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Department of Business Administration

Course Title: Performance and Compensation Management

Course Code: MGT 505

Pre-requisite Courses: Organization Behavior, Human Resource Management

Credit Hours: Three (3)

Degree: MBA Program

Course Description: This course familiarizes students with the concepts of compensation management within the wider context of human resource management. It provides students with an understanding of the reward

management process which includes pay survey, job evaluation, and the design of pay structure.

Students will acquire basic data management techniques and recognize what are the factors that

determine the pay levels and benefits of employees in the job market. Students will be aware of the

problems related to performance management system and be able to give suggestions for

improvement. The concept of equal opportunity in compensation and performance management will

be emphasized throughout the course.

Course Objectives: This course enables the student to:

1. Relate compensation management to behavioral theories and concepts and within the wider context of human resources management

2. Discuss basic compensation concepts and the context of compensation practice 3. Analyze factors that influence companies competitive strategies and compensation

practices

4. Discuss employment laws that influence compensation tactics in Pakistan 5. Discuss the traditional basis of setting employee s base pay on their seniority or

longevity with the company

6. Relate the role of performance management and the merit pay process 7. Describe various incentive/ variable pay at individual, group and organization wide level 8. Describe the reasons to adopt pay for knowledge pay programs and the advantages and

disadvantages of such programs

9. Discuss the mechanism of developing internally consistent compensation system using job analysis and job evaluation techniques

10. Discuss the mechanism of integrating the internal job structure with external market pay rates

11. Discuss the mechanism for constructing a companys pay structure 12. Discuss the mechanism for designing sales incentive compensation plan

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13. Differentiate between legally required and discretionary employee benefits 14. Explain theoretical basis for setting executive compensation

Learning Outcomes:

After completing this course a student will be able to:

1. Evaluate Performance Management System of any organization and recommend changes to make it more effective

2. Conduct Job Analysis and Develop Effective Job Descriptions 3. Conduct Job evaluation using point method 4. Design Salary Structure for any company keeping in view the legal requirements

Teaching Methodology:

Teaching at Iqra University is learner oriented. Students are involved in lectures, assigned

readings, reference readings, exercises, case studies, presentations, and class discussions. In the

same way, grading tends to focus on the students overall performance and participation in the classroom activities.

Code of Conduct:

Students have to follow the rules stated below to avoid a failing grade in the course:

Understand and follow the University policy regarding attendance.

Arrive in and leave the classroom strictly on time. Late arrival will be marked as absence. If you leave the classroom in the middle of a session even for a short while, you will be

marked absent.

Keep your cell phone off during the class.

Do the assigned readings for a class before coming to the class.

Maintain a disciplined, cordial, and respectful attitude towards the teacher and your fellow students.

Submit your homework on the due date before the class begins.

Do not plagiarize from books, journals, or the internet.

Do not cheat (make someone else do your work or present work for some other course as work for this course).

The teachers decisions about marks and grade will be final.

Course Contents:

Week Topics to be covered Remarks

1. A Road Map To Effective Compensation

Role &Purpose of the Compensation System

Job Characteristic model

Rewards vs. Compensation Strategy

Compensation Strategy

Goals for the Compensation System

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2. Strategic Framework for Compensation

Role of Contextual Factors

Role of Structural Variables

The classical managerial strategy

Human relations managerial strategy

High involvement managerial strategy

Managerial Strategies and Reward System

First Hourly Test

due session 4

3. A Behavioral Framework for Compensation

Types of Reward Problems

Desired Reward Outcomes

How Rewards Affect Employee Behavior

Causes of Reward Dissatisfaction

Consequence of Reward Dissatisfaction

Understanding Membership Behavior

Understanding Task Behavior

Money as a Motivator

Behavioral Implications for Designing Reward System

4. Traditional Basis for Pay seniority and Merit

Seniority and Longevity Pay

Merit Pay Plans

First Hourly Test

Case Assignment

Presentation and

submission due 7th

session

5. Performance Management system

Planning

Monitoring

Developing

Rating

Rewarding

Performance Appraisal

Trait Based Approaches

Comparative Methods

Narrative Methods

BEHAVIORAL RATING APPROACHES

Management by Objectives (MBO)

360 degree performance appraisal

Activities to Promote Non-Discriminatory Performance Appraisal Practices

Errors in the Performance Appraisal Process

6. Incentive Pay

Definition

Assumptions for Incentive Pay Effectiveness

Contrasting Incentive Pay with Traditional Pay

Individual Incentives

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Advantages of Group-Incentive Plans

Disadvantages of Group-Incentive Plans

Company-Wide Incentive Plans

Designing Incentive Pay Programs

Linking Incentive Pay with Competitive Strategy

7. Case Presentation

MID-TERM EXAMINATION

8. Person Focused Pay

Defining Competency-Based Pay, Pay- For-knowledge, Skill-Based Pay

Usage of Pay-For-Knowledge Programs

Vertical Skills Programs

Horizontal Skills Programs

Stair-Step Model

Skill Block Model

Job-Point Accrual Model

Cross-Departmental Models

Contrasting Person-Focused Pay with Job-Based Pay

Advantages of Pay-For-Knowledge Pay Programs

Disadvantages of Pay-for Knowledge Pay Programs

Linking Pay-For-Knowledge with Competitive Strategy

2nd

hourly test due

10th

session

9. Building Internally Consistent Compensation Systems

Characteristics of Internally Consistent Compensation Systems

Job Analysis

Steps in the Job Analysis Process

Job Analysis Techniques

Job Evaluation

The Job Evaluation Process

Job Evaluation Methods

Whole Job Ranking

Job Classification

Point Method

Factor Method

Internally Consistent Compensation System and Competitive Strategy

10. Building Market Competitive Compensation System

Market-Competitive Pay Systems

Conducting strategic analyses

Assessments of competitors pay practices with compensation surveys

Integrating the internal job structure with external

2nd

hourly test

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market pay rate

11. Building Market Competitive Compensation System

What companies hope to gain from compensation surveys

Compensation Surveys: Strategic Considerations

Compensation Survey Data

Integrating Internal Job Structures With External Market rates

Integrating Internal Job Structures With External Market rates

Compensation Policies and Strategic Mandates

Third hourly Due

14th

session

Presentation of Case

assignments 14th

and

15th

session

12. Building Pay Structures That Recognize Individual

Contributions

Constructing a Pay Structure

Deciding on how many pay structures to construct

Determining a Market Pay Line

Defining Pay Grades

Calculating Pay Ranges for Each Pay Grade

Setting Pay Range Midpoints

Setting Pay Range Minimums and Maximums

Pay Compression

Green and Red Circle Pay Rates

Evaluating the Results

Designing Merit Pay Systems

Designing Sales Incentive Compensation Plans

Designing Pay-For-Knowledge Programs

Pay Structure Variations

13. Laws Relating to Employment and Compensation

The workmen Compensation act,1934

The Factories Act, 1934

The payment of wages act,1936

The West Pakistan Maternity Benefit ordinance, 1958

The minimum wages ordinance, 1961

The provincial employees social security ordinance, 1965

The W.P. Industrial and commercial employment ordinance,1968

The W.P. shops and establishment ordinance,1969

The Industrial Relations Ord. , 1969

The workers Children (Education) ordinance, 1972

The Employees cost of living (Relief) Act, 1973

The employees Old- Age Benefits Act, 1976

Computation of Salary

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14. Project Presentations Third hourly Test

15 Project Presentations

Quiz

FINAL EXAMINATION

Rescheduling of Class:

The teachers at Iqra University are very particular about taking their classes, but in case of an

emergency, an alternate teacher may conduct the class. Students are informed through SMS in

case of rescheduling of a class.

Grading Policy:

A Grade: 88 and above B+ Grade: 81-87 B Grade: 74-80 C+ Grade: 67-73 C Grade: 60-66 F Grade: Below 60

Marks Distribution of 100%:

Quizzes ______10_____

Assignments/Case Studies: ______15_____

Project/Project presentations: ______10_____

Mid-term ______25_____

Final Exam ______40_____

Total 100____

Recommended Readings:

1. Strategic Compensation, by Joseph J. Martocchio, prentice Hall (Latest Edition) 2. In addition the teacher may prescribe any additional reading material.