WEEK 1: INTRO TO COMPENSATION
ADMINISTRATION
Compensation
- Compensation refers to all forms of
financial return and tangible services
and benefits employees receive as
part of employment relationships.
- Employee compensation is generally
one of the largest costs or expenses
for any organization.
- Employee compensation refers to
the benefits (cash, vacation, etc.)
that an employee receives in
exchange for the service they
provide to their employer.
Basic paytime: 25%
Overtime pay: 25%
On holiday: 30%
To have 13th-month pay: 1 month
Breaktime is not compensable
Mag compensate lang ang isang tao pag
may instruction.
COMPENSATION
- Compensation may achieve several
purposes assisting in recruitment,
job performance, and job
satisfaction. It is a tool used by
management for a variety of
purposes to further the existence of
the business.
- Compensation Administration refers
to the tasks of compensation
managers in designing and
implementing a pay program with a
systematic approach to providing
monetary value to employees in
exchange for work performance.
- Management of employee
compensation is called
Compensation Administration.
COMPENSATION ADMINISTRATION
- Compensation Administration is a
strategic management tool of
compensation management and HR
management to match productivity
with the cost of labor and employees
to get satisfaction with their worth
and values.
- It then fulfills the objectives of both
the employers and the employees.
- The goal of compensation
administration is to design a
cost-effective pay structure that will
attract, motivate, and retain
competent employees.
- The structure should also appear fair
to employees. Fairness is a term
that frequently arises in the
administration of an organization’s
compensation program.
COMPENSATION OBJECTIVES:
● To attract and retain competent
employees
● To establish fair and equitable
compensation
● To control costs and improve
productivity
● To comply with legal regulations
● To reward the desired behavior
● To improve the company’s goodwill
in the eyes of the general public and
employees.
Equitable - sino yung nangangailangan
Equality - fair para sa lahat
Compensation is a tool used by
management for a variety of purposes to
further the existence of the company.
Compensation may be adjusted according
to the business needs, goals, and available
resources.
Compensation may be used to:
● Recruit and retain qualified
employees.
● Increase or maintain
morale/satisfaction.
● Reward and encourage peak
performance.
● Achieve internal and external equity.
● Reduce turnover and encourage
company loyalty.
● Modify (through negotiations)
practices of unions.
“TURNOVER” - umalis sa company
loyalty/retention - nag stay sa company
Wages
- pinakamababang na pwede
swelduhin ng isang tao
- 573 pesos - 610 pesos
- refers to all pay or earnings that an
employer gives a worker in
exchange for work performed during
regular working hours and days; it
excludes, however, cost-of-living
allowances, profit-sharing payments,
premium payments, 13th-month pay,
and other financial benefits
Salary
- is a regular payment agreed upon in
an employment contract, and it's
linked to the number of hours
defined in the contract.
- a fixed amount that is paid to an
employee at regular intervals,
irrespective of the hours or amount
of work performed
A Compensation is made of:
Job Description
Job Analysis
Job Evaluation
Pay Structure
Payroll
- the process of paying a company's
employees, which includes tracking
hours worked, calculating
employees' pay, and distributing
payments via direct deposit to
employee bank accounts or by
check.
Compensation
- describes the cash rewards paid to
employees in exchange for the
services they provide. It may include
base salary, wages, incentives,
and/or commission.
Benefits
- Employee benefits are
non-monetary value and are not
based on performance but on
membership. They are indirect forms
of compensation and are paid
regardless of the performance. They
can determine their benefits
package to be availed.
Note:
Salaries and wages vary depending on the
nature of work, location of work, and time of
work.
Salaries for those working in cities are
higher than for those who work in provinces.
Compensation includes:
Base Pay
It is the basic compensation what the
employee gets, usually as a wage or salary.
Commissions
a sum of money given to a salesperson for
each transaction.
Overtime Pay
The overtime rate is offered to people who
need to work longer than the standard
8-hour shift.
Stock Options
a benefit in the form of an option given by a
company to an employee to buy stock in the
company at a discount or at a stated fixed
price.
Bonuses
are compensation paid above and beyond
one's base salary.
Profit Sharing
a system in which the people who work for a
company receive a direct share of the
profits.
Merit Pay
type of compensation a company uses to
reward higher-performing employees with
ongoing additional pay
Travel/Meal/Housing Allowance
A compensation system is made up of
the following parts:
Job descriptions
specify in detail the responsibilities,
requirements, functions, duties, location,
environment, conditions, and other
elements of occupations. Job descriptions
are an essential part of both compensation
and selection processes. For specific jobs
or entire job families, descriptions can be
created.
Job Analysis
is the process by which job descriptions and
Job Specifications are created. Techniques
for job analysis include observation,
questionnaires, and interviews.
Job evaluation
is a system for evaluating jobs to determine
the proper pay scales for specific jobs or job
components. Ranking, classification, factor
comparison, and point method are the four
main methods.
Pay Structures
Useful for standardizing compensation
practices. Most pay structures include
several grades with each grade containing a
minimum salary/wage and either step
increments or grade range. Step increments
are common with union positions where the
pay for each job is pre-determined through
collective bargaining.
Salary Surveys
Compile market and salary data. It includes
salary budget averages, inflation and cost of
living data, and typical salaries.
Concepts of Compensation System:
- Employees perform tasks for
employers and so companies pay
employees wages for the jobs they
do.
- Compensation is an exchange or a
transaction from which both
parties—employers and
employees—benefit: both parties
receive something for giving
something in compensation.
However, it involves much more than
this simple transaction.
- From the viewpoint of the employer,
compensation affects employee
motivation and affordability.
- Companies must think about how
much they can afford to pay their
employees and how their choices
will effect employee retention and
productivity.
 - Furthermore, some bosses and
businesses think that remuneration
can affect employees' work ethics
and behaviors, linking pay to output.
Phases of Compensation
Roles of Compensation Managers
- Compensation managers are
responsible for researching,
establishing, and maintaining a
company's pay system.
- This involves researching and
understanding the current and
upcoming competitive markets for
employee pay and benefits.
COMPENSATION IN THE PHILIPPINES
Challenges in Compensation
Administration
Budget constraints: Organizations often
need more compensation budgets, making
it difficult to offer competitive pay packages
while still controlling costs. Balancing
employee expectations and financial
resources is a significant challenge,
particularly for small businesses or those in
highly competitive industries.
Market competitiveness: In a competitive
job market, organizations must regularly
benchmark their compensation packages
against industry standards and competitors.
This can be challenging, as it requires
access to accurate market data and a
thorough understanding of the market
dynamics.
Pay equity: Ensuring pay equity across the
organization is an ongoing challenge.
Compensation managers must carefully
analyze salary structures to identify and
address disparities based on gender, race,
or age. This requires vigilance and a
commitment to fairness and transparency.
Regulatory compliance: Compensation
management must comply with various
labor laws and regulations, which may vary
by location and industry. Keeping up to date
with these regulations and ensuring
compliance can be time-consuming and
complex.
Performance measurement: Developing a
fair and objective system for measuring
employee performance is crucial for linking
compensation to performance. However, it
can be challenging to create performance
metrics that accurately reflect an individual's
contributions and account for the various
factors that may influence performance.
Balancing intrinsic and extrinsic
rewards: In addition to monetary
compensation, employees also value
non-financial rewards such as recognition,
growth opportunities, and a positive work
environment. Striking the right balance
between financial and non-financial rewards
is crucial for maximizing employee
satisfaction and engagement.
Communication and transparency:
Communicating compensation policies and
decisions clearly and transparently is
essential for building trust and fostering
employee buy-in. However, this can be
challenging, particularly in large or complex
organizations where multiple factors may
influence compensation decisions.
Retention and turnover: High employee
turnover can be costly and disruptive, so
organizations must implement
compensation strategies that support
employee retention. This requires a deep
understanding of employee preferences and
priorities and the ability to predict and
respond to changing workforce dynamics.
Adapting to change: The business
environment constantly evolves, and
organizations must adjust their
compensation strategies to remain
competitive. This may involve reevaluating
salary structures, adopting new
technologies, or rethinking traditional
approaches to employee rewards.
Implementing technology: Leveraging
technology in compensation management
can help streamline processes and improve
efficiency. However, selecting the right tools
and systems and ensuring proper
integration with existing HR systems can be
a significant challenge.
GOVERNMENT AGENCIES
RESPONSIBLE FOR COMPENSATION
AND BENEFITS IN THE PHILIPPINES
• The Department of Labor and
Employment (DOLE) regulates the benefits
and compensation policy in the Philippines.
This government agency follows the rules
stated in the Labor Code of the Philippines
– an all-encompassing legal code intended
to protect the workers in the country. Parts
of the labor code are the benefits and
compensation rules that employers ought to
follow when employing Filipino workers.
• The National Wages Productivity
Commission (NWPC) is an attached
agency of the Department of Labor and
Employment (DOLE). Justly remunerated
and productive Filipino workforce in globally
competitive enterprises. Its mission is to set
minimum wage that protects vulnerable
workers from undue low pay. Promote
productivity improvement and incentive
schemes among MSMEs.
• The Social Security System (SSS)
administers two programs: 1) the Social
Security Program for death, disability, old
age, maternity, and sickness; and 2) the
Employees' Compensation (EC) Program
for work-related injury, sickness, or death.
• PhilHealth is mandated to provide
universal health insurance coverage and
healthcare services for all citizens of the
Philippines. PhilHealth members receive
financial assistance for medicine, hospital
costs, and certain inpatient and outpatient
procedures.
• The Pag-IBIG Fund provides a national
savings and housing assistance program for
all members. Qualified members can avail
of housing loans, multipurpose loans, and
calamity loans. Besides its regular savings
program, members can also participate in
the Modified Pag-IBIG 2 special savings
facility for higher dividends.
• The BIR refer to national internal revenue
taxes imposed and collected by the national
government through the Bureau of Internal
Revenue (BIR) and local taxes refer to
those imposed and collected by the local
government.
Attached Agencies of DOLE
• National Wages and Productivity
Commission
• Regional Tripartite Wages and Productivity
Board
• National Labor Relations Commissions •
Employees’ Compensation Commission
• National Conciliation and Mediation Board
• Occupational Safety and Health Center •
Technical Education and Skills Development
Authority (TESDA)
• Professional Regulation Commission
(PRC)
• Philippine Overseas Employment
Administration
WEEK 2: WAGES AND ITS
SIGNIFICANCE
Wages - are the price paid for the services
of labor in the process of production and
include only the performance wages or
wages proper.
Purpose: for daily living, protection.
- The purpose of minimum wage is to
protect workers against unduly low
pay. They help ensure a just and
equitable share of the fruits for
progress to all, and a minimum living
wage to all who are employed, and
in need of such protection.
- Minimum wages can also be one
element of a policy to overcome
poverty and reduce inequality.
Including those between men and
women, by promoting the right to
equal remuneration for work of equal
value.
Wages:
- The steps involved in determining
wage rates are: performing job
analysis, wage surveys, analysis of
relevant organizational problems,
working wage administration,
explaining these to employees.
Assigning grades and price to each
job and paying the guaranteed.
TYPES OF WAGES
1. Piece rate wages
- These are wages paid according to
the work done by the worker. (rate
paid per unit of production x number
of units completed in the pay period.
2. Time wages
- If the worker is paid for his services
according to the time. It is called
time wage.
3. Cash wages
- It refers to the wages paid to the
labor in terms of money. The salary
paid to a worker is an example of
cash wages.
Blue collar - skilled people, not graduate
White collar - obtained a degree, offices
4. Living wages
- Refers to the least amount of money
an employer can offer to an
employee.
5. Minimum wage
 CONCEPT OF WAGES
Money wages or Nominal wages
- Refers to the total amount of money
received by the laborer in the
process of production.
- Hanggang saan ang aabutin ng
wage mo.
Real wages
- Is the type of wage that take inflation
rates into consideration. This wage
determines the purchasing power of
the individual and the amount of
goods and services the individual
can purchase given the current
market condition.
Real wages computation: nominal
wage / consumer price index * 100 =
real wages
Wage system
- Refers to compensation to an
employees with a fixed sum per
piece, hour, day, or another period of
time covering all compensations
including salary.
- Should be the introduction of a fair
wage.
- Fair wage is a wage equal to that
received by the employees
performing equal work and having
equal skills.
● In the Philippines, the two tiered
system were introduced by the
NWPC DOLE.
CHARACTERISTICS OF A GOOD WAGE
SYSTEM
● Should be fair and scientific
● Guaranteed minimum payment
● Should be accepted by all
employees to reduce worker
turnover and absenteeism
● Should be flexible to adopt changes
● Should ensure incentive for good
performance, which helps to
increase efficiency and productivity.
● Should be able to satisfy workers
which leads to motivation which
helps or improve productivity.
SIGNIFICANCE OF WAGES
● To the worker: wages are not only
the remuneration of the workers for
their contribution in production but
their very means of livelihood.
● Wages as purchasing power:
Wage earners and their families form
a large and important segment of the
market for consumer goods and
services. They represent their only
source of livelihood.
● The level of living thus depends
upon the amount of money which
the workers take home.
LEVELS OF LIVING
1. Poverty Level - those workers
whose incomes are very irregular
due to their lack of any desired skills
they can offer
2. Minimum of subsistence level -
This level are those workers who
provide the basic needs but do not
provide social needs
3. Minimum health and decency -
This level are those workers who
provide meager (insufficient)
provision for education, amusement,
and insurance.
4. Minimum of comfort standard - In
this level the remuneration of an
 employee is so high that he can command but doubtless so is the
provide for all the basic necessities national economy.
and meet all the requirements of
comfort for himself.

WAGES AS COST OF PRODUCTION

- The cost of production is also called
production cost or cost price. It is the
total cost sustained by a business to
produce a specific quantity of a
product. It includes all direct and
indirect cost of manufacturing the
product
- Cost of production includes: Cost of
raw materials, labor(wages),
storage, technology used,
maintenance, land
- Wages are the price which the
entrepreneur must pay for the
service of labor. In other words, they
are a cost of production and a major
one

RELATION OF LABOR COST TO TOTAL

COST
Cost of labor is the sum of all wages paid to
an employee, as well as the cost of
employee benefits and payroll taxes paid by
an employer

Unit labor cost is calculated as the ratio of

labor compensation to output

EFFECTS ON THE NATIONAL ECONOMY

- It is frequently said that we live in a
wage economy. Not only is the
standard of workers affected by the
wages they receive, and the
purchasing power they have at their

WEEK 3: WAGES SUPPLEMENTS
Supplements refer to extra remuneration or
benefits received by the wage earners from their
employers. In other words, supplements
constitute remuneration or special privileges
received by the employees over or above their
ordinary earnings.
KINDS OF COMPENSATION
MEANING
According to Business Dictionary Wage
Supplements are compensation received from
employment that is in addition to the regular,
ordinary salary or wages. They include
commissions, overtime earnings, awards,
bonuses, retirement matching programs, or
payment for unused vacation days.
PURPOSE
- To persuade and motivate employee;
- Not linked with employee performance;
- Help increase the wealth and well-being
of employees at the cost of an employer
TYPES
Supplemental wages includes:
• Profit-sharing
• Paid vacations (not rendered work)
• Bonuses
• Commission
• Tips
• Over-time pay
PROFIT SHARING ORIGIN
° The profit sharing was first devised by a
Frenchman named EDME
JEAN LECLAIRE.
° One of his employees was reported to have
said to him that the participation of the workers
in the profits of the employer is the only way to
get free of the hatred between them under the
organization system of production.
° This scheme attracted considerable attention
not only in France but also in England so much
so that about the middle of the 19th century,
their principles were advocated principally by the
Christian Socialists, who influenced co-operative
societies to apply them to their employees.
PROFIT SHARING
° An agreement (formal or informal) freely
entered into by which employees receive a
share fixed in advance of the profits. (
International Congress on Profit Sharing, 1889)
° It is a payment in the form of cash, stock
options, or otherwise, given under a
predetermined and continuing policy sought by
management of a company to all or any group of
its officers or employees in addition to their
wages.
° Profit sharing excludes gifts, gratuities, or other
payments made by an employer to his
employees out of profits at his discretion without
being bound by a scheme.
° Profit sharing schemes is usually through the
initiative of the individual firms, and in
consequence
schemes vary widely to suit the conditions of
each company and the purposes and attitude of
employers who introduces them.
° Profit sharing is usually free to terminate at any
time, but until the employer does so they are
bound to observe its provisions.
OBJECTIVES OF PROFIT-SHARING
° To instill a sense of partnership among its
employees and thus prevent
industrial friction or unrest.
° To serve as group incentive. Employees
participate in the profits of the company, they are
motivated to work harder and help contribute to
the success of the firm.
° To provide employee security.
° To attract desirable employees to join the
organization and moreover reduce turnover on
the part of those who are already members.
° To serve as an attractive means of
communicating with its employees its philosophy
of sharing the wealth with them.
SPECIAL BONUSES
° Christmas Bonuses - it is usually paid during
prosperous times, or when excess profits taxes
are unusually high, the payment of Christmas
Bonuses is much more widespread than at other
times.
° When bonuses are paid regularly each year,
regardless of the economic or tax situation. The
costs are considered as part of the regular
operating expenses of the business;
° When their distribution is contingent upon the
company’s current financial situation, these
bonuses assume the aspect of profit sharing.
° The eligibility requirements vary from industry,
frequently payment of bonuses requires one
year of service with the company and
sometimes there are additional attendance and
good behavior requirements.
° The most common type of bonus is based
upon a certain percentage of annual wages.
(e.g. 2 percent)
° Some companies pay a uniform amount to all
regular employees, irrespective of individual
earnings or length of service beyond the
required minimum for obtaining a “regular
status”.
° Some companies base each individual’s bonus
upon a fixed sum per year of service.
OBJECTIVES OF SPECIAL BONUSES
° The practice of paying Christmas bonus is that
they promote goodwill, loyalty, and stability
among employees and also provide a means of
sharing some of the company’s income during
prosperous times without committing the
company to added costs which would be difficult
to reduce during periods when profits are not H
high.
PRODUCTION BONUS SYSTEM
° This system enjoys the advantage of providing
employees with more pay for exerting greater
effort while, at the same time, providing them the
security of their regular wages.
° A bonus payment may be used upon the
number of units that an individual or a group
produces.
COMMISSION
° Commission refers to the compensation paid to
an employee after completing a task, which is,
often, selling a certain number of products or
services.
° Commission vary in the way they set and pay
to their employees, this includes:
straight commission,
salary plus
commission,
graduated commission.
DE MINIMIS BENEFITS
DE MINIMIS BENEFITS NOT SUBJECT TO
WITHHOLDING TAX
• Monetized unused vacation leave credits to
employees not exceeding ten (10) days during
the year;
• Monetized value of vacation and sick leave
credits paid to government officials and
employees;
• Medical cash allowance to dependents of
employees, not exceeding ₱ 1,500.00 per
employee per semester of ₱ 250.00 per month;
• Rice subsidy of ₱ 2,000.00 or one sack of 50kg
rice per month amounting to not more than ₱
2,000.00;
• Uniform and clothing allowance not exceeding
₱ 6,000.00 per annum;
• Actual medical assistance, e.g. medical
allowance to cover medical and healthcare
needs, annual medical/executive check-up,
maternity assistance, and routine consultations,
not exceeding ₱ 10,000.00 per annum;
• Laundry allowance not exceeding ₱ 300.00 per
month;
• Employees achievement awards, e.g. for
length of service or safety achievement, which in
the form of a tangible personal property other
than cash or gift certificate, with an annual
monetary value not exceeding ₱10,000.00
received by the employee under an established
written plan which does not discriminate in favor
of highly paid employees;
• Gifts given during Christmas and major
anniversary celebrations not exceeding
₱5,000.00 per employee per annum;
• Daily meal allowance for overtime work not
exceeding twenty five percent (25%) of the basic
minimum wage;
• Benefits received by an employee by virtue of Incentives are effective motivators when the
a collective bargaining agreement (CBA) and objectives to be met are clearly started upfront
productivity incentive schemes provided that the and when the incentives offered are desirable. A
total annual monetary value received from both company that provides various types of
CBA and productivity incentive schemes incentives, tailored to individual workers,
combined do not exceed ten thousand pesos motivate employees to consistently do their best.
(Php 10,000.00)per employee per taxable year;\
INCENTIVES DEFINITION
WEEK 4: INCENTIVES • An incentive is something, like a prize or
desired action, that gets an employee to do
more of whatever is/was encouraged by the
employer.
• An example of this is a company throwing a
pancake party on Mondays to help employees
get through the day while promoting something
like teamwork throughout the departments of the
company. While enjoying a free pancake
breakfast, employers are able to conduct
meetings and brief employees on the company
as a whole
INCENTIVE SCHEME
• An incentive or “reward” can be anything that
attracts an employees’ attention and stimulates
him at work. An incentive scheme is a plan or
program to motivate individual or group
performance.
• An incentive program is most frequently built
on monetary rewards (incentive pay or monetary
bonus), but may also include a variety of
non-monetary rewards or prizes.
• Incentives are needed to increase the
productivity of the laborers as also to reduce
cost per unit of labor.
• It is gainful for both the laborers as well as
employers to give incentives.
INCENTIVES CAN:
• Increase productivity
• Encourage teamwork
• Thank employees for doing their work well
• Keep employees happy
• Reward high achieving employees
• Build trust with employers
• Problem of absenteeism and late-coming
comes to an end
TYPES OF INCENTIVES
1. Monetary or Financial Incentives
Allowances
Profit-sharing
Bonus
2. Non-monetary or Non-financial incentives
Job security
Praise and recognition
Career Development
Management Development
MONETARY OR FINANCIAL INCENTIVES
• Money is the determinant factor of all
incentives. In order to increase the efficiency of
the laborer, various financial incentives such as:
good wage, bonus, allowances, and money
related income items ( free medical assistance,
free education, etc.)are very essential.
• Financial incentives impart self-confidence and
give sense of security to the workers. They take
more interest in work and produce more in the
hope of getting still more monetary benefits.
• Financial incentives also include such
economic incentives as are given collectively to
the employees.
MONETARY OR FINANCIAL INCENTIVES
a. Allowances:
- allowances are made to the employees
under wages/pay packet. It is paid by
the employers to the employees in order
to provide relief to the latter against ever
rising prices of consumer goods.
- This incentive is given to compensation
for rising prices or consumer price index.
- It is an important part of the wages paid
to the employees. Today, allowance is
given to all government and most of the
private sector employees.
- Initially allowances was kept separate
from the basic salary.
- Presently, allowance used to be treated
as an additional income of the workers.
And payment of allowance has become
an integral part of wage payment.
b. Profit sharing
- Is an arrangement entered into by which
the employees review a share, fixed in
advance of profits.
- It is a scheme, whereby a certain
percentage of the profits is distributed at
fixed intervals, usually annually or
semi-annually, in some definite ratio to
all employees who have been in
employment of the firm for a stated term.
- According to International Labor
Organization(ILO), profit-sharing is
method of industrial renumeration under
which an employer undertakes to pay
his employees a share in the net profits
of the enterprise, in addition to their
regular wages.
CHARACTERISTICS OF PROFIT-SHARING
1. profit is shared between the workers and the
employers in accordance with an agreement.
2. Share out of profits is in addition to the normal
market rate of wages and
is intended to provide inducement to the
workers.
3. Preparation of the profit to be shared is
pre-determined, the employee cannot change it
later on.
4. Share of the profit paid to the workers is
based on the net profit or dividend of the
industrial unit.
5. It is the profit that is shared between the
workers and the employer and not the loss.
6. labor-class alone is entitled to it and not the
managerial-class.
7. Each worker, without any discrimination, gets
share out of profit.
8. Individual ability of the worker is not taken into
consideration while sharing profit.
9. Distributed share amount is either paid in
cash or credited to the provident fund of the
workers.
10. All workers know their share in advance.
METHODS OF PROFIT SHARING
1. On the basis of industry:
- Under this system, surplus profit of different
units of a given industry is collected and
distributed equally among all the workers of that
industry.
2. On the basis of locality:
- All units operating at one place collect their
profits and distribute a given percentage of it
among the workers of all units
3. On Industry cum Locality basis:
- Units of a given industry operating in a
particular locality distribute a predetermined
proportion of their profits among the workers.
4. On Unit Basis:
- under this agreement, profit of different units is
worked out
separately. Each unit distributes a their interest in satisfying social and
pre-determined share of its profit among the
laborer.
5. On Departmental Basis:
- Under this arrangement profit of different
departments of the industrial unit is worked out
separately and distributed among the concerned
departments.
6. On Individual Basis:
- Under this arrangement profit, pre-determined
share is taken out and distributed among the
workers on basis of their efficiency
MERITS OF PROFIT SHARING
1. Industrial Peace
2. Increase in Production
3. Economy
4. Stability in Job
5. Reduction in Supervision
6. Industrial Democracy
7. Increase in Income and Efficiency of workers
c. BONUS
- To motivate the workers, payment of
bonus is also quite significant. It serves
as monetary incentive and helps
establish cordial relations between
employee and employer.
- Payment of bonus to workers is
prevalent in almost all industries. Bonus
refers to that monetary payment which
is paid to workers in addition to their
wages as a reward for their good
services.
NON-MONETARY/NON-FINANCIAL
INCENTIVES
• Non-monetary incentives include all those
non-financial, social and psychological factors
for which employees get incentives for maximum
and outstanding work.
• Non-monetary incentives play an important role
in getting work with greater efficiency from the
worker.
• For the workers monetary reward has a great
significance but of still greater importance is
psychological needs.
• Studies viewed that non-monetary incentives
are as important as monetary incentives.
1. Job Security
Every employee wants his job to be stable and
secure. Security of service inspires him to
perform his duty efficiently.
2. Opportunity in Progress
Every employee looks for an opportunity to
make progress. It is therefore essential that
everybody should be ample opportunities for
advancement. It is possible that he may not be
able to take advantage of the opportunity when it
comes his way but he does hope for the
opportunity. Everyone prefers on higher post to
financial gain.
3. Sound Policy:
An employee expects justice and fair treatment
in the company. In matters of promotion or
transfer, etc., the management must play fair.
Workers lose confidence in management when
the latter exercises discrimination. Besides, their
enthusiasm for work becomes weak.
4. Workers participation in management:
Workers should have the right to participate in
management of industry or to conduct the
business and to give advice in matters of mutual
interests. This will make them realize their
importance and develop in them sense of
responsibility. It has effect both on industry and
production.
5. Praise:
Everybody likes that his good works be
appreciated. It is the weakness of an ordinary
person that he feels greatly flattered at his
praise. It satisfies his ego.
Praise has great motivational force. It constantly
inspires the worker to take keen interest in the
work and adds to his productivity.
6. Knowledge of Results:
The workers must be made aware of the results
of the work being done by them so as to
motivate them to produce still more.
7. Recognition
Every employee wishes that his work be fully
recognized, it should be useful and he should be
indispensable to production process. It makes
him conscious of his ability, efficiency, position
and responsibility. Management should therefore
give due recognition to all kinds of work
performed by the worker so that they are
inspired to do work with greater zeal.
TYPES OF INCENTIVES: NON-FINANCIAL
Recognition Incentives
These incentives are actions like thanking,
praising, presenting employees with a certificate
of achievement, or announcing an
accomplishment at a company meeting. This
can be use for individuals or even in the use of
the whole company.
Recognizing the accomplishments of an
employee or a whole group of employees with a
simple thank you or a plaque for the
accomplishment can go a long way in
maintaining great work and great relationships.
Rewards Incentives
This one speaks for itself. This type of incentives
includes monetary rewards, prizes, or even
company trips to help build moral or reward the
company. This incentive usually coincides with
the recognition incentives. Sometimes saying
thank you isn’t enough, so saying thank you with
a trip or prize can really drive home the point
and help encourage the employee to continue
contributing to the team.
Appreciation incentives
These are the type of incentives that were
mentioned above. Parties, family gatherings for
the employees like picnics, and just general
celebrations for good employee work. Showing
recognition through food and celebration is
always a great way to.
TYPES OF INCENTIVES: FINANCIAL

Financial (monetary)
Compensation incentives which can be raises,
bonuses, profit-sharing, signing bonus, and
stock options. These are great incentives to help
encourage loyalties to a company.
Monetary incentives are those in which
payments are based on a combination of time
and output units according to an established
formula.
TYPES OF INCENTIVES PLAN
1. Individual incentive plans;
2. Group incentive plans;
3. Organizational level incentive plans; and
4. Incentives to professional employees.
1. INDIVIDUAL INCENTIVE PLANS
- This incentive plans are influenced by
many factors such as: technology, job
tasks/duties and/or organizational goals.
- Incentive payments are determined by
the number of units produced, by the
achievement of specific goals, by
productivity improvements or by
availability of money.
TYPES OF INDIVIDUAL INCENTIVES PLAN
1. Piece work:
- It is one of the oldest incentive plans. In a
straight piecework incentive plan, the employees
receive a certain rate for each unit produced.
Compensation is determined by the total number
of units produced during a particular period. In
piece rate plan, employees whose production
exceeds the
standard output receives a higher rate for all the
units they produce than the rate of paid to those
who are unable to exceed the standard.
2. Standard hour plan:
- In this plan, payment is determined based on
the completion of a job in a predetermined
standard time. If employees finish their work in
less than the standard time, their payment is still
based on the standard time for the job multiplied
by their hourly rate. (if the standard time to
polish a particular equipment is 8 hours and if an
employee finishes the work in 6 hours, then
his/her compensation is calculated for 8 hours
even though he/she has completed the tasks in
6 hours).
3. Bonus:
- it is an incentive plan given to an employee in
addition to one’s normal basic pay.
4. Merit pay:
- this incentive payment is based on one’s
performance. Those who perform better
generally receive more merit pay. This is in
addition to basic pay. The percentage of
increase is attributable solely to performance.
- Lump-sum merit pay, in this plan, employees
receive single lump-sum increase at the time of
their review. It is not added to their basic pay.
The main advantage is that employees are able
to see a clear link between their performance
and payment.
INCENTIVE AWARDS AND RECOGNITION
Special contributions, achievements or service
to the organization are often recognized through
MERCHANDISE AWARDS, PERSONALIZED
GIFTS, VACATIONS, GIFT VOUCHERS, ETC.,
presenting tangible awards with the right
message at the right time is an effective way of
appreciating good performances. Research
showed that non-cash incentive awards along
with recognition programs were more effective to
motivate workers.
SALES INCENTIVES
As sales job requires drive and enthusiasm, the
sales people must be highly motivated. That is
why financial incentives are used for sales force
widely. Incentives are important to elicit
cooperation and trust from sales people as they
are generally in the field away from the office.
Generally, performance of sales people is
measured by the sales volume, the employees’
ability to establish new contacts, the enthusiasm
to promote new products/services and the
various forms of services provided to the
customers.
Performance standards for sales people are
difficult to establish as their performance is often
influenced by many external factors such as
economic/seasonal fluctuations, sales
competition, changes in demand and the nature
of sales territory.
There are also problems of how to reward extra
sales effort and the activities which do not
directly or immediately contribute to sales.
TYPES OF SALES INCENTIVE PLAN
1. Straight Salary Plan:
- it is a compensation plan in which sales people
are paid for performing various duties that may
or may not result in sales. It may not motivate
sales people to put in sufficient effort to
maximize the sales and it only enables them to
provide services and build-up the good will.
2. Straight Commission Plan:
- it is based on a percentage of sales. This plan
provides maximum incentive and is easy to
understand and calculate.
3. Combined Salary and Commission Plan:
- this plan includes a straight salary and a
commission. It is the most widely used sales
incentive plan.
For example:
if a sales person works under a 75/25
combination. He/she gets 75% of the basic pay
and pays 25% of the sales value as
commissions. The ratio of combination is
decided by the company based on certain
objectives.
2. GROUP INCENTIVE PLANS
• These incentive plans have become popular
when many tasks are executed by people as a
group/teams. Group plans help companies in
cost reduction and total quality management.
MERITS OF GROUP INCENTIVE PLANS
• Improved efficiency
• Encourage cooperation and team spirit
• These plan is desirable when tasks are
independent and measurement of individual
performance is difficult.
STEPS IN GROUP INCENTIVE PLAN
1. Setting performance measures-
improvements in efficiency, product quality or
reduction in materials/labor costs are common
benchmarks to base incentive payments. The
same must be informed to the employee.
2. Determining of the size of incentives- it is
deciding certain percentage of sales as
incentives.
3. Establishing payment formula- the team
bonus may be distributed to employees equally,
in proportion to their basic pay or on the basis of
their relative contributions. It is decided by the
team members along with the manager.
MERITS OF GROUP INCENTIVE PLAN
• It builds team culture and improves team spirit
through supporting group planning and problem
solving;
• Group cooperation enhances individual
contributions;
• It motivates employees through broadening the
scope of their contributions;
• Group incentives reduces jealousies among
the employees as their contributions and
payments are similar.
• Interpersonal competencies will improve
through cross-training.
LIMITATIONS OF GROUP INCENTIVES PLAN
• There are chances that some individuals may
feel that their contributions are higher than that
of others;
• There may be pressure from inefficient fellow
workers to reduce performance of efficient
workers to hide their inefficiency;
• Payment formulas are usually difficult to
understand.
TYPES OF GROUP INCENTIVES PLAN
1. Team Compensation Plan
- These plans reward team members with
incentive bonus when the performance
standards are met or exceeded.
2. Gain-Sharing Plan
- These organizational plans to increase
productivity or decrease labor cost and to share
the gains obtained through higher productivity or
reduced wastes with the employees.
- In contrast to Profit-sharing, where employees
may not be able to link their contribution to
profits, gain sharing focuses on savings such as
reduced use of materials or less labor.
- as the name suggests, employees share the
gains obtained through savings.
THREE (3) TYPES OF GAIN SHARING PLAN
1. SCANLON PLAN:
- it was developed by an Official of United Steel
Workers Union named Joseph Scanlon in 1937,
- this plan using employee and management
committees to gain cost reduction
improvements.
- the aim is to encourage improved employee
productivity by sharing resulting financial gains
with employees.
- the main thrust is that employees should offer
ideas and suggestions to improve productivity
and in turn, be rewarded for their constructive
efforts.
FIVE (5) FEATURES OF SCANLON PLAN
1. The philosophy of cooperation:
- it assumes that managers and workers should
work together and avoid the attitudes of “us” and
“them” to develop a sense of ownership in the
company.
2. Identity
-the company’s mission or purpose is clearly
explained and the employees must understand
how the business operates in terms of
customers, prices, costs, etc. this helps
employees focus their efforts.
3. Competence
-this plan demands a high level of competence
at all levels.
4. Involvement System
- soliciting suggestions and evaluation to review
performance to determine bonus.
5. Sharing of benefits
2. RUCKER PLAN:
- under this plan, the financial incentive is based
on the historic relationship between the total
earnings of hourly employees and the
production value that employees create.
-Both Scanlon and Rucker plan prove that any
management expecting to gain the cooperation
of its employees in increasing productivity must
allow them to become involved psychologically
as well as financially in the organization.
3. IMPROSHARE
- in this plan, bonuses are based on the overall
productivity of the team.
3. ORGANIZATIONAL LEVEL INCENTIVE
PLANS:
Organizational level incentive plans include
all the employees irrespective of teams/groups.
• These incentives are based on the success of
the organizations as a whole over a period of
time, one year or above.
• These plan aims to create a sense of
ownership by encouraging a philosophy of
cooperation and team work among all the
members of the organization.
• Common organization plans are profit sharing,
stock options, and employee stock ownership
plans.
4. INCENTIVES TO PROFESSIONAL
EMPLOYEES:
• Professional employees such as engineers,
scientists, doctors, etc., cannot advance beyond
a certain point of salary structure in some
organization unless they are willing to become
administrators. Unfortunately, when they
become administrators, their talents cannot be
utilized. Under these circumstances they can be
motivated through bonuses and merit increases.
• The executive pay package for professionals
basically consists of basic salary, short-term
incentive/bonuses, long-term incentives/stock
plans, benefits, perquisites or perks and golden
parachutes (guaranteed position).

The Best 23 Employee Incentive Programs for

the Modern Enterprise:
1. Customized Paid Vacation
2. Green Transport Service
3. On-site Entertainment
4. Unlimited Sick Leaves
5. Free Online Skill Development Courses
6. Free eLearning Program
7. One-on-One Mentorship
8. Fast Food Catering on Specific Weekdays
9. Free Healthy Snacks
10. Stationery and Equipment Personalization
11. Health and Wellness Programs
12. Club and Society Membership
13. Rest and Relaxation Rooms
14. Streaming Service Subscriptions
15. Department/Team Activities
16. Gamification of Tasks
17. Profit Sharing Among Employees
18. Working Remotely, Whenever (work from
home)
19. Elimination of Degree Requirements
20. Unlimited Medical Insurance Coverage
21. Vehicle Financing Assistance
22. Consumer Goods Financing Assistance
23. Student Loan Debt Assistance

MANAGEMENT INCENTIVES
● The most important objectives of a
compensation package is to reward
efficient performance on the job
with commensurate pay for efforts
and ability and thus help motivate the
worker to higher levels of creativity
and productivity.
● Moreover, Low productivity is one of
the most serious problems facing in
the country and studies showed the
frightening fact that this disease is
prevalent in the vital organs of
companies- management.
Management incentive is the practice of
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offering incentives like pay, extra time
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off, or a gift to employees that meet certain
benchmarks or perform specific behaviors.
CHARACTERISTICS OF PROFESSIONAL
AND MANAGERIAL EMPLOYEES
• The characteristics of professional and
managerial employees are different from
those of factory employees.
• Lee Danielson found that successful
engineers and scientists have certain
distinctive characteristics that apply to other
professionals and managerial employees.
They are:
1. They are highly intelligent.
2. They have an analytical frame of mind and
a preference for deductive (from general to
specific) reasoning.
3. As a group, they tend to be more creative
and imaginative than others.
4. They are usually both independent and
self-conscious.
5. As a group, they tend to be idea- and
thought-oriented rather than people-oriented
6. By and large, these professionals are
economically advanced to the point where
income is valued not only for its purchasing
power but also for the status it confers and
the recognition it implies.
7. They are highly mobile.
● These characteristics help to explain
why intrinsic rewards are necessary
for managerial and professional
employees and are valuable to them.
● They also emphasize the importance
of developing a total compensation
package for the individual employee
or for each particular class or group
of employees, as for example,
accountant, engineers, managers and
supervisors.
MANAGEMENT’S LOW PRODUCTIVITY
• Management’s low productivity is often
caused by the lack of understanding of
the relationship between performance
and money. Moreover, managers often fail to
see that the only way a company can pay
more is for productivity to increase.
• To gain productivity, it is necessary to
motivate managers to pass on the benefits of
their ingenuity to the company.
• MONEY is still the primary motivation tool.
Regardless of how the term is used, whether
incentive plan or incentive bonus. It is still
basic reward that counts.
• Job satisfaction
• Occupational and organizational choice.
DESIGNING MANAGEMENT INCENTIVES

• Without rewards (money) or inadequacy of

• (Small Business Report, January 1982).
it, there is laziness and the nasty or hatred
States: The idea that a manager can increase
desire to work hard. Unfortunately, however,
productivity to such an extent that it
a considerable number of companies fail to
warrants being paid twice or even three times
fully utilize the power of money.
the previous year’s salary often requires a

• The concept of MONEY as a motivator is major change in thinking for top

management. What many companies
anchored on a theoretical base, that is,
overlook is that, in a well designed plan, a
managers who want more pay and who
substantial multiple of the manager’s bonus
believe making their departments more
ends up as a profit.
productive and cost-effective will result in
more pay, will work harder and better to get • One of the reasons why a number of
that pay.
companies do not adopt management

• Compensation experts continue to advise incentives plans is a practical one. The

productivity of an organization can’t increase
companies to structure their compensation
until managers have a full grasp of the true
plans for managers with an incentive plan as
meaning of what a good performance
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its basis. Such advise is made in the light of

actually is.
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present conditions today.

MANAGEMENT INCENTIVE PLANS

• Since executives and manager’s
performance is difficult to measure, most
companies have no systematic program with
regard to compensation package for them.
Rather, they make subjective determinations
influenced by the availability of executive
and managerial personnel that possess the
desired skills, bonus, profit-sharing, and
stock option plans are now being practice
to, along with fringe benefits designed to
increase the real income while keeping
taxable income at a minimum.
INFLUENCE OF REWARDS DECISIONS
• Job effort and performance.
• Attendance and retention.
• Employee commitment to the organization.
• On the basis of studies made, there are
strong evidences to show that there are
logical connections between managerial pay
and company performance. For instance:
Those paid top management the highest
total payroll had increased profits far more
than those paying their executives and
managers the smallest percentage
Any company which seeks to make
incentive plans work must take into
account the following:
1. Cost and Benefit Analysis - a company
before venturing into such a plan must direct
its attention towards estimating the
additional earnings that would be realized
which then must subsequently be compared
with the costs of rewards, administration of
the plan, etc. Moreover, Intangible rewards point (never defined) “the man makes the
that a company is bound to receive should be job” and his rewards should not be limited by
ignore. a “classified” price tag.

2. Company Analysis - The company should - Normally the “sharing rate” is

take into account such as factors as current approximately 10 percent of the increase in
market share, sales growth, profit profits generated by the incentive plan.
improvement. Moreover, a review of sales for Obviously, the higher the sharing rate
the last past three-five years including costs percentage, the more profits that will be
and profits by product line must be consumed by the rewards.
undertaken analyzing cost/volume/profit
7. No-bonus zone - For purposes of stressing
relationships and determining how they are
emphasis on superior performance, no
affected by sales growth and cost reductions.
reward should be given for marginal
The risk and cost to the company if the
improvement. Thus, for performance that
program fails must also be considered.
does not reach a predetermined threshold, no
3. Participation - this plan must be clearly bonus is paid.
describe, that is, it is limited only to those
- The relationship between performance
managers who directly and significantly
levels, no-bonus zones and bonus ceilings
affect company performance. -in this plan, it
must be clearly defined and understood by
is generally important to provide separate
the manager.
incentive programs for different levels of
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management inasmuch as their efforts affect 8. Payout provisions - the matter of

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performance of the company in different

payment of rewards should also be clearly
ways.
spelled out. Receipt of incentive rewards on a

4. Plan Structure - in this plan, it must be deferred basis unless requested by managers
for tax purposes. Could defeat the very
simple, easy to understand and implement.
purpose for which the plan has been
Any plan that is complicated may render the
instituted. It may make managers
best intentions to nothing. Simplicity may be
lose-enthusiasm on their jobs instead of
judged on the ease of determining whether
exerting greater efforts toward increasing
managers themselves can easily calculate
levels of productivity.
their rewards on the basis of given
performance levels and bonuses. 9. Emphasis on long-term results - Every

5. Substantial rewards - the rewards offered incentive plan must be anchored on

long-term company growth and profitability
under this plan must be fairly substantial.
must be its sole basis.
Otherwise. Managers may not even give it a
thought. DEFERRED BENEFIT PAYMENTS

6. Sharing rate - the maximum amount that

Within recent years, large and small
any one manager can earn should be
businesses alike, are using deferred benefit
open-ended, but based upon a percentage of
payments. Such plans, are used by
the total profits that will be paid out. There
businesses in the United States designed:
are those who argue that above a certain
1. To attract and hold key executives and 6. Improved performance and
managers; 2. To provide them with sheltered productivity
investments; and 3. To ensure financial
Personal and Professional development
security
as total rewards:
Deferred plans were originally intended as a
• Trainings, career development, and
device for retirement planning, and this is still
performance management can constitute
the basic purpose of qualified plans.
valuable rewards for employees.
However, in the case of unqualified plans, the
primary purpose is one of tax avoidance for 1. Work Environment (Safety and
both current income and estate taxes.
Comfort)

- For retirement, hindi agad binibigay. 2. Job design

3. Recognition
TOTAL REWARDS PLAN 4. Work life balance
5. Autonomy
- Is a system of reward that goes beyond
6. Flexible schedules and work
compensation and benefits includes anything
arrangements
and everything the employee values and the
7. Relationship with other people
employer is willing and able to offer
8. Quality leadership
employees.
Advantages:
- Total rewards system is compressed of
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compensation of non-compensation • Employee retention

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- Focus more on environment • Employee performance

4 PHASES OF TOTAL REWARDS • Controllable expenses

COMPENSATION
Disadvantages:
1. Assessment
• Lag the market
2. Design
3. Execution • Self focus
4. Evaluation
• Appropriate mixture
BENEFITS OF TOTAL REWARDS
SIGNIFICANT FACTORS AFFECTING
1. Persuasive recruitment tool
COMPENSATION
2. Signalling that you’re a progressive
company • Compensable factors help employees help
3. Increasing employee engagement decide how much a job is worth by
without increasing costs identifying the most valuable elements of
4. Increased awareness of all the each position in your workplace: the factors
benefits the employer provide where you base compensation.
5. Higher retention rate
Example/s: Supply and Demand

• Skills, experience, and education - The compensation levels in the Philippines

by market demand and supply are Influenced
Companies must not only decide what
the demand for certain skills and the supply
factors are necessary for successful
of qualified candidates can Impact salary
performance in each job but also how to
levels.
reward employees according to these
elements. Demand for specific skills

• Generally, the more strengths an employee
relate to their performance, their pay should
reflect their value on the job.
Results:
• Appropriately creating pay structures and
setting pay rates is a big advantage for
companies in attracting and retaining
employees.
- Industries, with high demand for specific
skills tend to offer higher compensation
For example, the technology sector often
pays high salaries due to the demand for
technical expertise
EXPERIENCE AND SENIORITY
Experience

The Philippines, Compensation is often

• Competitive pay
influenced by an Individual's level of
• Performance experience. As employees gain more
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experience in their field, they are likely to

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• Budget control
receive higher salaries due to their increased

• Internal equity and integrity expertise and knowledge.

Seniority
• Legal protection

Seniority is another factor that can effect

FACTORS AFFECTING COMPENSATION
compensation. As employees progress in their
(EXTERNAL)
career and take more senior roles. they often
• Supply and demand for employee skills receive higher salaries to reflect their
Increased responsibilities and leadership
- Employee skills and education
positions.
- Level of education skills
LEVEL OF EDUCATION AND SKILLS
• Labor organization
Level of Education
• Competitors
Higher levels of education, such as a
• The economic factors
bachelor's or master degree, are often

• Cost of living associated with higher salaries.

• Legislative factor
Specific Skills THE LEGISLATIVE FACTORS

Having specialized skills, such as Minimum wage law

programming, data for analysis, or project
- Minimum wages laws in the Philippines set
management, can also lead to higher
the minimum amount that employers must
compensation.
pay their employees
Labor Organization
Labor regulations
- They play an essential role in ensuring
ln the Phil government various aspects of
employees get a fair wage. They
employment Including working hours,
contest with the employers for the
overtime pay, leaves and benefits
employees. Rights and wage revision.
- labor union - whosets the agreement Local ordinances - can also affect
of organization. compensation

Competitors FACTORS AFFECTING COMPENSATION

-Industries with high competition among (INTERNAL)

companies may offer higher compensation to
attract and retain top talent. • Company compensation policy

For instance, the finance and banking sector • Company affordability

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often offers Competitive salaries to attract

• The firm’s financial position
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skilled professionals.
THE ECONOMIC FACTORS
Inflation Rates
- In the Philippines have been relatively
stable in recent years, averaging around 29%
Economic Growth
the philippines has experienced steady in
economic growth in recent years, with GDP
Growth rates averaging around 6-7%
Cost of Living
- Affects wage quite simply affect
compensation because if a given location has
higher paces for goods and services
providing a given level of utility. Workers will
require higher wages to work there.
• Worth of a job
• Worth of an employee - It pertains to your
performance
Company affordability
- Business conglomerates and multinational
corporations are examples of organizations
that can afford to pay higher salaries than
others because they generate bigger profits
The Firm’s Financial Condition
- Finding out a company's ability to pay
salaries is one of the benefits that financial
statements offers to the employee
Productivity
- A firm's productivity can have a significant
Impact on the compensation for its
employees. when a firm is more productive, it
may generate more revenue
Worth of a Job
- Organizations base their pay level on the
worth of the job. The wages and salaries tend
to be higher for the jobs involving the
exercise of brain power, responsibility based
jobs.
Worth of an Employee
- Time rates are granted to all employees
irrespective of performance In such cases,
employees are rewarded for their more
physical presence in the job.
• No compensation related created
information stored or data should be
developed and future planning and execution.
• The compensation policy and programmer
should be reviewed and reviewed periodically
conformity with changing needs.
• You have to evaluate before implementation
• Its must determine the external and internal
in compensation to retain and motivate our
employees
It's a most that must determine the external
and Internal in compensation to retain and
motivate our employees

COMPENSATION PRINCIPLES THE ESSENTIAL ROLE OF JOB

DESCRIPTION IN COMPENSATION
● Principle of economics
● Principle of Living wage Job description
● Principle of Contribution
- provide a clear understanding of the
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● Principle of Competition
expectations and responsibilities associated
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● Principle of Change
with role
● Principle of Significant difference
● Principle of Status Symbolism - play a pivotal role in compensation planning

STEPS IN ADMINISTERING
- set of skills, qualifications, responsibilities
COMPENSATION
Essential Role of Job Description play in
• should be develop by taking into
COMPENSATION DESIGN
consideration of the view of employers, the
employees, the consumer and the community Job Evaluation

• Compensation policy on page policy should
be clearly defined to ensure uniform &
consistent application.
• The compensation plan should be nurturing
with overall.
• All wage & salary related decisions should
be checked against the standards in
advantage on the wage and salary policy.
- job description provides the details needed
to access relative value of different job
- analyzing responsibilities, qualifications,
and complexity of the position
Market Benchmarking
- detailed and well crafted job description
allows organization to conduct benchmarking
to assess similar roles
Compensation Surveys 201 File - personal info of employees,
active files
- job descriptions are critical to accurate and
effective participation in compensation 202 File - inactive employees, who resigns

Internal Equity HOW TO WRITE JOB DESCRIPTION?

- job description helps establish internal - can be created using various methods
equity by ensuring fair and consistent
including;
compensation
1. Observation
Job Grading and Salary Structure
2. Interviews with employees and supervisors
- good job description provides the necessary
information to develop job grading systems 3. Reviewing existing Job Description
and salary structures
CONTENTS OF JOB DESCRIPTION
Performance Based Compensation
● Job Title - descriptive but generic enough
- job description serves as a foundation for for recruitment purposes, be specific
setting performance expectations
● Job Summary - a birds eye view of the
- enable organizations to define key position
performance indicator
● Duties - day to day adhoc (additional
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tasks)
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Compliance

- job description helps organization ensures ● Qualifications - experience,

compliance with laws and regulations related education/certification skills
to compensation, such as minimum wage
● Relationships - where the role falls in the
laws
organisational hierarchy
N U T S H E L L - Job description provide
● Salary and Benefits - salary range and
the foundation for determining compensation
benefits and perks provided
by offering a baseline for a assessment of a
rule in compensation ● Additional Statements - EEO, off win
employment, reasonable accommodation
Who should write JOB DESCRIPTION?
2 Components of Sub Job Description
- Job Analyst from HR
● The nature of work involved
- Incumbent in Job/team members
● The type of worker that appear best titled
- Supervisor of Job Holder
JOB SPECIFICATION - termed “JobSpec
Note: It is important to be unbiased in your
job descriptions and review them annually