CR Modules1 3
Transcript of CR Modules1 3
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Concepts
Significance of Wage and Salary Administration
Contents
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Also known as wage and salary administration/
Remuneration Management/ Reward Management
Compensation
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Refers to the establishment and implementation of sound policies
and practices of employee compensation.
It includes such areas as Job evaluation, Survey of wages and salaries,
Analysis of relevant organizational problems, Development and
maintenance of wage structure, Establishing rules for administering
wages, wage payments, incentives, Profit sharing, Wage changes and
adjustments, Supplementary payments, Control of compensation
costs and other related items.
Wage & Salary Administration
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Compensation includes direct cash payments,
indirect payments in the form of employee benefits
and Incentives to motivate employees to strive for
higher levels of Productivity- Casio
Compensation Definition
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The basic purpose of wage and salary administration is to
establish and maintain an equitable wage and salary
structure
Its secondary objective is the establishment and
maintenance of an equitable labour-cost structure, i.e an
optimal balancing of conflicting personnel interests sothat the satisfaction of employees and employers is
maximised and conflicts minimised
Nature & Purpose
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The wage and salary administration is concerned with the
financial aspects of needs, motivation and rewards
Managers should analyse and interpret the needs of their
employees so that reward can be individually designed to
satisfy these needs
Nature and Purpose
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Attracting and Retaining Talent
Motivating Personnel
Optimising the Cost of Compensation
Consistency in Compensation
Objectives of Compensation Management
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The various components of Compensation area) Wage and Salary Basic Salary+DA+Addl
DA+CCA+HRA
b) Incentives
c) Fringe Benefits-PF, Gratuity, Insurance, Maternity
benefits
d) Perquisites Driver, Housing, LTA, Petrol etc
Components of Compensation
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Money is included under direct compensation
Benefits come under indirect compensation and may consist of life,
accident and health insurance, vacation allowance, PF etc
A wage or pay is the remuneration paid, for the service of labour in
production, periodically to an employee/worker
Wages usually refer to the hourly rate or daily rate paid to such groups as
production and maintenance employees (blue collar workers)
Salary normally refers to the weekly or monthly rates paid to clerical,
administrative and professional employees (whitecollar workers)
Concepts
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Wage levels represent the money an average worker
makes in a geographic area or in his organisation
Wage Structure is used to describe wage/salary
relationships within a particular grouping
The grouping can be according to occupation,
organisation etc
Concepts
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Steps in Wage Determination
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Job Analysis
Wage Surveys
What are other firms paying?
What are they doing by way of social insurance?
Level of pay-other firms-similar jobs
A wage survey to be useful must satisfy the following points: Frequency
Scope
Accuracy
Steps in Wage Determination..
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Whether the organisation will recruit new employees
after salary revision? Are the prevailing rates in industry inconsistent with the
results of job evaluation?
Result of paying lower and higher compensation?
Wage Structure & Fringe Benefit What is the
relationship?
Relevant Organizational Problems
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Whether the organization wishes to or is able to pay above or
below or equal to the average in the community or industry
Whether wage rates should provide for merit increases or whether
there should be single rates
Pay Grades , Which Jobs
Assignment of Money to these Pay Grades
Differentials between pay plans
What to do with salaries that are out of line once these decisions
have been made?
Preparation of Wage Structure
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A wage curve shows the relationship between:
Value of the job
Average Wage Rates of these jobs
Wage Curve
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1. Management Wage Philosophy
Assumptions are made concerning what and how much
remuneration should be and when increases should be
given
Individual Wage Rate Determination: Steps
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2. Wage Theory
Management has a theory concerning the source funds
from which wages can be paid
Individual Wage Rate Determination: Steps
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3. Overall general wage rate
Philosophy and theory are modified by the interaction
of the law of supply and demand, governmental
factors, comparable wages, standard and cost of living,
collective bargaining ability to pay
Individual Wage Rate Determination: Steps
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3. Job Wage rate for ranges
Job analysis is performed which results in job
specification, which are then evaluated to determine a
jobsworth to an organisation
Individual Wage Rate Determination: Steps
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5. Performance Appraisal
Performance standards are established and each
individuals job performance and personal
characteristics are appraised by means of some form of
employee appraisal
This results in individualswage rate.
Individual Wage Rate Determination: Steps
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Compensation Management Process
Organization strategy
Evaluation & Review
Organization Policy
Job Analysis & Evaluation
Analysis of Contingent Factors
Design &
Implementation of Compensation Plan
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Principles and objectives of wage and salary
administration
Factors influencing wage and salary administration
Module 3
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1. There should be definite plan to ensure that
differences in pay for jobs are based upon variationsin job requirements, such as skill effort,
responsibility or job or working conditions and
mental and physical requirements
Principles of Compensation
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2. The general level of wages and salaries should be
reasonably in line with that prevailing in the labourmarket
Principles of Compensation
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3. The plan should carefully distinguish between jobs
and employees
4. Equal pay for equal work
5. An equitable practice should be adopted for the
recognition of individual differences in ability and
contribution
Principles of Compensation
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6. There should be a clearly established procedure
for hearing and adjusting wage complaints
7. The employees and the trade union, if there is one
should be informed about the procedure used to
establish wage rates
Principles of Compensation
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8. The wage should be sufficient to ensure the
worker and his family reasonable standard of living 9. The wage and salary structure should be flexible
so that changing conditions can be easily met
10. Prompt and correct payments of the dues of theemployees must be ensured and arrears of payment
should not accumulate
Principles of Compensation
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11. For revision of wages, a Wage Committee should
always be preferred to the individual judgement,however unbiased or a manager
12. The wage and salary payments must fulfil a wide
variety of human needs including the need for self
actualisation
Principles of Compensation
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1. The organisationsability to pay
2. Supply & Demand of Labour
3. The prevailing market rate
4. The Cost of Living
5. Living Wage
6. Productivity
Factors influencing Compensation
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1. Trade UnionsBargaining Power
2. Job Requirements
3. Managerial Attitudes
4. Psychological and Sociological Factors
5. Levels of Skills available in the market
Factors influencing Compensation
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Foundation of Compensation Strategies
Need for a formal Compensation Plan
Gaining Support from Management
Where to Start?
Communication Strategy
Creating the Compensation Strategy
Implementing the Plan
Other Points to note
Module 2
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1. Good business sense
2. Compensation is one of your largest single costs of doing business
3. Attract, retain and engage the talent you already have within yourorganization
4. Supports the desired mission, strategy and culture of the organization.
5. Can ensure equity and fairness among employees
6. Improves employee morale
7. Can reduce risk to the organization
Need for a formal Compensation Plan
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Focus on the business case
1. Know what matters
2. Use data to support your case
3. Make it relevant
4. Provide an example
5. Identify risk to the organization6. Be prepared and well-rehearsed with your recommendation
7. Have an outline of the plan
8. Be prepared with resource requests (financial, HR, etc)
Gaining Support from Management
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Get the right people involved
1. Buy-in from ALL key decision makers
2. Have a project champion
3. Identify the right decision-making
4. process
5. Consider employee involvement
6. Agree on goals7. Set a project deadline
8. Create a communication strategy
Where to Start?
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Communicate about the project
1. What is the organization doing and why
2. What is the process
3. Choose the right messenger
4. Be transparent about the process
5. Be realistic about the goal no promises should be made
6. Dontgive employees the opportunity to assume what the
7. outcome will be
8. Let employees know what to expect in terms of additional
communication regarding the project.
Communication Strategy
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Creating the Compensation Strategy
Start with: Where is theOrganization Now?
Growth cycle Demographics
Culture/managementstyle
Then: Where Do We WantTo Be? Importance of attraction,
motivation and retention Market competitiveness vs.
internal equity
Competitors and degree ofcompetitiveness
The right mix ofcompensation elements
Salary administration anddecision making
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1. Benchmark the organization
2. Perform a gap analysis
3. Create a proposal(s) for implementation
4. Decide what to do with anomalies
5. Get buy-in again
6. Communicate with employees
7. Assesses project effectiveness and next steps
Implementing the Plan
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Scan market salary
Turnover (Voluntary/ Involuntary)
Employees above their maximum salary range
Executive or Leadership Compensation
Compensation Pitfalls
Some other Points to Note..!