Human Resource

Management
Fundamentals of Human
Resource Management
Management Essentials

 Management involves setting goals

and allocating scarce resources to
achieve them.
 Management is the process of
efficiently achieving the objectives of
the organization with and through
people.
Management Essentials

 Primary Functions of Management

 Planning – establishing goals
 Organizing – determining what
activities need to be done
 Leading – assuring the right people
are on the job and motivated
 Controlling – monitoring activities to
be sure goals are met
Why is HRM Important to an
Organization?
 The role of human resource managers has
changed. HRM jobs today require a new
level of sophistication.
 Employment legislation has placed new
requirements on employers.
 Jobs have become more technical and
skilled.
 Traditional job boundaries have become
blurred with the advent of such things as
project teams and telecommuting.
 Global competition has increased demands
for productivity.
Why is HRM Important to an
Organization?

 The Strategic Nature – HRM must be

 a strategic business partner and
represent employees.
 forward-thinking, support the business
strategy, and assist the organization in
maintaining competitive advantage.
 concerned with the total cost of its
function and for determining value
added to the organization.
Why is HRM Important to an
Organization?

 HRM is the part of the organization

concerned with the “people”
dimension.
 HRM is both a staff, or support
function that assists line employees,
and a function of every manager’s job.
 HRM Certification
 Colleges and universities offer HR
programs.
Why is HRM Important to an
Organization?

Four basic
functions:
 Staffing

 Training and
Development
 Motivation

 Maintenance
How External Influences
Affect HRM

 Strategic Environment
 Governmental Legislation
 Labor Unions
 Management Thought
How External Influences
Affect HRM
 HRM Strategic Environment includes:
 Globalization
 Technology
 Work force diversity
 Changing skill requirements
 Continuous improvement
 Work process engineering
 Decentralized work sites
 Teams
 Employee involvement
 Ethics
How External Influences
Affect HRM
 Governmental Legislation
 Laws supporting employer and
employee actions
 Labor Unions
 Act on behalf of their members by
negotiating contracts with
management
 Exist to assist workers
 Constrain managers
 Affect non unionized workforce
How External Influences
Affect HRM
 Management Thought
 Management principles, such as those
from scientific management or
based on the Hawthorne studies
influence the practice of HRM.

 More recently, continuous

improvement programs have had a
significant influence on HRM
activities.
Staffing Function Activities
 Employment planning
 ensures that staffing will contribute to
the organization’s mission and
strategy
 Job analysis
 determining the specific skills,
knowledge and abilities needed to be
successful in a particular job
 defining the essential functions of the
job
Staffing Function Activities
 Recruitment
 the process of attracting a pool of
qualified applicants that is
representative of all groups in the
labor market
 Selection
the process of assessing who will be
successful on the job, and
 the communication of information to
assist job candidates in their decision
to accept an offer
Goals of the Training and
Development Function
 Activities in HRM concerned with
assisting employees to develop up-to-
date skills, knowledge, and abilities
 Orientation and socialization help
employees to adapt
 Four phases of training and
development
 Employee training
 Employee development
 Organization development
 Career development
The Motivation Function
 Activities in HRM concerned with helping
employees exert at high energy levels.
 Implications are:
 Individual
 Managerial
 Organizational
 Function of two factors:
 Ability
 Willingness
 Respect
The Motivation Function

 Managing motivation includes:

 Job design
 Setting performance standards
 Establishing effective compensation
and benefits programs
 Understanding motivational theories
The Motivation Function

 Classic Motivation Theories

 Hierarchy of Needs –Maslow
 Theory X – Theory Y –McGregor
 Motivation – Hygiene – Herzberg
 Achievement, Affiliation, and Power
Motives – McClelland
 Equity Theory – Adams
 Expectancy Theory - Vroom
How Important is the
Maintenance Function?
 Activities in HRM concerned with
maintaining employees’ commitment and
loyalty to the organization.
 Health
 Safety
 Communications
 Employee assistance programs
 Effective communications programs provide
for 2-way communication to ensure that
employees are well informed and that their
voices are heard.
Translating HRM Functions
into Practice
 Four Functions:
 Employment
 Training and development
 Compensation/benefits
 Employee relations
HRM in an Entrepreneurial
Enterprise
 General managers may
perform HRM functions, HRM
activities may be outsourced,
or a single generalist may
handle all the HRM functions.
 Benefits include
 freedom from many
government regulations
 an absence of bureaucracy
 an opportunity to share in the
success of the business
HRM in a Global Village
 HRM functions are more complex
when employees are located around
the world.
 Consideration must be given to such
things as foreign language training,
relocation and orientation processes,
etc.
 HRM also involves considering the
needs of employees’ families when
they are sent overseas.
HR and Corporate Ethics

 HRM must:
 Make sure employees know about
corporate ethics policies
 Train employees and supervisors on
how to act ethically
Human Resource Planning
and Job Analysis
Introduction
 Human resource planning
is a process by which an
organization ensures that
 it has the right number and
kinds of people
 at the right place
 at the right time
 capable of effectively and
efficiently completing those
tasks that will help the
organization achieve its
overall strategic objectives.
Introduction
 Linked to the organization’s
overall strategy and planning to
compete domestically and
globally.
 Overall plans and objectives
must be translated into the
number and types of workers
needed.
 Senior HRM staff need to lead
top management in planning for
HRM issues.
An Organizational
Framework
Linking Organizational Strategy
to Human Resource Planning
 Ensures that people are available to
meet the requirements set during
strategic planning.
 Assessing current human resources
 A human resources inventory report
summarizes information on current
workers and their skills.
 Human Resource Information Systems
 HRIS are increasingly popular
computerized databases that contain
important information about
employees.
 Linking Organizational Strategy
to Human Resource Planning
 Assessing current human resources
 Succession planning
• includes the development of replacement charts
• portray middle-to-upper level management
positions that may become vacant in the near
future
• lists information about individuals who might qualify
to fill the positions
Linking Organizational Strategy
to Human Resource Planning
 Determining the Demand for Labor
 A human resource inventory can be
developed to project year-by-year
estimates of future HRM needs for
every significant job level and type.
 Forecasts must be made of the need
for specific knowledge, skills and
abilities. ?
Linking Organizational Strategy
to Human Resource Planning
 Predicting the Future Labor Supply
 A unit’s supply of human resources
comes from:
• new hires
• contingent workers
• transfers-in
• individuals returning from leaves
 Predicting these can range from
simple to complex.
Linking Organizational Strategy
to Human Resource Planning
 Predicting the Future Labor Supply
 Decreases in internal supply come
about through:
• Retirements
• Dismissals
• Transfers-out
• Lay-offs
• Voluntary quits
• Sabbaticals
• Prolonged illnesses
• Deaths
Linking Organizational Strategy
to Human Resource Planning
 Where Will We Find Workers
 migration into a community
 recent graduates
 individuals returning from military service
 increases in the number of unemployed and
employed individuals seeking other
opportunities, either part-time or full-time
 The potential labor supply can be expanded
by formal or on-the-job training.
Linking Organizational Strategy
to Human Resource Planning
 Matching Labor Demand and Supply
 Employment planning compares forecasts
for demand and supply of workers.
 Special attention should be paid to current
and future shortages and overstaffing.
 Recruitment or downsizing may be used
to reduce supply and balance demand.
 Rightsizing involves linking staffing levels to
organizational goals.
Linking Organizational Strategy
to Human Resource Planning
Employment Planning and
the Strategic Planning Process
Job Analysis
 Job Analysis is a systematic
exploration of the activities within a
job.
 It defines and documents the duties,
responsibilities and accountabilities of
a job and the conditions under which
a job is performed.
?
Job Analysis
 Job Analysis Methods
 Observation method – job analyst
watches employees directly or reviews
film of workers on the job.
 Individual interview method – a
team of job incumbents is selected
and extensively interviewed.
 Group interview method – a number
of job incumbents are interviewed
simultaneously.
Job Analysis
 Job Analysis Methods
 Structured questionnaire method –
workers complete a specifically
designed questionnaire.
 Technical conference method –
uses supervisors with an extensive
knowledge of the job.
 Diary method – job incumbents
record their daily activities.
 The best results are usually achieved
with some combination of methods.
Job Analysis
 Structured Job Analysis
Techniques
 Department of Labor’s Job Analysis
Process:
• Information from observations and
interviews is used to classify jobs by their
involvement with data, people and things.
• Information on thousands of titles
available on O*Net OnLine which is the
Department of Labor’s replacement for
the Dictionary of Occupational Titles.
Job Analysis
 Position Analysis Questionnaire
(PAQ)(developed at Purdue
University)
 Jobs are rated on 194 elements,
grouped in six major divisions and 28
sections.
 The elements represent
requirements that are applicable to
all types of jobs.
 This type of quantitative
questionnaire allows many different
jobs to be compared with each other,
however, it appears to be more
applicable to higher-level
professional jobs.
Job Analysis
 Job Descriptions
 Written statement of what jobholder does,
how it is done, under what conditions and
why.
 Common format: title; duties; distinguishing
characteristics; environmental conditions;
authority and responsibilities.
 Used to describe the job to applicants, to
guide new employees, and to evaluate
employees.
Job Analysis
 Job Specifications
 States minimum acceptable
qualifications.
 Used to select employees who have
the essential qualifications.
Job Analysis

 Job Evaluations
 Specify relative value of each job in
the organization.
 Used to design equitable
compensation program.
Job Analysis

 The Multi-faceted Nature of Job

Analysis
 Almost all HRM activities are tied to
job analysis.
 Job analysis is the starting point for
sound HRM.
Job Analysis
 Job Analysis and the Changing World of
Work
 Globalization, quality initiatives,
telecommuting, and teams require
adjustments to the components of a job.
 Today’s jobs often require not only technical
skills but interpersonal skills and
communication skills as well.
Recruitment and Selection

By: Dr. Hadia Hamdy

Introduction

 Recruiting
 Once an organization identifies its
human resource needs through
employment planning, it can begin the
process of recruiting potential
candidates for actual or anticipated
organizational vacancies.
Introduction

 Recruiting brings
together those with jobs to
fill and those seeking jobs.
Recruiting Goals

 To provide information that will attract

a significant pool of qualified
candidates and discourage
unqualified ones from applying.
Recruiting Goals
 Factors that affect recruiting
efforts
 Organizational size
 Employment conditions in
the area
 Working conditions, salary
and benefits offered
 Organizational growth or
decline
Recruiting Goals

 Constraints on recruiting efforts

include:
 Organization image
 Job attractiveness
 Internal organizational policies
 Recruiting costs
Recruiting: A Global
Perspective
 For some positions, the whole world is
a relevant labor market.
 Parent (Home) country nationals
are recruited when an organization is
searching for someone with extensive
company experience to launch a very
technical product in a country where it
has never sold before.
Recruiting: A Global
Perspective
 Host-country nationals (HCNs) are
targeted as recruits when companies
want each foreign subsidiary to have
its own distinct national identity.

 HCN’s minimize potential problems

with language, family adjustment and
hostile political environments.
Recruiting Sources

 Sources should match the position to

be filled.
 Sources:
 Internal Searches
 Employee Referrals/

Recommendations
 External Searches
 Alternatives
Recruiting Sources
The internal search
 Organizations that promote
from within identify current
employees for job openings:
 by having individuals bid for
jobs
 by using their HR
management system
 by utilizing employee
referrals
Recruiting Sources

The internal search

 Advantages of promoting from within
include
 morale building
 encouragement of ambitious
employees
 availability of information on existing
employee performance
 cost-savings
 internal candidates’ knowledge of the
organization
Recruiting Sources

The internal search

 Disadvantages include:
 possible inferiority of internal
candidates
 infighting and morale problems
Recruiting Sources
Employee referrals/recommendations
 Current employees can be asked to
recommend recruits.
 Advantages include:
 the employee’s motivation to make a good
recommendation
 the availability of accurate job information for
the recruit
 Employee referrals tend to be more
acceptable applicants, to be more likely to
accept an offer and to have a higher survival
rate.
Recruiting Sources

Employee
referrals/recommendations
 Disadvantages include:
 the possibility of friendship
being confused with job
performance
Recruiting Sources
External searches
 Advertisements: Must decide type
and location of ad, depending on job;
decide whether to focus on job (job
description) or on applicant (job
specification).
 Two factors influence the response
rate:
 identification of the organization
 labor market conditions
Recruiting Sources
External searches
 Employment agencies:
 Public or state employment services
focus on helping unemployed
individuals with lower skill levels to
find jobs.
 Private employment agencies provide
more comprehensive services and are
perceived to offer positions and
applicants of a higher caliber.
Recruiting Sources
External searches
 Schools, colleges, and
universities:
 May provide entry-level or
experienced workers
through their placement
services.
 May also help companies
establish cooperative
education assignments and
internships.
Recruiting Sources
Recruitment alternatives
 Temporary help services.
 Temporary employees help organizations
meet short-term fluctuations in HRM needs.
 Older workers can also provide high quality
temporary help.
 Employee leasing.
 Trained workers are employed by a leasing
company, which provides them to employers
when needed for a flat fee.
 Typically remain with an organization for
longer periods of time.
Questions???
Selection
Selection – the process by which an organization
chooses from a list of applicants the person or
persons who best meet the selection criteria for
the position available, considering current
environmental conditions
Internal Environmental Factors
Influencing Selection

 Organization characteristics that can

influence the selection process:
 Size
 Complexity
 Technological ability
External Environmental Factors
Influencing Selection

 Government employment laws and

regulations
 Size, composition, and availability of
local labor markets
Selection Criteria

Experience and
Formal Education
Past Performance

Personal
Physical
Characteristics and
Characteristics
Personality Type
Reliability of Selection
Criteria
 Reliability – how stable or repeatable
a measurement is over a variety of
testing conditions.
Validity of Selection Criteria

 Validity – addresses the questions of:

 What a selection tool measures
 How well it has measured it

 It is not sufficient for a selection tool to

be reliable
 The selection tool must also be valid
Steps in the Selection Process

1. Preliminary
Screening

2. Employment 3. Employment
Interview Tests

4. Background 6. Physical
5. Selection
and Reference Examination
Decision
Checks
The Selection Process

Initial Screening
 Involves screening of
inquiries and screening
interviews.
 Job description
information is shared
along with a salary
range.
The Selection Process
Employment Interview
Interviews involve a face-to-face meeting with
the candidate to probe areas not addressed
by the application form or tests
 Two strategies for effective use of interviews:
1. Structuring the interview to be reliable and
valid
2. Training managers on best interview
techniques
The Selection Process

Types of Interviews:
 Unstructured interview

 Structured interview

 Behavioral Interviews
 Candidates are observed not only for
what they say, but how they behave.
 Role playing is often used.

 Stress Interviews.
The Selection Process

Realistic Job Preview

 RJP’s present unfavorable as well as
favorable information about the job to
applicants.
 May include brochures, films, tours,
work sampling, or verbal statements
that realistically portray the job.
 RJP’s reduce turnover without
lowering acceptance rates.
The Selection Process

Employment Tests
 Mechanism that attempts to measure
certain characteristics of individuals,
e.g.,
 aptitudes
 intelligence
 personality

 Should be validated before being

used to make hiring decisions
The Selection Process
Employment Tests
 Estimates say 60% of all organizations
use some type of employment tests.
 Performance simulation tests: requires
the applicant to engage in specific job
behaviors necessary for doing the job
successfully.
 Work sampling: Job analysis is used to
develop a miniature replica of the job on
which an applicant demonstrates his/her
skills.
The Selection Process
Employment Tests
 Assessment centers: A series of
tests and exercises, including
individual and group simulation
tests, is used to assess managerial
potential or other complex sets of
skills.
 Testing in a global arena:
Selection practices must be
adapted to cultures and
regulations of host country.
The Selection Process

Background Investigation:
 Verify information from the application
form
 Typical information verified includes:
 former employers
 previous job performance
 education
 legal status to work
 credit references
 criminal records
The Selection Process

Background Investigation
 Do not always provide an organization
with meaningful information about
applicants
 Concerns over the legality of asking
for and providing confidential
information about applicants
The Selection Process

Physical Examinations
 Should be required only after a
conditional offer of employment has
been made
Summary

 Putting more money into selection can

significantly reduce the amount of money
it must spend on training

 A selection system will make some

mistakes
 No guarantee of successful job
performance
Questions????
Training and Development

By: Magda Hassan

Agenda
 The Socialization Process.
 Employee Orientation.

 Employee Training

 Employee Development.

 Organization Development.

 Evaluation of Training Program.

Introduction
 Socialization, training and
development are all used to help
new employees adapt to their new
organizations and become fully
productive.
 Ideally, employees will understand
and accept the behaviors desired by
the organization, and will be able to
attain their own goals by exhibiting
these behaviors.
1. The socialization Process

 Socialization
 A process of adaptation to a
new work role.
 Adjustments must be made
whenever individuals change
jobs
 The most profound adjustment
occurs when an individual first
enters an organization.
1. The socialization Process

The assumptions of employee

socialization:
 Socialization strongly influences
employee performance and
organizational stability
 Provides information on how to do the
job and ensuring organizational fit.
 New members suffer from anxiety,
which motivates them to learn the
values and norms of the organization.
1. The socialization Process
The assumptions of employee
socialization:
 Socialization is influenced by subtle
and less subtle statements and
behaviors exhibited by colleagues,
management, employees, clients
and others.
 Individuals adjust to new situations
in remarkably similar ways.
 All new employees go through a
settling-in period.
 1. The socialization Process
A Socialization Process
1. The socialization Process

The Socialization Process

 Prearrival stage:
Individuals arrive with a
set of values, attitudes
and expectations which
they have developed
from previous experience
and the selection
process.
1. The socialization Process
 The Socialization
Process
 Encounter stage:
Individuals discover how
well their expectations
match realities within the
organization.
 Where differences exist,
socialization occurs to
imbue the employee with
the organization’s
standards.
1. The socialization Process

The Socialization Process

 Metamorphosis stage: Individuals
have adapted to the organization, feel
accepted and know what is expected
of them.
2. New-Employee Orientation
Purpose

 Orientation may be done by the supervisor,

the HRM staff or some combination.
 Formal or informal, depending on the size of
the organization.
 Covers such things as:
 The organization’s objectives
 History
 Philosophy
 Procedures
 Rules
 HRM policies and benefits
 Fellow employees
2. New-Employee Orientation

 Learning the Organization’s

Culture
 Culture includes long-standing,
often unwritten rules about what
is appropriate behavior.
 Socialized employees know how
things are done, what matters,
and which behaviors and
perspectives are acceptable.
2. New-Employee Orientation
Roles

The CEO’s Role in Orientation

 Senior management are often visible
during the new employee orientation
process.
 CEOs can:
 Welcome employees.
 Provide a vision for the company.
 Introduce company culture -- what matters.
 Convey that the company cares about
employees.
 Allay some new employee anxieties and help
them to feel good about their job choice.
2. New-Employee Orientation

HRM’s Role in Orientation

 Coordinating Role: HRM
instructs new employees
when and where to report;
provides information about
benefits choices.
 Participant Role: HRM
offers its assistance for
future employee needs
(career guidance, training,
etc.).
3. Employee Training
Definitions
 Employee training
a learning experience
designed to achieve a
relatively permanent change
in an individual that will
improve the ability to perform
on the job.
 Employee development
future-oriented training,
focusing on the personal
growth of the employee.
 3. Employee Training
Determining Training Needs
4. Methods of Employee Training
 On-the-job training methods
 Job Rotation
 Understudy Assignments

 Off-the-job training methods

 Classroom lectures
 Films and videos
 Simulation exercises
 Vestibule training
5.Employee Development

 This future-oriented set of

activities is predominantly
an educational process.
 All employees, regardless
of level, can benefit from
the methods previously
used to develop
managerial personnel.
5.Employee Development

Employee development methods

 Job rotation involves moving
employees to various positions
in the organization to expand
their skills, knowledge and
abilities.
 Assistant-to positions allow
employees with potential to
work under and be coached by
successful managers.
6. Employee Development
Methods
Employee development methods
 Committee assignments provide
opportunities for:
• decision-making
• learning by watching others
• becoming more familiar with
organizational members and problems
 Lecture courses and seminars
benefit from today’s technology and
are often offered in a distance
learning format.
6. Employee Development
Methods

Employee development methods

 Simulations include case studies,
decision games and role plays and
are intended to improve decision-
making.
 Outdoor training typically involves
challenges which teach trainees the
importance of teamwork.
7. Organization Development

 What is change?
 OD efforts support changes that are
usually made in four areas:
 The organization’s systems
 Technology
 Processes
 People
7. Organization Development

 Two metaphors clarify the change

process.
 The calm waters metaphor describes
unfreezing the status quo, change to a
new state, and refreezing to ensure
that the change is permanent.
 The white-water rapids metaphor
recognizes today’s business
environment which is less stable and
not as predictable.
8. Evaluating Training and
Development Effectiveness
Evaluating Training Programs:
 Typically, employee and manager opinions
are used,
 These opinions or reactions are not
necessarily valid measures
 Influenced by things like difficulty,
entertainment value or personality of the
instructor.
 Performance-based measures (benefits
gained) are better indicators of training’s
cost-effectiveness.
Performance Appraisal and
Compensation

By: Yomna Sameer

Evaluating Employee
Performance - Agenda
 Purpose of performance management
system
 Difficulties in performance
management system
 Steps of the Appraisal process

 Appraisal methods
Performance Evaluation

 The performance management

systems need to include:
 decisions about who should
evaluate performance
 what format should be used
 how the results should be utilized
Purposes of a Performance
Management System

 Feedback - let employees know how

well they have done and allow for
employee input.
 Development – identify areas in
which employees have deficiencies or
weaknesses.
Difficulties in Performance Management
Systems

 Focus on the individual:

Discussions of performance may elicit
strong emotions and may generate
conflicts when subordinates and
supervisors do not agree.
Difficulties in Performance Management
Systems

 Focus on the process: Company

policies and procedures may present
barriers to a properly functioning
appraisal process.
 Additionally, appraisers may be poorly
trained.
The Appraisal Process
Step 1 and 2
 Establishment of performance
standards
 Derived from company’s strategic
goals.
 Based on job analysis and job
description.
 Communication of performance
standards to employee.
Step 3 and 4

 Measurement of performance using

information from:
 personal observation
 statistical reports
 oral reports
 written reports

 Comparison of actual performance

with standards.
Step 5 and 6

 Discussion of appraisal with

employee.
 Identification of corrective action
where necessary.

 Basic corrective action deals with

causes.
Appraisal Methods

Three approaches:
 Absolute standards

 Relative standards

 Objectives
1. Absolute Standards

Evaluating absolute standards:

 An employee’s performance is
measured against established
standards.
 Evaluation is independent of any other
employee.
1. Absolute Standards

 Essay Appraisal: Appraiser writes

narrative describing employee
performance & suggestions.
 Critical Incident Appraisal: Based
on key behavior incident illustrating
effective or ineffective job
performance.
 1. Absolute Standards

 Checklist Appraisal: Appraiser checks off

behaviors that apply to the employee.
 Adjective Rating Scale Appraisal:
Appraiser rates employee on a number of job-
related factors.
1. Absolute Standards

 Forced-Choice Appraisal:
Appraisers choose from sets of
statements which appear to be equally
favorable, the statement which best
describes the employee.
1. Absolute Standards

 Behaviorally Anchored
Rating Scales (BARS):
Appraiser rates employee
on factors which are defined
by behavioral descriptions
illustrating various
dimensions along each
rating scale.
2. Relative Method

 Employees are evaluated by

comparing their performance to the
performance of other employees.
2. Relative Method

 Group Order Ranking: Employees

are placed in a classification reflecting
their relative performance, such as
“top one-fifth.”
2. Relative Method

 Individual Ranking:
Employees are ranked from
highest to lowest.
 Paired Comparison:
• Each individual is compared to
every other.
• Final ranking is based on
number of times the individual
is preferred member in a pair.
3. Achieved Outcome
Method

Management by Objectives (MBO)

 includes mutual objective setting and
evaluation based on the attainment of
the specific objectives
3. Achieved Outcome
Method

 Common elements in an MBO

program are:
• goal specificity
• participative decision making
• an explicit time period
• performance feedback
 Effectively increases employee
performance and organizational
productivity.
Creating More Effective
Performance Management Systems
Development of Compensation
and Pay systems - Agenda

 Objectives of compensation
 Types of rewards

 Development of a base pay system

Objectives of compensation

 Efficiency
 Quality
 Performance
 Cost

 Fairness

 Compliance
Types of Reward Plans

Intrinsic versus Extrinsic Rewards

 Intrinsic rewards (personal
satisfactions) come from the job itself,
such as:
 pride in one’s work
 feelings of accomplishment
 being part of a work team
Types of Reward Plans

Intrinsic versus Extrinsic Rewards

 Extrinsic rewards come from a
source outside the job
 include rewards offered mainly by
management
 Money
 Promotions
 Benefits
Types of Reward Plans
Financial versus Non-financial Rewards
 Financial rewards include:
 wages
 bonuses
 profit sharing
 pension plans
 paid leaves
 purchase discounts
 Non-financial rewards emphasize making life
on the job more attractive; employees vary
greatly on what types they find desirable.
Introduction
Development of a Base Pay
System

Job Analysis

Job Evaluation

Pay Survey

Job Structure

Pay Structure & Grades

Development of a Base Pay
System
Job Evaluation
 Use of job analysis
information to determine
the relative value of each
job in relation to all jobs ?
within the organization.
 The ranking of jobs
 Labor market conditions
 Collective bargaining
 Individual skill differences
Development of a Base Pay
System

Job Evaluation Methods

 Ordering method: A
committee places jobs in a
simple rank order from
highest (worth highest pay)
to lowest.
Development of a Base Pay
System

Job Evaluation Methods

 Classification method:
 Jobs are placed in classification
grades
 Compare their descriptions to the
classification description and
benchmarked jobs
 Look for a common denominator such
as skills, knowledge, or responsibility
Development of a Base Pay
System

Job Evaluation Methods

 Point method:
 Jobs are rated and allocated points
on several identifiable criteria,
using clearly defined rating scales.
 Jobs with similar point totals are
placed in similar pay grades.
 Offers the greatest stability.
Development of a Base Pay
System

Establishing the Pay Structure

 Compensation surveys
 Used to gather factual data on
pay rates for other
organizations
 Information is often collected
on associated employee
benefits as well
Any Questions