COMPENSATION MANAGEMENT

Points to be discussed in the Lecture Sessions:

Definition and objectives of Job Evaluation

Process and techniques of Job Evaluation.

Advantages and Limitations of Job Evaluation.

Concept of Wage and Salary Administration.

National Wage Policy.

Concepts of Rewards.

Types of Incentives plans.

Employee benefits.

JOB EVALUATION is the systematic process of analyzing and evaluating jobs to determine the relative worth of each job in an organization.

…..Basis for compensation management.

…..Job Evaluation is the rating of jobs to determine their position in the job hierarchy.

•Determine the positions and place of a job.

•Manage internal and external consistency in the compensations.

•Ensure employee satisfaction with respect to the compensation.

•Basis for classification of new or changed jobs.

The objectives of JE :

JOB EVALUATION

Process of Job Evaluation.

Preparation of a job Evaluation Plan.

Job Analysis

Job Description and Job Specification

Selection of Job Dimensions.

Classification of jobs.

Implementation of the evaluation.

Maintenance.

Techniques of Job Evaluation.

Non Quantitative techniques.

RankingRelative ranking

Paired Comparison.

Single Factor Ranking.

Job Classification or Grading

1. Analyzing Organizational Culture.

2. determining job dimensions.

3. Defining Job grades.

4. Classifying jobs with the grade definitions.

5. Using inputs from employees, unions etc .

6. Freezing the grades and assigning monetary value to the key grades.

Quantitative Techniques.

Point Rating Method.

Identifying a number of Compensable Factors and determining the degree to

which of these factors is present in the job.

Factor Comparison Method.

Decision Band Method.

Job Factor Job A Job B Job C Job D Job E Correct rate Correct rate Correct rate correct rate correct rate

1.Skill 10 8 7.50 5 11

2. Effort 5 3 4 4 6

3. Responsibility 3 1 1 1 4

4. Working Conditions.

CONCEPT OF WAGE AND SALARY ADMINISTRATION.

The Wage and Salary Administration maintains equity and competitiveness in the wage market, reinforcing positive employee behavior, eliminating wage discrepancies, maintaining good relations .

PURPOSE:

Attracting talented resources.

Retaining and motivating employees.

Financial Management

Legal requirements.

Concepts of different wages.

• Minimum wage

•Fair wage

•Living wage.

Basic Wage Plans.

• Time Wage Plan.

•Piece wage plan

•Skill based pay

•Competency based pay.

•Broad banding.

Variable Compensation Program.

The worker Level-----------Piece rate and time rate systems.

The Managerial Level-----Monetary and non monetary rewards for achievements of results.

The Group Level-----------Incentives for group performance.

Executive Compensation.

Steps to design an effective executive compensation plan.

i. Review the existing executive compensation plan.

ii. Analyze the organizational Objectives.

iii. Retention Scheme.

iv. Consideration on funding and other factors.

v. The final plan

vi. Information about the compensation plan to the stakeholders.

Wage Differential:

…….Differences in wages paid for same or similar work because of various reasons .

• Individual level.

•Organizational Level.

•Occupational Level.

•Industry Level.

•Regional Level.

How Wage fixation takes place?? Who decides??

Collective Bargaining or negotiation.

Government Authorities( Pay Commission and Wage Board).

Concept of Reward.

Extrinsic Reward

Intrinsic Reward.

Financial Rewards.

Nonfinancial Rewards.

Performance based rewards

Membership based rewards.

Non Monetary Incentives

Recognition.

A challenging assignment.

Additional responsibility.

Free gifts and free vacations.

Awards.

: Long Term Plans.a. Annual Bonus.

b. Profit Sharing: Distribution plan, Deferred plan,

Combination plan.

c. Gain Sharing:

d. Employee Stock Option plans: ESPP, Restricted Stock Plan, ESOS, Stock appreciation Right, /Phantom Shares, Phantom Stock, Premium priced options.

• Free or subsidized lunches.

•Medical facilities to the employee and his family.

•Paid holiday.

•Provident Fund and gratuity.

•Employee Insurance.

•Maternity Leave.

•Child care centres.

•Educational allowances for children.

•Merit scholarship for employees children.

•Company accommodation and conveyance.

•Cafeteria and rest rooms.

•Study Leave.

•Company Sponsored Study.

•Club Membership.

•Recreational Facilities.

•Credit Cards and tax assistance.

•Interest free loans.

Employee Benefits

Modern Concepts in Employee Benefit Schemes.

Golden Parachute: Continuation of the salary, Bonus and perquisites, Retirement benefits, Vesting

of stock incentives.

Cafeteria Benefit Plan.

THANK YOU

DEFINITION OF FACTORS USED IN RATING JOBS.

Education

Training

Experience

Mental Efforts.

Physical efforts

Visual Attention.

Initiative.

Responsibility.

Working conditions.

Physical Hazards.