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COMPENSATION Third Canadian Edition Milkovich, Newman, Cole

COMPENSATION Third Canadian Edition Milkovich, Newman, Cole. Chapter 6 Person-Based Structures. Many Ways to Create Internal Structure. Business and Work-Related Internal Structure. Person-based (Chapter 6). Job-based (Chapters 4-5). PURPOSE. Skills . Competencies.

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COMPENSATION Third Canadian Edition Milkovich, Newman, Cole

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  1. COMPENSATIONThird Canadian EditionMilkovich, Newman, Cole Chapter 6 Person-Based Structures

  2. Many Ways to Create Internal Structure Business and Work-Related Internal Structure Person-based (Chapter 6) Job-based (Chapters 4-5) PURPOSE Skills Competencies Collect, summarize work information Job analysis Job descriptions Skill analysis Core competencies Determine what to value Job evaluation: classes or compensable factors Skill blocks Competency sets Certification process Competency indicators Assess value Factor degrees and weighting Person-based structure Person-based structure Translate into structure Job-based structure

  3. Skill-Based Pay Structures • link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that is relevant to the work • pay individuals for all the skills for which they have been certified regardless of whether the work they are doing requires all or just a few of those particular skills • very different approach compared to a job-based plan, which pays employees for the job to which they are assigned, regardless of the skills they possess

  4. Types of Skill-Based Pay Plans • Specialist: In-Depth • Generalist / Multiskill-Based: Breadth

  5. Purpose of the Skill-Based Structure • support the strategy and objectives • support work flow • fair to employees • motivate behaviour toward organizational objectives

  6. Skill Analysis • a systematic process to identify and collect information about skills required to perform work in an organization.

  7. Determining the InternalSkill-Based Pay Structure Skill certification Skill-based pay structure Skill analysis Skill blocks • Basic Decisions • What is the objective of the plan? • What information should be collected? • What methods should be used to determine • and certify skills? • Who should be involved? • How useful are the results for pay purposes?

  8. Determining the InternalCompetency-Based Pay Structure Core competencies Competency sets Behavioural descriptors Competency – based pay structure • Basic Decisions • What is the objective of the plan? • What information should be collected? • What methods should be used to determine • and certify competencies? • Who should be involved? • How useful are the results for pay purposes?

  9. Competencies • underlying, broadly applicable knowledge, skills, and behaviours that form the foundation for successful work performance (exhibited by excellent performers more consistently than average performers)

  10. Competency-Based Pay Terminology Taken from mission statement; for example, “business awareness.” CORE COMPETENCY COMPETENCY SETS Grouping of factors that translate core competency into observable behaviour; for example, cost management, business understanding. COMPETENCY INDICATORS Observable behaviours that indicate the level of competency within a competency set. For example, “identifies opportunities for savings.”

  11. Competency Analysis • a systematic process to identify and collect information about the competencies required for successful work performance • collect information on: • personal characteristics • visionary competencies • organization-specific competencies • establish certification methods

  12. Achievement orientation Concern of quality Initiative Interpersonal understanding Customer service orientation Influence and impact Organization awareness Networking Directiveness Teamwork & cooperation Developing others Team leadership Technical expertise Information seeking Analytical thinking Conceptual thinking Self-control Self-confidence Business orientation Flexibility Top Twenty Competencies

  13. Internal Alignment: Job- or Person-Based Structures • Purpose of job- or person-based pay plans • Internal pay structure to help achieve organizational objectives • Aligned with internal alignment policy • Supports business operations • Managing the plan • Manual • Communication to foster employee acceptance

  14. Avoiding Bias in Pay Structures • Define the compensable factors and scales to include the content of jobs held predominantly by women. • Ensure that factor weights are not consistently biased against jobs held predominantly by women. Are factors usually associated with these jobs always given less weight? • Apply the plan in as bias free a manner as feasible. Ensure that the job descriptions are bias free, exclude incumbent names from the job evaluation process, and train diverse evaluators.

  15. Contrasting Approaches (1 of 2)

  16. Contrasting Approaches (2 of 2)

  17. Conclusion • internal pay structures need to be aligned with the organization’s business strategy and values, the design of the work flow, and a concern for the treatment of employees • techniques for establishing internally aligned structures include the job-based approach (job analysis and job evaluation) and person-based approaches (skill/competency-based plans) • these techniques can aid in achieving the objectives of the pay system when they are properly designed and managed

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