Designing Compensation

Designing Includes:

Pay determination as per internal and external factors.

Developing grades or bands Determining the hierarchy of grades Formulating a compensation structure Finalizing pay packages taking in

consideration various legislations as well

Factors affecting compensation designing:

INDIVIDUAL Skill, Qualification , Experience, Expertise

ORGANISATIONAL

Size, Nature, Technology, Goodwill or Status & Financial

Strength

Job analysis, Job Pricing, W/S survey, Legislations,

Developing Pay packages

Vision & Mission , Wish to lead, to meet the challenges

COMPETITIVE

PRODUCT COST

Other factors:

Company’s & mission Marketing rates & trends for external

equity Organizational ability to pay Supply & Demand elasticity Cost of living in the region Productivity linked performance Strength of unions & their pressure Company’s goodwill & image in the market Government legislationsTribunal’s judgments

Compensation Structure

It is a framework describing the relationship of a person with his/her worth .

It is a hierarchy of job to which wage rates are attached.

It describes the width of wage and salary for the entry and exit levels of that grade.

It indicates the basis of progressionThe structures vary according to the job ,

its complexity, importance and criticality

Types of structures:

Internal : formed on the basis of job analysis, JD and job evaluation

Business or work related: Weightage to KSA and experience of the employees

Designing Process

Designing Components of Compensation