Matakuliah: J0124/Manajemen Sumber Daya Manusia Tahun: 2007/2008 MODUL 16 Compensation Strategies...

Matakuliah : J0124/Manajemen Sumber Daya ManusiaTahun : 2007/2008

MODUL 16 Compensation Strategies &

Practices

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Learning OutcomesAfter studying this chapter, the students shouldbe able to :• Identify two types & components of compensation • Discuss four strategic compensation design issues• Define job evaluation & discuss four methods of performing

it• Outline the process of building wage & salary system

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Outline • The Nature of Compensation• Compensation System Design Issues• Perceptions of Pay Fairness• Legal Constraints on Pay Systems• Development of a Base Pay System• Pay Structure• Issues Involving Pay Increases

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Nature of Compensation• Compensation is what employees receive in exchange for

their contribution to the organization

Compensation

Direct Indirect

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Compensation System Design Issue

• Compensation philosophies * entitlement orientation * performance orientation• Compensation approaches * traditional approach * total reward approach• Decisions about compensation level• Competency-based level• Individual vs team rewards

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Perception of Pay Fairness

• Procedural & distributive justice in compensation

• Pay openness

• External equity

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Legal Constraints on Pay Systems

• Minimum wage• Child-labor provision• Computer-related occupations• Overtime provisions• Compensatory time off• Independent contractor regulations• Equal pay & pay equity

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Development of a Base Pay System

• Job evaluation * ranking method * classification method * point method * factor comparison

• Legal issues & job evaluation

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• Pay surveys

Wages & salaries survey

Formal Informal

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Pay Structures• Different pay structure• Establishing pay grades• Broadbanding• Pay range• Individual pay• Rates out of range• Pay compression

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Issues Involving Pay Increases• Pay adjustment matrix

• COLA

• Seniority

• Lump-sum increases

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Closing• Compensation can be divided into direct & indirect

compensation• When designing & administering compensation program,

behavioral aspects must be considered• There are several factors in determining salary rates• An effective pay system requires that changes continue to

be made as needed