work for rewards.
• Probably the most important rewards,
and indeed the most obvious, is money.
• But all employees don’t earn the same
amount of money.
THE GOALS OF COMPENSATION
ADMINISTRATION
• The goals of compensation administration are
to design a cost-effective pay structure that will
attract, motivate, and retain competent
employees.
• It should also be one that will be perceived as
fair by employees.
• Fairness is a term that frequently arises in the
administration of an organization's
compensation program.
• Organizations generally seek to pay the least
that they have to in order to minimize costs, so
fairness means a wage or salary that is adequate
for the demands and requirements of the job.
Fairness is a two-way street.
WHAT IS JOB EVALUTION?
• Job analysis is the process of describing the duties of a job,
authority relationship, skills required, conditions of work,
and additional relevant information.
• Data generated from job analysis could be used to develop job
descriptions and specifications, as well as to do job
evaluations.
• By Job evaluation, we mean using the information in job
analysis to systematically determine the value of each job in
relation to all jobs within the organization. Job evaluation
seeks to rank all the jobs in the organization and place them in
a hierarchy that reflects the relative worth of each.
• Job evaluation assumes normal performance of the job by a
typical worker. So, in effect, the process ignores individual
abilities or the performance of the jobholder.
• The ranking that results from job evaluation is the means to
an end, not an end in itself. It should be used to determine the
organization's pay structure.
PAYING FOR PERFRORMANCE
• Pay-for-performance programs are compensation
plans that pay employees on the basis of some
performance measure.
• Piecework plans, gain sharing, wage incentive plans,
profit sharing, and lump sum bonuses are examples
of pay-for-performance programs.
• What differentiates these forms of pay from the
more traditional compensation plans is that instead
of paying an employee for time on the job, pay is
adjusted to reflect some performance measure.
• These performance measures might include such
things as individual productivity, team or work
group productivity, departmental productivity, or
the overall organization's profits for a given period.
• Performance-based compensation is probably most
compatible with demonstrating to employees that a
strong relationship exists between their
performance and the rewards they receive.
TEAM -BASED COMPENASATION
• In today’s dynamic organization, much more emphasis has
been placed on involving employees in most aspects of the job
that affect them.
• When organizations group employees into teams and empower
them to meet their goals, teams reap the benefits of their
productive effort.
• The is, team-based compensation plans are tied to team-based
performance.
• If goals were achieved, then all shared in the “Glory”. If any of
the managers failed, the entire team would not receive a dime
of bonus money. The concept is now being driven down to the
employee population!
• Under a team-based compensation plan, team members who
have worked on achieving and in many cases, exceeding
established goals often share equally in the rewards (although,
in the truest sense, teams allocate their own rewards).
• Providing for fair treatment of each team member, group
cohesiveness is encouraged.
SUMMARY
• Explain the various classifications of rewards.
• Discuss why some rewards are considered
membership based.
• Define the goal of compensation administration.
• Discuss job evaluation and its three basic
approaches.
• Explain the evaluation of the final wage structure.
• Describe competency-based compensation
programs.
• Discuss why executives are paid significantly higher
salaries than other employees in an organization.
• Identify what is meant by the balance sheet
approach to international compensation.
PAY-FOR-PERFORMANCE
• Employees should have a clear understanding of
what they’re attempting to accomplish. Manager
needs to see that this task is achieved by helping
employees set their work goals.
• While this appears to be common sense, it’s not
always the case. Setting pay-for-performance
objectives is a skill that every manager needs to
perfect. You can better facilitate this process by
following these guidelines.
- Identify an employee’s key job tasks.
- Establish specific and challenging goals for each key
task.
- Allow the employee to actively participate.
- Prioritize goals.
- Built in feedback mechanisms to assess goal.
- Link rewards to goal attainment.
FACTOR
1ST
DEGREE
Skill
1. Education
2. Problem Solving
Responsibility
1. Safety of others
2. Work of others
2. Problem Solving:
2ND
3RD
DEGREE
DEGREE
4TH
5TH
DEGREE
DEGREE
22
14
44
28
66
42
88
56
110
70
5
14
44
28
66
42
88
56
25
70
This factor examination the types of problem dealt with in your job. Indicate the one level that
is most representative of the majority of your job responsibilities.
Degree 1: Actions are performed in a set order per written or verbal instruction.
Problems are referred to supervisor.
Degree 2: Solves routine problems and makes various choices regarding the order in which
the work is performed within standard practices. May obtain information from varied sources..
Degree 3: Solves varied problems that require general knowledge of company policies and
procedures applicable with in area of responsibility. Decisions made based on a choice from
established alternatives. Expected to act within standards and established procedures.
Degree 4: Requires analytical judgment, initiative, or innovation in dealing with complex
problems or situations. Evaluation not easy because there is little precedent or information
may be incomplete.
Degree 5: Plans, delegates, coordinates, and/or implements complex tasks involving new or
constantly changing problems or situations involves the origination of new technologies or
policies for programs or projects. Actions limited only by company policies and budgets.
Source: Material reprinted with permission of The Dartnell Corporation, Chicago, IL 60640.
A WAGE CURVE
9.75
9.50
9.25
9.00
8.75
8.50
8.25
8.00
7.75
7.50
7.25
7.00
6.75
6.50
6.25
6.00
100
200
300
400
500
600
A SAMPLE WAGE
STRUCTURE
9.50
9.25
9.00
8.75
8.50
8.25
8.00
7.75
7.50
7.25
7.00
6.75
6.50
6.25
6.00
5.75
5.50
5.25
5.00
4.75
Grade 6
Grade 5
Grade 4
Grade 3
Grade 2
Grade 1
100
200
300
400
500
600
EMPLOYEE BENEFITS
The Costs of Providing Employee Benefit
Contemporary Benefits Offerings
• INTRODUCTION
Social Security
Unemployment Compensation
Worker’s Compensation
• LEGALLY REQUIRED BENEFITS
• VOULNTARY BENEFITS
• PAID TIME OFF
Vacation and Holiday Leave
Disability Insurance
• SURVIVOR BENEFITS
Health Insurance
- Traditional Insurance
- Health Maintenance Organization
- Preferred Provider Organizations
- Employer-Operated Coverage
- Health Insurance Continuation
Group Term Life Insurance
Travel Insurance
The Service Side of Benefit
• FAMILY-FRIEND BENEFITS
• AN INTEGRATIVE PERESPECTIVE ON EMPLOYEE BENEFITS
• RETIRMENT PROGRAMS
Defined benefit Plans
Defined Contribution Plans
- Money Purchase Pension Plan
- Profit-Sharing Plans
- Individuals Retirement Accounts
- Roth IRAs
- 401(K)s
• SUMMARY / QUESTION ANSWER
Flexible Spending Accounts
Modular Plans
Core-Plus Options Plans
INTRODUCTION
• The Costs of Providing Employee Benefits
• Contemporary Benefits Offerings
LEGALLY REQUIRED BENEFITS
• Social Security
• Unemployment Compensation
• Workers’ Compensation
VOLUNTARY BENEFITS
• Health Insurance
- Traditional Health Insurance
- Health Maintenance Organizations
- Preferred Provider Organizations
- Employer-Operated Coverage
- Health Insurance Continuation
RETIREMENT PROGRAMS
• Defined Benefit Plans
• Defined Contribution Plans
- Money Purchase Pension Plan
- Profit-Sharing Plans
- Individuals Retirement Accounts
- Roth IRAs
- 401(k)s
PAID TIME OFF
• Vacation and Holiday Leave
• Disability Insurance Programs
SURVIVOR BENEFITS
• Group Term Life Insurance
• Travel Insurance
FAMILY-FRIENDLY BENEFITS
• The Service Side of Benefits
AN INTEGRATIVE PRESPECTIVE ON
EMPLOYEE BENEFITS
• Flexible Spending Accounts
• Modular Plans
• Core-Plus Options Plans
Thank You……….!