NEHRU INSTITUTE OF INFORMATION TECHNOLOGY AND

MANAGEMENT, COIMBATORE
NIITM

BA 5017
MANAGERIAL BEHAVIOUR
AND EFFECTIVENESS

Dr.K.Ravi Kumar
Professor
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UNIT 2
DESIGNING THE MANAGERIAL JOB
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Unit 2 Content
Topics Sessions
(40 mts)
Identifying the Managerial Talent 2 session
Selection and Recruitment 1 session
Managerial Skill Development (MSD) 1 session
Pay & Reward 1 session
Managerial Motivation - Effective Management Critics 1 session
Performance Appraisal Measures 1 session
Balanced Score Card 1 session
Feedback and Career Management 1 session
Current Practices of Managerial Job 1 session
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Pay & Reward

 Pay & Reward
NIITM
Work Performance of managers are affected by:
Job Characteristic + Job Environment (physical) + Abilities and Skills of
Manager and + the willingness to perform.

Employees are rewarded by means of Strategic reward decisions like:

• What to pay employees?
• How to pay individual employees?
• What benefits to offer?
• How to construct employee recognition programs?
Need to establish a pay structure and a balance between
Internal Equity – the value of the job for the organization
External Equity – The external competitiveness of an organization's pay
relative to pay elsewhere in the industry.
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Reward management
Reward Management is concerned with the formulation and implementation of
strategies and policies, the purpose of which are to reward employees fairly,
equitably and consistently in accordance with their value to the organization.

Philosophy of Reward Management

• Strategic Sense – Vision for long term, that must be derived from the
business
• Total Reward Approach - Considering all approaches of reward as a
coherent integration with other HRM strategies.
• Differential reward - according to the contribution, fairness, equity,
consistency and transparency.
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Economic Theories of pay levels:
•Supply & Demand : Labour Market Factors
•Efficiency Wage Theory: Attraction of better employees, motivation, reducing
fluctuation leads to high wages.
•Human Capital Theory: Productivity Differences
•Principal – Agent Theory – Inequality in the information leads to agency cost
•The effort bargain – Collective Bargaining.

4 P’s of Reward
•Pay – Salary, Bonus, Shares etc
•Praise – Positive feedback, commendation, staff of the year award etc
•Promotion – Status , Career Elevation, etc.
•Punishment - Disciplinary action, withholding pay or criticism etc.
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Strategic Reward Management

Vision – Our reward practices in next five years
Means – Ways and means to get there.

Reward Strategy
• A declaration of intent that defines what the organization wants to do in the
longer term to develop and implement reward policies, practices and
processes that will further the achievement of its business goals and met
the needs of the stakeholders.
• It gives a framework to other elements of reward management.
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The Structure and Content of a reward Strategy

• Environment Analysis
• Macro level, social, economical, demographic
• Industrial level
• Micro-level: Competitors.
• Analysis of the inner environment – Strategy, Job Evaluation, Financial conditions.
• Gap Analysis
• Guiding Principles
• Broad-brush reward strategy
• Specific reward initiatives
 Job Evaluation NIITM
Job evaluation is a systematic process for
• Defining the relative worth / size of jobs / roles within an organisation
• Establishing internal relativities
• Designing an equitable grade structure and grading jobs in the structure
• To give an input for reward considerations.

Dimensions of Job Evaluation:

• Relative or measured to an absolute scale
• Relative: Compares jobs to one another within the company
• Absolute: Compares to an independent, external measure

•Analytical or Non-analytical
Analytical: Measures factors or elements of the jobs
Non-analytical: Measures the jobs as a whole
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Wage Gaps

• Wage gaps occur in companies due to international benchmarking standards.

International Pay – Market for top managers is paid internationally or else

they leave the firm
Local Wages – The market of workers with little or no qualification is paid
locally paid.

In an less developed countries like this leads to an enormous wage gaps between
top, middle and bottom level of employees.
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Remuneration
Components of Total Remuneration

• Basic Pay
• Contingent Pay
• Consolidated Pay and
• Variable Pay
 Components of Total Remuneration NIITM
Basic Pay
Base pay is the fixed compensation paid to employee for performing specific job
responsibilities. It is paid as salary, hourly. There is a tendency towards market
orientation and the increasing role of qualifications.
Contingent Pay
Individual contingent pay relates financial rewards to the
• Individual performance, organisation or team performance
• Competence
• Service
• Contribution
• Skill of individual employees

Consolidated Pay - Built into the base pay

Variable Pay – Paid in the form of cash bonuses or any other foms of cash pay for
the benefit of employee.
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Contingent Pay and Types

• Individual contingent pay act as a good motivator

• It attracts and retains better workers
• It makes labour related expenditures more flexible
• Sometimes act against quality and team work
• It demotivates those who don’t receive it (based on performance measurement)

Types of individual contingency pays

• Performance related – increases basic pay or bonuses related to assessment
• Competence related – Pay increases related to the level of competence
• Contribution related – Pay is related both to inputs and outputs
• Skill based – pay is related to acquisition of skills
• Service related – Pay is related to services
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Team Based Pay
• Pay is related to team performance
• It encourages team work, loyalty and co-operation
• It can be demotivating on individual level (encourages social loafing)

Organisation – wide schemes

• Profit sharing Plans – Organization wide programs that distribute
compensation based on an established formula designed around profitability.
• Gain Sharing – compensation based on sharing of gains from improved
productivity
• Employee Stock Ownership Plans (ESOPS) – Plans in which employees
acquire stock, often at below marked prices.
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Employee Benefits
• Attractive and competitive total remuneration
• Provide for the personal needs
• Increase commitment towards organization
• Tax benefits
• Pension schemes
• Personal (and family) security – different types of insurances
• Financial assistance – loans, house purchase schemes, discount on company services
• Personal needs – holidays, child care, recreation facilities, career breaks
• Company privileges – Company car and petrol expenditures
• Intangible benefits – Quality of work life, mobile phones, cafeteria systems
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Thank you
Happy Learning Experiences @NIITM