- Establishing Strategic Pay plans [17] -

Employee Compensation

Definition
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Employee Compensation – include all forms of pay going to employees and arising
from their employment
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Direct Compensation – Wages, Salaries, Incentives, Commissions, and bonuses
-
Indirect Compensation – financial benefits like employer – paid insurance and
vacation

Aligning Total reward with strategy


The compensation plan should first advance the firm’s strategic aims – management
should produce an aligned reward strategy

This means creating a compensation package that produces the employee behaviours the
firm needs to achieve its competitive strategy

Equity And Its Impact on Pay Rates


Equity Theory of motivation – is once a person perceives an inequity a tension or drive
will develop that motivates him or her to reduce the tension and perceived inequity


Type of Equity
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External equity
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Internal equity
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Individual
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provedural

Pay Policies

seniority based

performance

other pay policies

geography

Strategic Compensation Management


formulating a total reward package that produces the employee skills and behaviours
that the company needs to achieve its strategic goals

Compensating Expatriate Employees


home based salary plan – an international transferee’s base salary reflects his or her
home country’s salary

host – based plan – the firm ties the international transferee’s based salary to the host
country’s salary

Job Evaluation

a formal and systematic comparison of jobs to determine the work of one job relative to
another

the aim is to determine a job’s relative worth and eventually establish a wage or salary
structure

Principle Job Evaluation


job that require greater qualifications

more responsibilities, and more complex job duties should receive more pay than jobs
with lesser requirements

Compensable Factors

Factors that jobs have in common can be used to establish how the jobs compare to one
another

The fundamental, compensable element of a job, such as skills, effort, responsibility
and working conditions

Steps of Job Evaluation


Identify the need of job evaluation

Getting cooperation

Choosing evaluation committee

Committee perform evaluation

Job Evaluation Method


Ranking method
-
The simplest job evaluation method ranking each job relative to all other job, usually
based on some overall factor like “job difficulty”
-
Steps include :
+
Obtain job information
+
Select and group jobs
+
Select compensable factors
+
Rank job
+
Combine ratings
+
Compare current pay with others based on survey
+
Assign a pay scale
Company will decide to rise, lower or maintain the pay for each job after compared
with others pay to increase employee retention (does not have to match, as long as it
is somewhat close)


Job Classification
 -
Method in which ratters categorize jobs into groups
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All the jobs in each group are of roughly the same value for pay purposes
-
The groups are called classes if they contain similar jobs or grades if they contain job
that are similar in difficulty but otherwise different
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Also known as job grading
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*insert the chart*


Point Method
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It involves identifying several compensable factors for the jobs, as well as the degree
to which each factor is present in each job
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The result is a quantitative point rating for each job


Computerized Job Evaluation
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Most computerized system have two main components : structured questionnaires
and statistical models

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Penjelasan
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Contoh

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Topic 2
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Topic 3