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Industry’s Compensation Policy

Industry’s Compensation Policy. Objectives. Insight into micro concept of compensation. To provide details about internal consistency & external parity. To appraise students of job pricing, job ranges & job broad banding,etc.

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Industry’s Compensation Policy

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  1. Industry’s Compensation Policy

  2. Objectives • Insight into micro concept of compensation. • To provide details about internal consistency & external parity. • To appraise students of job pricing, job ranges & job broad banding,etc

  3. Compensation policies need to be evolved in every enterprise taking the following aspects in to consideration • Attraction & Retention • Internal consistency • External parity • Capacity to Pay • Pay for Performance • Labor cost & productivity • Cost of living • Merit & Seniority Progression • Motivation

  4. Compensation Strategy at MICRO(COMPANY) LEVEL • Industries & Corporations develop their compensation model based on three building blocks • Compensation Objectives • Strategic Policies that from the foundation of compensation system • The techniques of compensation

  5. Compensation Objectives • Compensation systems are designed & Managed to achieve certain objectives- 1. Improving Performance,quality,delighting customers &, 2. Controlling labour Costs.

  6. Strategic Compensation Policies • Strategic Compensation Policy decisions like- • Internal Consistency • External Competitiveness • Employee contribution,& • Administration of pay system

  7. JOB EVALUATION • Job Evaluation Consist of the followings: • Job analysis • Job Description • Job specification • Job grading • Job classification • Job Assessment/job Pricing

  8. Determinining an internally consistent Job Structure • Some Major Decisions in job Evaluation • Establish Purpose of Evaluation • Decide whether to use single or multiple plans • Choose among alternative approaches • Obtain involvement of relevant stakeholders • Evaluate Plans usefulness

  9. Methods & System of job evaluation • Ranking Method • Classification Method • Point Rating Method • Factor Comparison Method • The Urwick Orr Profile Method • Time Span of Discretion Method • Decision Band Method • Direct Consensus • Guide Chart Profile Method

  10. External Parity The structure should be built by comparing the prevailing wages in the area of the industry.Such comparison of internal wage structure with the external system is known as establishing External equity

  11. Determining Externally Competitive Pay Level & Structure • Some Major Decision in Pay-Level Determination • Specify Pay-Level Policy • Define Purpose of surveys • Specify relevant market • Design & conduct survey • Interpret & apply result • Design grades & ranges or bands

  12. Pay Surveys • Why Conduct a Survey? • Hiring & retaining Competent Employees: • Recognizing Pay Trends in the Marketplace • Defining Pay Practices in a court of Law

  13. Pay Surveys • Data Collection Techniques • Telephone • Mailed questionnaire • Online • Face to face interview • Confrence

  14. Types of Pay Surveys • Informal Surveys • External Survey Method • Job Title Method • Job Description Method • Job Evaluation Method • Selection of jobs for wage survey • Organization to be included • Information to be collected

  15. PRICING JOBS • In Pricing jobs, the job is matched with the labour market worth. These two activities are required to be confirmed • To establish appropriate pay level for each job • To group the different pay level in to pay grades

  16. Pay Levels • The appropriate pay levels for any job reflects its worth- A Job’s relative worth is determined by its ranking through the job evaluation process & by what the labour market pays for a similar job. A set of right Pay Level, the internal ranking & the survey wage rates are combined through the use of graph called a scatter gram. A vertical axis is pay rates. If the point system is used ,the horizontal axis is for point.

  17. Pay Levels • The development of a wage-trend line- Each dot in this graph represents the intersection of the point value & the market determined wage rate for particular key job The wage trend line helps in determining the wage rates for key jobs & non-key jobs

  18. Pay Levels • The Compensation Structure: Compensation analyst find more convenient to lump job together into job classes. • In this approach jobs are already grouped in to predetermined category.

  19. Designing Pay Rates & Bands • Constructing Ranges :From internal consistency perspective the range reflects the approximate differences in performance or experience the employer wishes to pay for a given level of work. From an external competitiveness perspective, the range also act as an control device. A range maximum sets the lead on what the employer is willing to pay for work.

  20. Designing Pay Rates & Bands • Banding: It consolidates as many as 4 or 5 traditional grades into single band, with one minimum & other maximum.Because band encompasses so many jobs in different values.

  21. Contrast B/W Ranges & Bands

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