Answera. Identify and describe any THREE (3) sub factors in the global guide

that are particularly significant in differentiating compensation in different countries.

[12 marks]

Understanding international compensation begins with recognizing differences and

similarities and figuring out how best to manage them. How people get paid around the

world depends on variations in the factors in the global guide. Four general ones are

economic, institutional, organizational and employee with sub factors. These factors

have been discussed throughout the book, now they can be applied globally. But once

we shift from a domestic to an international perspective additional factors become

important too. Institutional factors, such as cultural traditions and political structures and

economic factors, such as differences in ownership of enterprise and the development

of capital and labor markets, come into play. Further, social contracts and the role of

trade unions must reconsidered.

The first sub factors in the global guide is a culture, that defined as shared mental

programming which is rooted in the values, beliefs, and assumptions held in common by

a group of people and which influences how information is processed. The assumption

that pay systems must be designed to fit different national cultures is based on the

belief that most of a country inhabitants share a national character. The job of the global

manager, according to this assumption, is to define the national characteristics that

influence pay system.

Second is ownership and financing of companies differ widely around the world.

These differences are important to international pay. In the United States, corporate

ownership and access to capital is far less concentrated than in most other countries. In

Korea, six conglomerates control a significant portion of the Korean economy, and the

six are closely linked with specific families. In Germany, the national Bundesbank and a

small number of other influential banks have ownership interests in most major

company. These patterns of ownership make certain types of pay systems almost

nonsensical because ownership in the companies is not readily available for individual

investors.

  Finally is managerial autonomy, an organizational factor in the global guide, refers to

the degree of discretion managers have to make total compensation a strategic tool. It

is inversely related to the degree of centralization. Most government organizations

adhere to these guides, but private organizations do so in varying degrees. Government

and trade unions are not the only institutions to limit managerial autonomy. Corporate

policies often do so well. Compensation decisions made in the home-country corporate

office and exported submits around the world may align with the corporate strategy but

discount local economic and social condition.

 

b. Why is it difficult to make international wage comparisons? Give FOUR (4) reasons.

[16 marks]

The reason why it difficulty to make international wage comparison,

First, is the term of wages is itself ambiguous. It refers either to the rate at which

labour of certain kind it paid to the earning of the workers.

The Second reason is, price rate and other system of payment by result

are more difficult to interpreted and compare than time of the rate. Third is, even

is the national data, however are in case comprehensive and reliable there are

difficult in compare it. The comparison will be invalid unless like is compared with

like, but an identified the description may cannot slightly differing kinds of works

in different of the countries.

Four is, the occupations are to which we are thus restricted may be

representative of wages as whole one country, but quite untypical of another or

they may be unpresentative of both.

Furthermore the reason is, family earnings and subsidiary occupations, to

ignore them are to ignore influences that materially affect it to very different

degree countries.

Otherwise is of the comparing labour cost arises mainly from the

circumstances that labour is only one element in an invariable complex set of

product is even make difficult to seeing the comparative of work.

c. What is meant by “the full house”? Evaluate the concept’s importance in understanding and managing global total compensation.

[8 marks]

The meaning of full house is, an audience that fills the venue for an event to

capacity. Example, he seemed a trifle unnerved playing to a full house . The

important of understanding the concept of managing global total compensation is,

The globalization of businesses, financial markets, trade agreements, and labor

markets is affecting every workplace and every employment relationship.

First is, employee compensation is embedded in the different political-

socioeconomic arrangements found around the world. Compensation systems have

a profound impact on individual behavior, organizational success, and social well-

being. This holds true within and across all national boundaries.

Second is, managing compensation plays an important role in the business

success . It usually forms a significant part of the overall costs and creates one of

the most tangible links between employees and the organization. Literature on

international compensation suggests two extreme approaches how the company

respond to their multi-country presence.

Third is, In one extreme, a firm lets its managers to decide on the compensation

issues locally in their home countries with a limited or no influence from the

company’s head quarters.

Finally is, the firm takes advantage of already created internal processes and

through guidelines and policies imposes these into the countries of its subsidiaries.

While the first, local approach, could leverage the culture-specific environment, the

second, global approach, adopts practices that ensure best fit with the overall

company strategy.

d. Discuss the aim of a wage & salary policy. [12 marks] Pay system are designed to achieve certain objectives. The objective of the pay

model is efficiency, fairness, compliance with laws and regulations. Efficiency can be

stated more specifically, improving performance, increasing quality, delighting

customers and stockholder, and controlling the labour costs.

And the fairness objective calls for fair treatment for all employees by recognizing

both employee contributions (higher pay for greater performance, experience, or

training) and employee needs (fair wages as well as fair procedures). Procedural

fairness refers to the process used to make pay decision. It suggested that the way a

pay decision is made may be as important to employees as the result of the decision.

Compliance as a pay objective means conforming to federal and state compensation

laws and regulation. If laws change, pay systems may need to change too, to ensure

continued compliance. As companies go global, they must comply with the laws of all

the countries in which they operate.

And the aims of the wages and salary policies is, pay policy is structured to

compensate employees based on the nature and level of work performed and how well

the employee accomplishes the work. In establishing the salary ranges for the Pay Plan,

consideration may be given to factors such as the prevailing pay rates for comparable

public and, when practical, private organizations in the surrounding area, state and

federal laws where applicable, and budgetary capacities. All salary increases are only

granted if adequate funds are budgeted and available.

The following process will be used in the development of proposed revisions to the

Pay Plan. The County uses a market based job evaluation method, whereby the

external market is used to establish and benchmark compensation levels. Job content is

analyzed and documented through job descriptions. Jobs are assigned to Occupational

Groups based on the nature of work performed. Market data is collected for jobs that

are commonly found and defined. Compensation data is collected utilizing reliable

published salary surveys. Data analysis methods will be reviewed annually in

conjunction with proposal to the board. Jobs are assigned to pay grades based on the

market to midpoint comparisons. Jobs without market data are assigned to pay grades

based on internal equity.

The employers need to manage a world of ever-changing risks, including compliance

with federal, state and local human resource laws and regulations, and protecting

themselves from mistakes made by directors, officers and other managerial staff or by

the company itself.To protect the interests of your company, make sure you have the

appropriate amount and mix of risk transfer through Directors and Officers (D&O),

Errors and Omissions (E&O), and Employment Practices Liability Insurance (EPLI)

coverage. All of these policies protect the business owner from risks that come with

having employees, but each has its own unique purpose that you should be aware of.

e. Basic functions of Compensations and benefits department. [12 marks]

Human Resource is the most vital resource for any organization. It is responsible

for each and every decision taken, each and every work done and each and every

result. Employees should be managed properly and motivated by providing best

remuneration and compensation as per the industry standards. The lucrative

compensation will also serve the need for attracting and retaining the best

employees. Compensation is the remuneration received by an employee in return

for his/her contribution to the organization. It is an organized practice that involves

balancing the work-employee relation by providing monetary and non-monetary

benefits to employees.

The basic function of compensation and benefits department is Provides services

to employees to answer their benefit questions, resolve problems related to access

to or payment of benefits, orient newly eligible employees, and process enrollment

forms, change, and loan requests.

Maintains employee benefits data in automated human resources information

systems.

Coordinates transfer of data to external vendors, plan providers, auditors, and

consultants.

Negotiates and contracts with benefit plan providers, vendors, auditors, and

consultants for services, premiums, and plan administration. Prepares and

communicates information to employees and former employees about benefit

programs, procedures, changes, and government-mandated disclosures.

Analyzes and evaluates services, coverage, and options available through

insurance and investment companies to determine programs best meeting needs of

organization.

f. Related Compensations and benefits documents. [10 marks]

Meaning of compensation is, Compensation refers to all forms of financial returns and

tangible services and benefits employees receive as part of an employment

relationship. The related with the compensation and benefits documents is,

Compensation and benefits resumes,  Compensation and benefits cover letters,

Human resources job description,  HR KPI, and the sample of interview questions.

Related with compensation and benefit is, Job responsibilities which include the

following but not limited to. That is, review and analyze job variables such as span of

control, reporting lines, task difficulty and job specifications for all positions to

incorporate them in the formation of compensation and benefits plans.

Second is, perform analysis of job worth, salary surveys, competitive salaries, design

of compensation packages and other related compensation and benefits project. And

also analyze competitive compensation practices in the current job market, interpret

survey data to determine competitive position and recommend appropriate. changes, if

necessary.

Third is, re-evaluate current job positions, promotions and compensation proposals.

Make a research and analyze data to find out appropriate salary level and job title for

new positions.

Fourth is, prepare statistical analysis and reports such as organization and flow

charts, career pathway reports and compensation analysis information.

Finally is, ensure that all administered compensation and benefit packages are up-

to-date and correspond with current industry trends. Stay up-to-date with new trends,

developments, laws and regulations related to the administration of compensation and

benefits

g. Common interview questions for Compensation and benefits position. [10 marks]

The example interview question for compensation and benefit position is, please tell

us about your experience in employee benefit and compensation field? What was your

last job profile in this regard?, how tough is to make a competitive salary policy to keep

the association of employees with company within company resource limitations?, what

are the legislation regarding pension and insurance claims and other allowances?.

Second example is, what kind of compulsory claims and covers companies provide

to its employee?, do you have any experience of dealing with unions in salary and

benefit related issues? If yes, than what have been your strategies to resolve such

maters?, and while developing new compensation packages and salary slabs, what

factors do you keep in mind?.

Third example is, what are the different job evaluation methods used in a company?,

have you made analysis and assessment reports of market trends of salary and benefits

of different employees in your prior jobs?, how you will address the individual

complaints or grievance regarding benefits and compensations? How challenging is it to

maintain the employee satisfaction?, and how much salary do you expect for this job?

This interview question will asking during the interview session. All the this question is

about the compensation and benefit that the employee will get if they work at that

company or organization.

h. What is the average cost of individual employee benefits to a company?

[5 marks]

The average costs of individual benefits have a several type. There is include a

holiday, vacation, pay, holiday costs based on pay, state unemployment and social

security with holdings that the employee never sees. For the average costs of employee

money is usually almost twice the wages they are paid. This can cover the wages,

workman’s compensation, unemployment, insurances and etc.

CASE STUDY- Make a careful study on the following case:

NOW EVERYONE CAN FLY WITH INTERNATIONAL AIRLINES

Even with higher salaries, the number of airline mechanics has been declining and airlines are having a difficult times hiring enough mechanics. Why this is occurring can be seen by looking at the job. Whether it is diagnosing bad wiring at 3.00 A.M., squeezing into fuel tanks, or replacing antennas 20 meters off the ground, an aircraft mechanic’s job takes place in less than ideal circumstances. The individual works in weekends, holidays, and late night shifts, which is when most airlines maintenance is done. The pay is about RM 4700.00 per month for a job that is certainly affects airline passengers and their lives. Mechanics are invisible to most customers, but their work is the backbone of flying. “Aviation mechanics think they are perceived as the under belly of the aviation industry,” says the Deputy Director of the International Association of Machinist. The FAA is studying the effects of fatigue and shift work to see whether duty rules are needed for mechanics. The agency does not even limit the number of hours a mechanic can work as it does with airline pilots. The number of mechanics licenses issued has dropped by two-thirds in nine years from over 24,000 per year in the early 90’s to almost 8,000 per year now. Further adding to the problem are large numbers of mid-career mechanics switching to other jobs. Mechanics are leaving the airlines in record numbers for better mechanics jobs as in power plants, electronics firms, the railroad and auto industries, and even amusement parks. If attrition does not slow and more new mechanics are not trained, the results will be more flight delays, late packages, and aircraft sitting on the ground, says a highly placed official.

The question is: Excluding any pay problems, how could the airline mechanics job be redesigned?

Plan and present your answers in not more than one page. (15 marks)

Answer for the case study

The airlines mechanics job be redesigned by several action to solve the problems. The

action that should to be taken, is reform a timetable and set up a number of office

hours. Other than that, the management should advertise job vacancies. And the

mechanics worker should be given a working conditions or job satisfactions. Followed

by the statement, they don’t have enough workers, so they should choose the suitable

fresh graduate from any institutions to attract them works at that company, from that

they can add their numbers of workers. The management also can improve the

research and development and training their workers. And they should change a

number of maintenance system and establish the good relationship with other people.

Reform the timetable should be done and at the same time set up a number of office

hours to became more specific to reduce an abundance of employee. The numbers of

the employee decrease because most of the people in the outside not really know that

have a vacancies at that company. So the management of that company should

advertise about the vacancies, to attract more people join that company. Then they

should given a working condition and job satisfaction at their workers to attract them. If

don’t have enough resources the management should choose the suitable fresh

graduate from any institution to add the number of workers to replace a burden of older

workers.

Other than that, to increase the productivity of work and to get the positive feedback

from the employee, the management should do the improvement from their researches

and development, and also should train their workers from the mechanics department to

make them more productive with their work and be a active workers to reduce a number

of passive workers from that company.

Finally, the maintenance systems should change too. It is because this system can

influence a comfortable and productivity that given from the workers. A relationship

between the management staff and mechanics workers must be more friendly and good

each other to establish the good environment and give the job satisfaction at that

workers. Because it can give the influence at their productivity and feedback to you.

This action can make the airline mechanics job more systematically and more

effective. And at the same time the productivity of employee should be increased and

the company can achieve their profits.

COMPENSATION AND BENEFIT MANAGEMENT

BMHC 5003

TITLE:MIDTERM TEST

PREPARED FOR:EN. ABBAS ALI

PREPARED BY:

NUR FARAHIN BT NOORAINI

09BB02060

(BACHELOR IN HUMAN RESOURCES MANAGEMENT WITH) (HONS. SEM 5)