COMPENSATION ADMINISTRATION 10.
Retirement – payment for work no longer
LECTURE 6: TOTAL REWARDS PLAN
Total rewards – Is a system of rewards that goes
beyond compensation and benefits and includes
anything and everything the employee values and the
employer is willing and able to offer employees.
Total rewards system – Is comprised of compensation
and non-compensation elements used to attract and
retain workers and reinforce desired behaviors.
Total rewards strategy – Is a system implemented by a
business that provides monetary, beneficial, and
developmental rewards to employees who achieve
specific business goals.
- The strategy combines compensation and
benefits with personal growth opportunities
inside a motivated work environment.
- Total rewards strategy encourages organizations
to move toward a pay-for-performance
philosophy providing opportunities for top
performers to earn higher base salaries
through a well-defined performance evaluation
program embracing a meritocracy culture.
EXAMPLES OF TOTAL REWARS STRATEGIES
1. Compensation
2. Base Pay – wages and salary
3. Merit Pay – base-pay increase based on employee
performance
4. Incentives – cash bonuses based on employee
performance
5. Promotions – base pay increase based on potential
to perform new job
6. Pay Increases – base pay increase based on length of
service with the organization
7. Benefits
8. Health and Welfare – payment for injuries and
illness both on and off the job
9. Paid Time Off – payment for vacation time or
excused days from work
performed based on length of employment
11. Personal Growth
12. Training – skill development through on or off the
job instruction
13. Career Development – in-the-job coaching to
develop skills
14. Performance Management – ongoing goal setting
and feedback to develop skills
FOUR (4) PHASES OF TOTAL REWARDS
IMPLEMENTATION
1. Assessment – this phase, the HRP evaluates the
company’s total rewards system and generates ideas
for improving it. To carry-out this phase effectively, HR
must take responsibility for a lengthy series of tasks.
2. Design – during this phase, the HR team identifies
which employee and organizational attributes to
reward and which types of rewards to offer. The HR
Team should consider the full range of rewards
strategies, including compensation, benefits, personal
and professional development, and work environment.
3. Execution – once the HR Team has designed a total
rewards system, it moves to the execution phase of the
implementation process- putting the new system in
place in the organization. During this phase, the HR
team must consider numerous issues.
4. Evaluation – in this phase, the project team
compares the actual results of the executed total
rewards strategies against the desired results. By
conducting evaluation, you can show top management
that the company’s investment in its total rewards
system has paid off.
BENEFITS OF TOTAL REWARDS
1. A Persuasive Recruitment Tool – the more items or
inducements that you’re able to put on the table, the
stronger the case you make for selling your
organization, this can help you bring high-performing
candidates on board.
2. Signaling that you’re a Progressive Company –
employees like to be associated with well-known, well-
considered company. “The brand of the company is PERSONAL AND PROFESSIONAL DEVELOPMENT AS A
very important. A positive, well-respected brand makes TOTAL REWARDS
it easier to draw in quality candidates.”
 Work environment (safety and comfort)
3. Increasing Employee Engagement without  Job design
Increasing Costs – Happy, engaged, connected  Recognition
employees will spread the word that they like where  Work/life balance
they work. Overtime, that builds and solidifies the  Autonomy
reputation of the company as a good place to work.  Flexible schedules and work arrangements
 Relationships with other people
4. Increased Awareness of all the Benefits the
 Quality leadership
Employer Provides – underutilization of employee
benefits is a big concern for many companies. The ADVANTAGES OF TOTAL REWARDS PROGRAM
time, effort and resources that go into putting together
an employee benefits packages (particularly to a small  Employee Retention
business) can be considerable, and when those  Employee Performance
benefits go unused, it can all feel like a waste.  Controllable Expenses
 Program Administration
5. Higher Employee Retention Rates – engaged
employees are more loyal, which means that it’s going DISADVANTAGES OF TOTAL REWARDS PROGRAM
to take more than a small salary increase to lure the
 Lag the Market
them away.
 Appropriate Mixture
6. Improved Performance and Productivity – a more  Self-focus and Competition
engaged workforce isn’t just a loyal workforce; it’s also
a more productive one. Total rewards program have
been linked to increases in overall employee LECTURE 7: SIGNIFICANT FACTORS AFFECTING
performance and satisfaction. COMPENSATION
PERSONAL AND PROFESSIONAL DEVELOPMENT AS A FACTORS AFFECTING COMPENSATION
TOTAL REWARDS
External Factors:
 Trainings, career development, and performance
management can constitute valuable rewards  Supply and demand for employee skills;
for employees. But the value of these rewards  Labor organization;
for an organization is less clear.  Competitors
 From the employer’s perspective, personal and  The Economy;
professional development is good only if it  Cost of living; and
enables workers to acquire special skills that  Government Legislation
add value to the enterprise.
 Valuable skills are those that give an Internal Factors:
organization unique capabilities that rivals
 The firm’s financial condition;
can’t copy and thus afford the employers a
 Productivity of the firm
sharp competitive edge (Barney and Wright,
 Employee
1998). Clearly, development opportunities that
 Job Description
give workers general skills that can be easily
transported to other organizations do not
provide strategic value.
SUPPLY AND DEMAND
The commodity approach to labor tend to show that a
wage is a price for the services of a worker or
employee. As such, if a firm desires his services, it must
pay a price for such services which are subject to
control by the worker or group of workers acting in
concert with one another.
As the law of supply and demand indicates the greater
supply of any commodity and the lesser the demand
for it, the price is low. Conversely, if the demand is
greater than the supply, the price is high.
In general, anything works to decrease the supply of
labor, such as restriction by a particular labor union,
there will be a tendency to increase the compensation.
If anything works to increase the employers demand
for labor, such as wartime prosperity, there will be a
tendency to increase the compensation. The reverse of
each situation is likely to result in a decrease in
employee compensation.
LABOR ORGANIZATION
Labor unions – represent the vital arm and thus the
strong force of labor organizations. In the structure of
economic relationships, the labor union attempts to
work primarily on the supply side.
Union leaders are often very competent in selecting
the appropriate time to strike as judged by the markets
for the employer’s products.
To strengthen their control over the supply of labor,
unions seek such goals as union or closed shops,
regulation or restricted substitution of capital for labor
through technology, and controlled entry into
apprenticeship programs.
Collective bargaining agreement – the process by
which unions and employers arrive and enforce their
agreements
- In order to realize the ambition of creating some
effective power over a labor market, a union
had to gain control of the supply of labor and
have the financial resources necessary to
outlast the employer strength. The union has
to force the employer to negotiate.
THE FIRM’S FINANCIAL CONDITION
It should be recognized that not a few employers share
their bonanza in the form of bonuses with their
employees.
If the firm is highly successful, it is good public relations
to pay their workers and employees above the
prevailing wage rate. Contented and happy workers
become sufficiently motivated to work harder resulting
in increased productivity.
All said, ability to pay is an important factor affecting
compensation, not for the individual firm for the entire
economy or industry.
PRODUCTIVITY
Productivity goes hand in hand with morale, i.e., if
morale is high, the worker exerts greater efforts
resulting in increased productivity.
Productivity is a measure of performance.
Productivity is the ability of the worker to produce
more is circumscribed by the path he has chosen, the
path that lead to the accomplishment of desired goals.
This makes the worker highly productive provided
there are no restraining forces, that is, if no barriers
blocked the desired path.
Higher productivity, it should be noted, is an index of
high or good performance and suggest promotion at a
certain time in the future; promotion in rank and in
pay.
DRAWBACKS IN PRODUCTIVITY COMPENSATION
 There is no precise and accurate measure of
productivity acceptable to all;
 The reported percent increase are generally of
long-term average and are not achieved each
year;
 Not all industries participate equally in
productivity gains; and
 Use of any index does not materially reduce
controversy in bargaining since the index is
used as the base from which to bargain.
The proper role of a productivity index in
compensation is not one of a rigid formula; rather, it
provides helpful information for both parties in the
bargaining process.
COST-OF-LIVING ALLOWANCE
In recent years apart from the base pay members of
the labor force receive from their employers as
compensation for their services, in addition thereto,
there is added what has come to be known as cost of
living allowance termed as COLA for short.
The basic intent behind such increment is to help them
in their dilemma brought by the higher of inflation.
Briefly, COLA adjustment of compensation constitutes
no fundamental solution to equitable compensation of
employees. Rather, as indicated above, it is useful as a
top gap device in times of inflation when labor is
pressed to keep with the rise in prices.
In the Philippines, the mandatory cost of living
allowance is contained in WAGE ORDERS issued by the
government from one time to another. However,
distressed enterprises are granted full or partial
exemptions or deferment of compliance for a period to
be determined by the National Wage Council.
GOVERNMENT
The recognition of the importance of labor to the
nation’s economy explains the government’s continued
attention and concern to the plight of the workingman.
Such area of concern includes LAW to evolve fair and
equitable payment of wages due the workingman. To
this end, a number of social and labor legislations have
been enacted, particularly relating to wages. One of
these is the Minimum Wage Law.
Government intervention took the form of the
establishment of a wage board or council for each
industry, or a central wages commission covering a
group of companies.
COMPENSATION PRINCIPLES
Principle of Economics – pay must bear a reasonable
relationship to the overall financial structure of the
company.
Principle of Living Wage – pay should be substantial
enough to obtain a reasonable standard of living.
Principle of Competition – pay must be competitive
enough. It must compare favorably with pay for similar
work in both the area and the industry.
Principle of Significant Differences – compensation
should recognize significant differences in
responsibility, authority, accountability, and level of
employment within the organization.
Principle of Contribution – should be based upon the
individual’s contribution to the objectives of the
company.
Principle of Change – should be capable of revision to
meet changing conditions.
Principle of Status Symbolism – compensation
believes that individual earnings mark his progress in
life accordingly.
STEPS IN COMPENSATION ADMINISTRATION
1. Determining the relative value of positions;
2. Grouping positions into classes or grades;
3. Deciding upon general compensation levels;
4. The company’s relative ability to pay;
5. Devising the range of compensation for the
class;
6. Establishing criteria for advancement through
the range; and
7. Evaluating the individual
LECTURE 8: JOB DESCRIPTION AND JOB ANALYSIS
Job Description – a group of duties, responsibilities and
activities assigned to an individual. It is a summary of
the most important features of the job in terms of its
general nature and of the type of operation required to
perform it in an efficient manner.
- It summarizes duties and responsibilities, skill or
training requirements; and organizational
demands for this type of employees required.
- The job description is normally formulated by
the HR DEPARTMENT.
Essential features each position as:
1. The nature of the work involved, and
2. The type of worker that appears best fitted for
the position (JS).
CONTENTS OF JOB DESCRIPTION
1. A summary of statement/ job
2. Relationships
3. Specific duties and responsibilities
4. Authority
5. Qualifications
DETAILED JOB DESCRIPTION CONTENTS
1. Job Summary
2. Job Title
3. Location of the Job in the organization
(Department or Unit)
4. Authority to report – to what higher position
the job is tied to.
5. How much direction and supervision is given
to the job.
6. Specific duties performed
a. Regular as in the case of PAYROLL
ASSISTANT who is assigned to that job
for as long as he holds that position in
the company;
b. Less frequently, but regularly as, once
a week or every fifteen days.
(Example: computing attendance
worked by employees.)
c. Occasionally. When the PAYROLL
MASTER is absent due to illness or
vacation leave of absence, the
PAYROLL ASSISTANT takes over his
position and does the former’s job at
least temporarily.
d. Unrelated tasks that could be assigned,
as for instance, during an emergency,
vacancies, resignations, absence, etc.
7. Extent of job authority, if any. Statements of
authority relationships include:
a. From whom authority is received for
this position;
b. To whom orders and instructions are
given;
8. Working conditions, that is, whether safe,
pleasant and conducive to higher
productivity. If the reverse obtains, there
should be a clear statement to that effect.
9. Machinery and equipment required for the
job.
10. Others that have a bearing on the job. For
instance: AN ADMIN ASSISTANT
responsibility is to maintain adequate supply
of materials, proper utilization of resources,
and etc.
GUIDELINES FOR WRITING A JOB DESCRIPTION
1. It should be borne in mind that job descriptions are
nothing more than job summary statements of duties
and responsibilities called in the job and never
intended to serve as a measure of employee
performance.
2. Attention should be focused and directed to two
basic elements:
1. principal duties
2. accountability for performance of the job.
3. Job identification data – this relates to identifying
information about the job such as job title, (if
alternative titles exist); code name, if such is used;
organizational unit and level of job; and, perhaps,
current holder of the job.
4. Minimal qualifications necessary for the job must be
clearly indicated. This will help in the recruitment
process. Without gainsaying considering those without
the desired qualifications for the performance of the
job is a sheer waste of time, effort and money.
5. The chain of command must be clearly spelled out;
and so with delegation of authority.
6. There should be a periodic review of job descriptions
since jobs change. The descriptions should always
reflect the nature and contents of the jobs in question.
JOB SPECIFICATION
Job specification – is at times termed as “job spec” for
short, it usually indicates the skill, education, and
experience required to perform the job.
- It also includes a statement of the job conditions
relating to the health, safety, and comfort of
the employee. Perhaps, a more nearly accurate
name would be to call this job specification an
“person specification”.
JOB ANALYSIS PROCEDURES INVOLVED IN JOB ANALYSIS

 Job evaluation begins with job descriptions. 1. Gathering of factual material

 A job description begins with a job analysis. 2. Accuracy of data
3. Putting the information in draft form.
Job analysis – is the study of work done and the 4. The draft is now made subject to review
conditions under which it is done in order to determine 5. Revision of the first draft
what the job actually is. 6. Final approval
Job Analysis – is the methodical compilation of study
of work data in order to define and characterize each
occupation in such a way as to distinguish it from all
others.

JOB ANALYSIS OBJECTIVES:

1. To determine and establish job specifications;

2. To develop training programs;
3. To evaluate positions in the company;
4. To study work flow and work process for
improvement in operations;
5. To determine safety standards
6. To aid in determining cost and value benefits
of employee benefits.

FACTORS IN A JOB ANALYSIS PROGRAM

The decision to go on board on a job analysis program,

either for the purpose of reviewing the accuracy of
present and possibly obsolete job descriptions, or for
the sole purpose of installing a new plan, doubtless
requires a careful consideration of the following
factors:

1. What are the clear reasons which justify job

analyses?
2. What reliable information, if any, exists? Is
such information complete and reliable for
the present use it is intended?
3. What jobs or groups of jobs are the subject of
study and analysis? In what order will the
study of other jobs follow?
4. How should the information from the job
analysis be collected and recorded?
5. When should the job analysis be undertaken?
When should it be completed?