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Compensation in a Knowledge Based Global Economy Learning ObjectivesThe importance of rapidly growing global economy

The relationship between employee costs and organizational competitiveness and profitability

The contribution of organizational compensation to the lifestyle of the employees and their families

The relationship among levels of education, knowledge and skills, and work-related income

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home shopping demopage #Compensation in a Knowledge Based Global EconomyLast century witnessed monumental changes in social, political and economic systems throughout the world

Global economy focuses on Inflation, GDP, Monetary policies, Trade tariffs, however Labor Costs continue to remain of critical importance

Labor costs continue to effect the survival of private and public sector organizations

Concept for providing the poor promoted hiring practices resulted in many job holders making little or no constructive contribution

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home shopping demopage #Compensation in a Knowledge-Based Global EconomyProviding jobs to non productive workers leads to over staffing and often results inefficient operations and corruption

To survive in complex competitive global economy, all organizations private or public must be able to focus on effective and efficient delivery of the products and services

Performance based remuneration system for all works (results in improved employee performance thereby making organization more profitable and competitive)

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home shopping demopage #Capitalism and Knowledge in a Global Economy What is Capitalism

Capitalism is an economic system in which trade, industry, and the means of production are largely or entirely privately owned and operated for profit

Central characteristics of capitalism include private property, capital accumulation, competitive markets and wage-labor

In a capitalist economy, the parties to a transaction typically determine the prices at which assets, goods, and services are exchanged

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home shopping demopage #Capitalism and Knowledge in a Global Economy What is Capitalism

Capitalism has existed under many forms of government, in many different times, places, and cultures

Following the demise of feudalism, capitalism became the dominant economic system specially in the Western World

Capitalism was carried across the world by broader processes of globalization and became the dominant global economic system

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home shopping demopage #Capitalism and Knowledge in a Global Economy World events have a major influence on organizational operations

Critical factor underlying capitalism is that profit is OK

To succeed and make profit, an organization must have a motivated workforce

In a capitalistic world, employees must face challenges of their work to get money as well as satisfaction

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home shopping demopage #Capitalism and Knowledge in a Global Economy To survive, knowledge has become more and more essential, hence passion for learning must exist

A major problem of capitalistic world is difference between the lower-paid and higher-paid members of work force, this disparity is increasing with higher levels of knowledge

Some employees see their opportunities stagnant or even decline

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home shopping demopage #Capitalism and Knowledge in a Global Economy In past two decades, workforce size has been reduced (downsizing or reduction), some levels in management structure have been eliminated

HR and compensation professionals have been asked to identify

Jobs in which workers efforts can be combined

Unneeded jobs

Jobs in which incompetent, obsolete or unneeded employees are hidden

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home shopping demopage #Capitalism and Knowledge in a Global Economy At the same time HR / Compensation professionals are asked to redesign and reward programs to improve employee morale and motivation

The compensation professionals need to enhance their own knowledge and skills dramatically

Importance of this function has risen manifold9(JANE)

home shopping demopage #Compensation and Organizational StrategyCompensation program must support the strategic plan and actions of the organization totally

HR/Compensation specialists task begins with determining

Work that must be performed by a team or individual

Kinds and levels of knowledge and skill required

Quality of people needed

Rewards, the organization can offer to promote work culture

Strategy that considers all four aspect becomes competitive10(JANE)

home shopping demopage #Integrating Knowledge and Skill Requirements, Organization Compensation and Employee IncomeTo be successful in knowledge based world, each organization must make full use of available technologies

Work does pay off, however to be successful the worker must be willing to accept challenges and solve problems

In these situation of uncertainty, a focus on correctness is necessary to minimize the chance and cost of improper action

Change is inevitable in the knowledge-based world, Change is the ONLY CONSTANT

Successful adaption to change require continuous expansion of knowledge and skills

Employee satisfaction directly relates to the income obtained from work performed and life style opportunities made available to the workers

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home shopping demopage #Life Style and CompensationMoney-Pay is MOTIVATOR

Gone are the days when people used to think it is NOT

Pay exerts powerful influence on human behavior

To understand human behavior with money, it is critical to recognize the relationship between lifestyle and social class

A social class consists of a group of people roughly equivalent in an unequal society

Various criteria are used to measure status to differentiate social classes, these include income, property, occupation and education

Typical society is divided into three major classes upper, middle and lower12(JANE)

home shopping demopage #Pay and Social ClassFrom the dawn of civilization, humanity is divided into at least two social classes the HAVES and the HAVE NOTS

As society grew middle class appeared, members of middle groups were traditionally government employees

Motivation factors are different for each classes

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home shopping demopage #Social Class - UpperTypical Characteristics of Upper class

They are few and far between in any society

They are employers

They usually exploit poor

They have usually common notion to make profit at the expense of using poor

They have their own norms which are distinct from the culture of middle and poor

They enjoy all luxuries of life

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home shopping demopage #Social Class - MiddleTypical Characteristics of Middle Class

Social mobility is found highest in this class

They live comfortably than poor class, but are financially lower than upper class

They all are usually employees

They are usually exploited

Some of them have recently switched to middle class, therefore, their norms are more likely to be similar to that of poor class. But their kids are assured to have the distinct norms of middle class

This class usually postpones immediate enjoyment in order to gain a big goal

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home shopping demopage #Social Class - LowerTypical Characteristics of Lower Class

Social mobility is the lowest in them

Some of them are likely to be drug/narcotics addicted, terrorists

Their enjoyment or plans do not last beyond sea side/park trip

They are either unemployed, or get employment for short term basis

Education, health, population welfare, housing, water supply and sanitation remain major issues for this class

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home shopping demopage #Summary To survive and be successful in a global economy an organization must be competitive

Major factor underlying competitiveness is labor/staff costs

Organizations must recognize differences in individual contributions and compensate accordingly

Major difference in contribution is related to knowledge and skills, employee brings to the work place

It is important to understand the concept of social class and differences in these classes

The pay and reward system of the organization must stimulate acceptable levels of performance from all employees

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home shopping demopage #Money is important

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