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HRM (HRM PRACTISES (COMPENSATION MANAGEMENT (PAY SYSTEMS) (PAY SYSTEMS…

- - - - Total Compensation pay mix
        
        Indirect: Benefits
        
        Membership, Scholarship, Allowances (car, housing,...), Time away from work, Pension,...
        
        retain: ment to retain the employees for longterm loyality
        
        "
        
        Direct: Cash
        
        Base Salary
        
        attract: ment to attract people to join
        
        "
        
        Incentives & Bonus Short term and long term Incentives
        
        motivate: push them to work a little bit harder
        
        Strategic Objectives: drive change in employee behaviors to correspond with change in business strategic direction
      - Relational Forms
        
        Recognition/ Status, Job security, Challenging Work, Learning Opportunities, Personal Satisfaction, Good Culture
    - - Pay equity Self comparison (Output/Inuput), comparing with reference others(Output/Input compared with others)
        
        Inequity Quit, Voice, Neglect, Loyality --> depens on person
      - Pay justice Distibutive justice (Fair share of pay & rewards), Procedural justice (Fair process), Interactional justice (Fair management)
        
        Injustice Quit, Voice, Neglect, Loyality --> depens on person
    - - JOB-BASED PAY
        
        Internal Equity & Fairness make a decision about value of jobs in the company
        
        Job Structure Relatively, jobs with different values will get different pay
        
        Pay Structure: pay policy resulting from job structure and pay -level/value decisions
        
        Job Evaluation methods
        
        Whole Job
        
        Job Ranking (Job vs. Job)
        
        Job Classification (Job vs. Standard)
        
        Specific Job Factors
        
        Factor Comparison (Job vs. Job)
        
        Point Factor Rating (Job vs. Standard)
        
        External Equity & Competitiveness ensures that job in the company are valued appropriately relative to similiar jobs in external labor market
        
        Pay Level/ policy average amount the org. is willing to pay for a particular job compared to it´s competittors pay levels
        
        Factors shaped external competitiveness Labour market factors (demand vs. supply), product market factors (degree of competition, level of product demand), organisation factors (industry, strategy, size...)
        
        Company pay policies 1. Match with competitor, 2. Lead, Lag
        
        Issues in Developing Pay Structure
        
        Legal Requirements (minimum wage, Overtime pay,...)
        
        Market forces (product markets, Labor markets...)
        
        Organization´s Goals (high quality workforce, cost control, equity and fairness...)
        
        Pay Level Decision/ Job Structure Decision/ Pay Structure Decision (Pay rates, Pay grades,...)
      - SKILL BASED PAY
        
        Broadbanding develope multi-skilled employees who could do a variety of tasks and pay for people not for jobs --> skill-based pay approaches --> promote career development by rewarding skill growth
      - PERFORMANCE BASED PAY
        
        Strategic implications Why?
        
        Clear link tying pay to some measure of individual, group or organizational performance
        
        Clear target: establish a performance threshold to qualify for incentive payments
        
        Fair Evaluation extablish performance evaluation tools
        
        Impact on organization emphasize a shared focus on organizational objectives
        
        Impact on individuals adress growth needs, advancement potential, increased responsibility,...
        
        Expectancy theory E x I x V =Motivation
        
        EXPECTANCY Link between effort & performance? Do people have the ability to perform?
        
        INSTRUMENTALILTY: Link between perfromance & rewards? If not there will be a lack of motivation -based on the system
        
        VALENCE: Link between rewards and satisfaction. Equity of rewards is important because it´s not just about the amount
        
        Performance based Pay Plans
        
        Individual Incentive Plans
        
        MERIT PAY links an increase in base pay to how successfully an employee performs in job. Once merit increases are given they become part of base pay, regardless of future performence
        
        BONUS is an incentive payment given beyond their normal base wageat the end of the years and does not become part of base pay
        
        PIECE RATE is additional pay to additional piece of work over the amount expected on base rate
        
        COMISSION incentive pay based on a percentage of sales
        
        Problems Employee *unfairly production standards, work speedup, competition, difficult to understand payout formulas, friction between employee and management
        
        Group Incentive Plans with a bonusteam or organization team
        
        PROFIT SHARING (end of the years) Advantage: employee involvement, Disadvantage: risk factor, lack of control,...
        
        GAINSHARING (close in time of performance)Advantage: employee involvement, Disadvantage: trust essential, not useful in piecework
        
        Problems Teamvariety (full time, part time..), how many people in one team?, complexity, control, communications
        
        Key Components of Effectiveness Link to strategic objectives, clear standards of performance, measures are accurate, attainable standards, easy understanding, meaningful incentives, fairness