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Part 6

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Part 6

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  1. Part 6 Pay

  2. Slide 26.1 What Constitutes Pay? • Transaction • Label • Status symbol • Determinant of standard of living • Discriminator

  3. Slide 26.2 Importance of Pay • Influence in employees’ lives • Importance reflected in Trade Union interest in pay levels • Legislation re minimum wage and pay bargain

  4. Slide 26.3 Terminology • Compensation • Reward • Remuneration • Pay

  5. Slide 26.4 Reward Strategy • Aligning an organisation’s payment arrangements with its business objectives • Developing payment systems that enhance employees contribution to business goals • Experimentation stage with many new approaches being considered

  6. Slide 26.5 Employee Objectives for Contract of Payment • Purchasing power • Fair • Rights • Relativities • Recognition • Composition

  7. Slide 26.6 Conventional Wisdom over Pay Composition (1 of 2) • Younger employers more interested in high direct earnings • Incentive or performance related payment of interest to those who see an opportunity to control own personal activities

  8. Slide 26.7 Conventional Wisdom over Pay Composition (2 of 2) • Women with children are less interested in payment arrangements that depend on overtime • Overtime used by many to produce acceptable purchasing power

  9. Slide 26.8 Employer Objectives For Contract For Payment • Prestige • Competition • Control • Motivation and performance • Cost • Change management

  10. Slide 26.9 Factors That Can Influence The Setting of Base Pay Rates • National minimum wage • Equal pay law • Nature of product markets

  11. Slide 26.10 Base Pay Rates Approaches • External labour market comparisons • Internal labour market comparisons • Job evaluation • Collective bargaining

  12. Slide 26.11 External Market Comparisons • Focus on external relativities • Going rate • Follow the market • Sources of intelligence – IDS, IRS

  13. Slide 26.12 Elements of Payment (1 of 2) Figure 26.1  The potential elements of payment

  14. Slide 26.13 Elements of Payment (2 of 2) Figure 26.1  The potential elements of payment

  15. Slide 26.14 Importance of Equity • Perceived inequity in payment matters can be dangerous to organisations • An area influencing employee satisfaction is way that pay levels and increases are distributed fairly

  16. Slide 26.15 Principles In Pay Decisions • Standard approach for determining pay across organisation • As little subjective or arbitrary decision making • Maximum communication and employee involvement • Clarity in pay determination matters

  17. Slide 26.16 Strategic Focus (1 of 2) • More reward managers than salary administrators but what is change in practices • New pay philosophy where decisions about payment levels and packages flow from overall strategy • Pay policy increasingly underpins employer objectives

  18. Slide 26.17 Strategic Focus (2 of 2) • Gaps in rhetoric and reality of strategic pay activity • For most matter of incremental change being made

  19. Slide 26.18 Summary (1 of 2) • Employees tend to be concerned with purchasing power, fairness & recognition of effort • Employers are concerned with pay matters made by law, and realities of their markets • Four alternative methods of setting basic pay rates

  20. Slide 26.19 Summary (2 of 2) • There are seven elements of pay • Procedural equity is essential to the design of successful payment systems • There is disagreements about how UK managers embrace more strategic approaches to reward management