MAKERERE UNIVERSITY MASTERS IN PUBLIC ADMINSTRATION AND MANAGEMENT DEPARTMENT OF POLITICAL SCIENCE AND PUBLIC ADMINSTRATION

COURSE UNIT:

HUMAN RESOURCE MANAGEMENT

ACADEMIC YEAR:

YEAR 2: 2011/2012

SEMESTER:

I

LECTURER:

PROFESSOR UMAR KAKUMBA

NAME 1) NAKAYIMA MARTHA 2) WAMPAMBA KATO PETER
3) OKEMA LEONARD

REG NO 2010/HD14/2958U 2010/HD14/ 386U 2010/HD14/ 995U

QNS What are the major determinants of wage/salary policy and structure in Organizations? Discuss the challenges facing compensaition management in Public Organizations in Uganda.

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This easy will help us to understand the key determinants of salary and wage policy. It will further explain the challenges faced by compensation management in Public organizations in Uganda. In order to adequately address it , we will define the key concepts in the essay that is to say wage policy, salary policy, structure, and Public Organizations. Section 2 of the easy will highlight the determinants of salary /wage policy and structure in Organizations. Later, the challenges facing compensation in Public Organizations will be discussed. A conclusion will be drawn summarizing all that has been discussed within the easy. A salary policy is an institutional policy that provides a common framework from which all salaries of the organization are determined. According to the Family Planning Management Science for Health (1999: 1). Policy: Brian. W. Hogwood and Lewis A. Gunn (1984) describe a policy as a deliberate action to guide decisions and achieve rational actions. The Northern Territory Government (2006): looks at the Wages Policy as that which provides the principles within which wage negotiations and enterprise bargaining can occur. The Policy is further explained as that which encourages employees, unions and agencies to look at ways to improve efficiency and productivity. Valentino Piana (2001: 1) Defined wages as the most common earnings of people. Perceived by workers, clerks, managers, and employees in general, wages and salaries constitute the core element in income for the majority of active people The wage and salary structures are those which provide wage rates for specific jobs and determine the relationships between these rates by combining the wage level, specific market pay rates and the job structure. In other wards it’s a common framework from which all salaries of the organization are determined.

Gary Dessler in his book Human Resource Management “Employee compensation refers to all forms of payment going to employees and arising from their employment." The phrase 'all forms of pay' in the definition does not include non-financial benefits, but all the direct and indirect financial compensations
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Workers' compensation (colloquially known as workers' comp in North America and compo in Australia) is a form of insurance that provides wage replacement and medical benefits for employees who are injured in the course of employment, in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence.

In order to adequately address the determinants of the three key concepts that is to say Wage Salary policy and structures they have been highlighted as follows: Salary policy determinants: Family planning Management for Health 1999:2:6) mentions that Clear and current job descriptions, which include the employees’ responsibilities, the reporting relationship and the level of education and experience required are key determinates of salary policies this is due to the fact that they help the organization to determine whether the organizational chart and the job descriptions as they currently exist are appropriate. They also help the organization to determine if changes must be made prior to the creation of the new salary policy in any organization or not.

A defined classification or banding structure which clusters jobs with similar levels of skill, experience and responsibility are key determinants of salary /wage structure this is due to the fact that they look at categorizing groups or positions in the organization s they plan a head for the organizational human resource requirement, they handle the staffing changes that might occur in the future, they design strategic plans which determine the need for staffing and salary scales in an organization, they design strategic plans which increase in salary scale. The band or level system is not easily modified, so it is important that the organization chooses a system flexible enough to handle possible changes in the Organization. A salary range for each classification or band is determined by a market analysis of pay scales for similar jobs in institutions in the same local or similar geographical areas. It may be necessary to analyze a broader geographic area if there is a shortage of qualified people available locally for some positions, (like computer programmer. It is difficult and problematic to change an implemented salary structure and is therefore imperative to establish ranges which allow growth in the future.
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Structure in Organizations A number of factors determine how organizations are structured. These include the organization's goals, social customs and mores, the beliefs and values of the Organizational goals clearly influence the way an organization is designed. The high value placed on productivity and quality as well as shareholder value had a major influence on the redesign of Westinghouse as a more diversified and decentralized firm. Indeed, goals are the prime determinants of structure. If one is in the business of producing hamburgers, the goal of delivering a gourmet product at a moderate price leads to different structuring arrangements than does the goal of delivering a reliable product quickly at a low price.

Social customs at the time of an organization's birth also determine how it is structured. This has been very important in the history of business. For example, the organizational forms adopted by the first companies in the automobile industry are not the same as the structures being adopted now. Historically production was structured around the assembly line.

Another determinant of structure is comprised of the beliefs and values of the people forming the organization. Many firms in the computer industry, formed by young entrepreneurs who favor informal life-styles, have loose, informal, and collegial structures that reflect those values. Alfred P. Sloan put his personal stamp on the organization of General Motors in the 1920s, and it was not until the turbulent days of the 1970s that significant changes were made. Interestingly, these changes were brought about primarily as a response to the environment and beliefs Environmental constraints include legislation, government regulation, court orders, market characteristics, social issues, and societal norms. For example, major incursions by Japanese auto manufacturers into the U.S. market have forced American firms to change their production methods as well as the underlying structures of their organizations. Laws concerning entry into or exclusion from certain businesses, the imposition or removal of regulations, and such courtordered actions as the breakup of American Telephone and Telegraph Company affect the structure of organizations. The birth of People Express and other air carriers was the direct result of the Airline Deregulations Act of 1978, which enabled new carriers to enter the airline business
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for the first time in decades. Technology is another determining factor that will affect the new forms of organizational structure. One example concerns organizations that were once a part of AT&T. Rapidly changing telecommunications technology and the removal of certain regulations are opening new market niches in which the regional telephone companies can compete. Another example is robotics and other modern production methods. As these technologies have developed, they have changed the American automobile industry as significantly as did foreign competition. Some research demonstrates that technological change offers occasions for restructuring founders or managers, environmental constraints, and available technology, size, though an element of structure, is also a determinant because it influences all the other elements. Wage determinants. Valentino Piana (2001) Individual and Collective Negotiation determine the wage policy: Wage levels result from individual and collective negotiations between the employees (and their representatives) with the management (and the owners) of firms. These negotiations help to determine the wage levels of the organization this could be done during interviews, advertisements where issues of wages are discussed. In public bodies, laws and negotiations decide wages. A government wanting to cut public expenditure might try to freeze or reduce public wages, whereas a stimulus-oriented policy might include increases. Firms and organizations pay wages to employees usually depending on working time and/or on results (production made or objectives reached). Individual wage often depends on occupied position in the organization as well as on education, cumulated experience and seniority. Wages for the same job outside the firm may serve as a conventional or mandatory reference point. Wage differentiation is a widespread phenomenon: different occupations and different industries pay working time at uneven rates. Even wage segregation is common: certain jobs are "socially" attributed to a certain gender or ethnicity, which in turn might decide to widen the job it is "allowed" to perform.
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In order to effectively look at the challenges facing compensation in Public Organizations in Uganda, we have to look at the importance of compensation to Public Institutions. A well designed compensation and benefits plan helps to attract, motivate and retain talent in a firm Padmakumar Ram and Gantasala V. Prabhakar (2010: 442) Highlight that Employee compensation is an important area of human resource management, not only because of it huge cost implications, but also because of its perceived ability to influence individual and group behavior in organizations. An individual’s desire to join an organization, to remain with an organization, and to increase effort for the organization is a function of the design and implementation of the organization’s compensation system (Bergmann, & Scarpello, 2002). Employees’ satisfaction with their pay has been a major focus of study since the 1960’s.It is a function of the discrepancy between employees’ perception of how much pay they should receive and how much pay they actually receive. Most researchers agree that if these perceptions are equal, then an employee is said to experience pay satisfaction. (Milkovich, & Newman, 2008). Organizations often use different criteria to study how effective their compensation plans are. These criteria include improved performance, compliance with laws and regulations, cost reduction, and contribution to the strategic plans (Bergmann, & Scarpello, 2002; Gomez-Mejia, 1992). Employee attitudes are also used to study the effectiveness of compensation plans because it is believed that they can be used to predict important organizational outcomes. Pay satisfaction for instance has been shown to be related to attendance, turnover, and union vote (Heneman, 1985)

Padmakumar Ram and Gantasala V. Prabhakar (2010: 444 further mentions that benefit satisfaction is influenced by benefit coverage and employee cost (Dreher, Ash, & Bretz, 1988).

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Since benefits are offered to all employees regardless of their position in the organization, when one is concerned with employees in a single organization, it may be useful to investigate factors that differ between individuals (Gerhart & Milkovich,(1992); Miceli & Lane, 1991). Hence, in situations where employee benefit coverage is fixed, it is expected that individual differences that affect the relative use or cost of benefits would be most predictive of benefit satisfaction. It is specifically hypothesized that age negatively influences benefit satisfaction (Miceli & Lane, 1991). The use of medical benefits, the most expensive of all benefits to employers and often employees (Milkovich & Newman, 2008), increases with age (Taubman & Rosen, 1982). Since older employees may be particularly sensitive to out of pocket benefit expenses (Barringer, Milkovich, &Mitchell, 1990), they are expected to be less satisfied with their benefits. Second, salary grade level is hypothesized to be negatively related to benefit satisfaction. Miceli and Lane (1991) argued that as inputs into the benefit system (like co-payment, deductibles, etc.) increase relative to benefit outcomes, satisfaction with benefits should decrease. Since in the organizations under study co-payments into the health insurance fund are based on salary grade, yet coverage is constant across salary grades, it is expected that the higher the salary grade an employee is in, the lower the level of benefit satisfaction the employee will report.

Compensation increases job satisfaction and motivation; Job satisfaction matters a lot in public organizations because it is an important factor in predicting system stability (reduced turnover) and worker motivation. If motivation is defined as the willingness to exert and maintain effort towards attaining organizational goals, then well-functioning systems like compensation seek to boost factors (such as morale and satisfaction) that predict motivation (Ministry of Health Report 2006: 6). A compensation plan that hits workers’ needs is more likely to motivate them to act in the desired way. Low Absenteeism: Why would anyone want to skip the day and watch not-so-favorite TV program at home, if they enjoy the office environment and are happy with their salaries and get what they need and want? In addition to that there will be low staff turnover due to employee satisfaction. .Peace of Mind: Your offering of several types of insurances to your workers relieves them from certain fears. Your workers as a result now work with relaxed mind.
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Increases self-confidence: Every human being wants his/her efforts to get acknowledgment. Employees gain more and more confidence in them and in their abilities if they receive just rewards. As a result, their performance level shoots up. Management of compensation by Public Organizations has faced a lot of challenges in Uganda. This part of the easy explains the challenges faced in managing the compensation: Costs and Expenditures: Godber W. Tumushabe (2009: 31) Mentions ascertaining the trends and full financial cost of public administration expenditure in general and the executive in particular is a painstaking undertaking given the scantiness or unavailability, but most important the undue secrecy, of the relevant financial information. This affects compensation management as calculating benefits of personnel might be challenge due to inadequate information on the financial benefits of the individuals. Because of this there are a lot of delays in compensating Human resource in terms of retirement benefits, health, lose of relatives due to delayed calculation of benefits and failure to compute the finances on time that affects the management of compensation in Public Organizations. Relatively, the Bureaucratic procedure involved in the approval of compensating individuals has also greatly caused a challenge in compensation management in Public Organizations in Uganda. In aggregate terms, the impact of a bloated political bureaucracy on the budget and the taxpaying public is significant. Godber W. Tumushabe (2009: 31) this due to the fact that before compensation, a number of procedures have to be undertaken these involve meeting different personal to approve the issue, delays in soliciting signatures, absence of officers in charge which in the long run turns out to be very expensive and also time consuming. Inadequate Information about the compensation process by the beneficiaries: The information about compensation is either unavailable in disaggregated terms or held in secret by the relevant ministries in Uganda. In other institutions the beneficiaries are not aware of this policy and this poses a challenge at the time of calculation of the compensation benefits since in most instances the Human Resource personnel and the employee are in disagreement or take long to appreciate each other’s efforts in management of this issue.

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Failure to effectively implement the recommendations of the triple (RRR) Retirement, Retrenchment and Recruitment Policy that addresses the compensation issues. The process of policy initiation, analysis, formulation, approval, implementation, and monitoring and evaluation (M&E) in the public sector, Policy analysis skills have been identified as a key weakness within the civil service in many developing countries, particularly Africa. ECA’s Communication Team. (2004: 41). This has been highly exemplified in the compensation policy process where the system is poorly managed. An example of this has been in compensating land owners or war ventriants in luwero where up to date many have not been compensated. This has led compensation managers to be dragged court thus making it more expensive and tedious. Corruption: McCormack (1997:419) defines corruption on the part of a public official as behavior that deviates from the normal duties of a public role because of pecuniary or status gains. Corruption is a pervasive phenomenon. It increases the cost of public services delivered to the customers and citizens and is usually ‘behind the screen’ and not easily detected, particularly “petty” corruption among lower cadres of the civil services, as well as “grand” corruption at top management levels. ECA’s Communication Team (2004:35). Corruption has highly affected compensation management due to the fact that it impinges the normal compensation procedure due to favors, desire for some customers to be catered for before others back door payments, nepotism to mention but a few. Lack of trained personnel to effectively manage compensation procedures: For any organization to effectively manage compensation issues it should have a highly trained and experienced human resource team to carry out duties like job analysis, job monitoring and evaluation these factors help to determine the compensation package for personnel at the different levels in an organization. However, in many public organizations, the whole compensation procedure is abused or mismanaged due to the incapacitated personnel who end up mismanaging the job analysis procedure due to the fact that they do not have skills of effectively calculating packages of staff with different responsibilities. Declining Social Values: One of the major challenges to public sector management reforms is the declining social value of society itself. Values such as integrity, honesty, dependa bilixperiety, helpfulness, impartiality, courteousness, and fairness are gradually disappearing
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from the public services (Agere and Mendoza, 1999: 26). Due to this fact there is no integrity in managing compensation in public organizations. For the compensation process to be quickened many beneficiaries have to part with some incentives enable compensation process to be effectively done within a very short period of time. Unsatisfying Compensation package: Many Human Resource managers are faced with the challenge of meeting the compensation demands of their employees. According to the study conducted by Ministry of Health in 2006, for Health workers in public hospitals, Only 11% of respondents believed their salary packages were fair, and a large majority thinks their compensation packages should include health care for dependents (90%), terminal benefits such as retirement (87%), housing (83%), a food allowance (79%) and transportation (77%). It is notable that respondents said that health care for dependents was even more important than salary itself, The importance of compensation was highest among nurses (2.9 on a three-point scale) compared to other cadres, perhaps because 43% are the heads of their households without spouses Ministry of Health: (2006:7) .This has put pressure on Managers to devise strategies of ensuring that compensation package is improved or threatened by lose of competent personnel to organizations with better compensation policies. Failure to effectively analyze jobs: Currently, jobs are not analyzed scientifically and job descriptions are not systematically developed. This has caused challenges like failure to carry out effective performance appraisals, poor recruitment procedures leading to equitable compensation and renewmeration. This poses a big challenge in compensation management because it causes conflict between the compensations managers and employee as poor decisions will be made and situations of favoritism will be felt.

Training of Human Resource Personnel: In order to meet the emerging challenges of inadequate skills in managing the compensations process in any organization, the human resource personnel have to equip themselves with better skills in dealing with the issue this could be done by conducting refresher courses for Human Resource Managers, organizing exchange visits with
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organizations which have effectively managed the compensation process as well as inviting external expertise to support the team and orient it into the process . Once they are equipped with the above skills and orientation, they will be able to develop a professional identity of their own and they would effectively address the compensation challenges within the different organizations. The need to establish a more clear-cut link between employee performance and administration of rewards and compensation by instituting objective performance appraisal system: The knowledge workers would expect a clearly perceivable link between their efforts (performance) and administration of rewards (salary and other monetary and non-monetary ones). In other words, they look for recognition of their efforts, in addition to clarity of goals and performance standards and operational freedom as well as good compensation packages. This can be achieved through the use of scientifically developed system of Performance Appraisal. Access to Information and Citizen Participation: (Transparency international Report )Public access to official information can lead to more effective, efficient and less corrupt government. Public scrutiny of official institutions can reduce abuses of power, including corruption. Participation in policy formation can improve the quality of policy and public support for it. To achieve these goals, the public needs to be well informed, and government officials need not only to divulge information but ensure that mechanisms of consultation are taken seriously and are properly inclusive Workforce planning: Dr Stephen Bach :( 2000: V) Mentions that enhancing Human Resource capabilities is often viewed as synonymous with workforce planning. Effective planning helps to reduce challenges facing compensation management. This is due to the fact that it helps to provide information that is critical for compensation management in a way that at that level adequate funds are allocated for staff compensation through revealing the number of people anticipated to retire within a specified period of time, Through planning, the organization also allocates funds for any eventualities like accidents, diseases that may require insurance coverage. In so doing, the problem of inadequate funds, inability to carry out effective compensation are effectively catered for.

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Effective job analysis: Kleyhans Ronel (2006: 50) looks at job analysis as a step- by –step process of obtaining information about a job by identifying the skills, duties, knowledge or activities that are needed for taking on that job in an organization. Carrying out an effective job analysis helps to manage compensation effectively and equitably. This is due to the fact that it will provide adequate information about the value of personnel occupying particular positions and their worth in terms of compensation. This information helps to manage compensation process effectively due to the knowledge, skills and ability gained after carrying out an exhaustive job analysis process.

REFERENCES: The Northern Territory Government Office of The Commissioner For Public Employment “Wages Policy” Fact Sheet (2006): Central Australia Representative, Alice Springs NT 0871 SH
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Family Planning Management Development Project (March 1999) “Developing a Salary Policy”. Management Sciences for Health USAID Cooperative Agreement No. CCP-A-00-9500000-02 (Pg 1-6) Ministry of Health of the Republic of Uganda Health Workforce Study: (March 2007) Satisfaction and Intent to Stay Among Current Health Workers. With additional support from: Aga Khan University, Makerere University and University of Washington.(Pg 7) Dr Stephen Bach (9-12 December 2000): HR and New Approaches to Public Sector Management, Improving HRM capacity: World Health Organization Department of organization of health services delivery, Geneva, Switzerland. Pg .V Valentino Piana (2001): Wages www.economics web institute .org. ECA’s Communication Team (August 2004) Public Sector Management Reforms in Africa, Published by Economic Commission for Africa Addis Ababa, Ethiopia (Pgs 35& 41)

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