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Compensation

Compensation Loyalist College Canada

QuestionAnswer
Internal Alignment - The relationship between jobs in a single organization. - Forms pay structure to support strategy - Supports workflow and motivates their behavior
Value Added Are employees adding value to the finished product, service or overall organization.
Work flow process that the goods and services are delivered to the customer.
Internal Pay structure - Number of levels of work - Pay differentials between levels - The criteria to determine those levels
Differentials Pay differences between jobs
Content and Value Content is work performed on a job and how it is done. Value is the worth of the work.
Content Structures rank jobs typically on the basis of - Skills required - Complexity of tasks - Responsibility
Value Structures rank jobs typically on the basis of - Value of work - Contribution of skills and tasks - Responsibility
Job and Person based structure looks at work - Content -Tasks, behavior - Responsibility
Person based structures look at the employee - Skills - Knowledge - Competencies
Pay Model - Objectives - Internal Alignment (Motivates behavior) - Competitiveness (are you in line with like industries) - Contribution (are you paying too much or too little?) - Management (How is the pay model rolled out?)
Job Structure Hierarchy of all jobs based on value to the organization. Provides the basis for the pay structure.
Job evaluation Process of determining the relative worth of jobs to create a job structure for the organization.
Job Evaluation Purpose - Supports Organizational Strategy - Supports Work flow - Is fair to employees - Motivates behavior toward objectives
Pay Model - Objectives - Internal Alignment (Motivates behavior) - Competitiveness (are you in line with like industries) - Contribution (are you paying too much or too little?) - Management (How is the pay model rolled out?)
Internal pay structure - Number of levels of work - Pay differentials between levels - The criteria to determine those levels
Tournament Theory - People work harder when there are more differentials. People perform better when they try to attain more.
External factors affecting internal structures - Economic pressures - Government policies/laws - Regulations - Stakeholders - Cultures and customs
Organization factors affecting internal structures - Strategy - Technology - Human capital - HR policy - Employee acceptance - Cost implications
Equity Theory Fairness. My pay for my inputs versus others pay for their work. (My pay = my qualifications, my work performed, my product value versus other pay for theirs)
Job Analysis Process of collecting information about the nature of specific jobs.
Stages to determine internal job structure 1. Job analysis 2. Job description 3. Job evaluation 4. Job structure
Purpose of the job analysis Identification and description of what is happening on the job. It identifies: Required tasks, knowledge and skills, working conditions.
Task Smallest piece of work done on a job
Job a person doing a group of tasks the make up the total work assignment of the person
Job Family a grouping of related jobs with similar content
Job family Grouping of related jobs with similar content
Position is the number of people doing a particular job.
Data to collect for job analysis - Employee characteristic - Internal relationships - External relationships - Emotional and physical demands
Validate data with Subject matter expert or the NOC list
Prepare a Job description with the following - Job title - Reports data - summary of key duties or responsibilities - KSA requirements - Physical or emotional demands
Job evaluation process of systematically determining the relative worth of jobs to create a job structure for the organization
Job ranking Raters examine job description and arrange jobs according to their value in the company
Jobs classification Classes or grades are defined to describe a group of jobs
Point Method Classes or grades assigned to specific job components; sum of values provides quantitative assessment of the job's worth.
Characteristics of Benchmark Jobs - Contents are fairly well-known and relatively stable over time. - Job is common across several different employers.
Compensable Factors Characteristics in the work that the organization values. These help pursue its strategy and achieve its objectives. Based on the following: Strategy and values of the organization, work performed, and stakeholders acceptability.
Compensable Factor Categories 1. Universal Factors 2. Sub-Factors 3. Degrees or levels
Skill as a universal compensable factor The experience, training, ability, and education required to perform a job under consideration. (Education, experience, technical knowledge, special training, interpersonal skills)
Effort as a universal compensable factor The measurement of physical or mental exertion needed for performance of a job. (diversity of tasks, complexity of tasks, creativity of thinking, analytical problem solving, physical application, degree of assistance available)
Responsibility as a universal compensable factor The extent an employer depends on employee to perform as expected. (decision making authority, scope of control, organizational impact, work integration with others, impact of failure, performance without supervision)
Working conditions as a universal compensable factor Difficult or unhealthy aspects of the conditions in which the work is done. (hazard exposure, stress,physical surroundings such as cramped spaces, outdoor work)
What are degrees or levels of sub-factors? Description of several different degrees levels in a job. A different number of points is associated with each degree or level.
Factor Weights Weighting assigned to each factor to reflect differences in importance attached to each factor by the employer.
Skill-based structure Links pay to the depth or breadth of KSA's a person acquires relevant to the work. Pays for all skills they are certified with regardless of use on the job or not.
Types of skill-based pay plans Specialist - in depth Generalist/multi skill-based - breadth
Purpose of the skill based structure - Supports the strategy and objectives - Supports workflow - Fair to employees - Motivates behavior toward objectives
Skill Analysis A systematic process to identify and collect information about skills required to perform work in an organization.
Competencies Broadly applicable knowledge skills and behaviors that form the foundation for successful work performance.
Competency based pay structures focus on the following - Core competencies - Competency sets - Behavioral descriptors - Competency based pay structure
Examples of competencies are - Initiative - Quality concern - Customer service orientation - Influence and impact - Team leadership
External Competitiveness Refers to the pay relationships among organizations pay relative to its competitors. Shaped by three factors: Labour market, Product/service market, Organizational factors.
Pay level Average of the array of pay rates paid by an employer.
Pay forms Mix of various types of payments that make up total compensation.
External Competitiveness 1. Pay level that is above, below, or equal to competitors. 2. The mix of pay forms relative to those of competitors.
External Competitiveness Objectives Control labour costs and attract and retain employees.
Marginal Product of Labour additional output associated with the employment of one additional HR unit, with other production factors held constant.
Marginal Revenue of Labour Additional revenue generated when the firm employs one additional unit of human resources, with other production factors held constant. (how many people we need to create revenue)
Market Factors Affect the ability of a firm to change price of its products or services.
Level of product demand puts a lid on max pay level an employer can set.
Degree of competition highly competitive markets, employers are less able to raise prices without loss of revenue.
Compensation All forms of financial returns and tangible services and benefits that employees receive as part of an employment relationship.
Relational Returns Psychological returns employees believe they receive in the workplace.
Total rewards all rewards received by employees, including cash compensation, benefits, and relational returns.
What is Wage? cash compensation an employee receives for the work performed.
What does Base Pay reflect? Reflects the value of work or skills and generally ignores differences attributable to individual employees.
Merit Increase Increment to base pay in recognition of past work behavior.
Cost-of-Living Adjustment Percentage increment to base pay provided to all employees regardless of performance.
Incentives One-time payments for meeting pre-established performance objectives in a future time period. Tie increases directly to performance.
What are Long-Term incentives? Intended to focus employee efforts on multi-year results. Typically they are in the form of stock ownership.
What are examples of Insurance and Pension benefits? Includes life health and disability Insurance, Pensions, health, dental, vision. These help protect employees from the financial risks inherent in everyday life.
What are work/life programs? That help employees better integrate their work and life responsibilities includes time away from work, access to services to meet needs, and flexible work arrangements
What are allowances? Compensation to provide for items that are in short supply.
What are the Strategic Policies in a pay model? 1. Internal Alignment 2. External Competitiveness 3. Employee Contributions 4. Management
What are techniques used for Internal Alignment in a pay model? 1. Work analysis 2. Descriptions 3. Evaluation/certification 4. Internal Structure
What are the Techniques used for External Competitiveness in a pay model? 1. Market definitions 2. Surveys 3. Policy lines 4. Pay Structure
What are the techniques used for Employee Contributions in a pay model. 1. Seniority-based 2. Performance-based 3. Merit Guidelines 4. Incentive Programs
What are techniques for management in a pay model 1. Costs 2. Communications 3. Change 4. Evaluation
Strategic Objectives are 1. Efficiency - Performance, quality, customers, stockholders and costs. 2. Fairness 3. Compliance
Procedural Fairness Concerned with the processes used to make decisions about pay.
Internal Alignment Pay comparisons between jobs or skill levels inside a single organization.
External Competitiveness Comparison of compensation with that of competitors
Employee contributions Degree of emphasis placed on the performance of employees. Directly affects employees attitudes and behaviors.
Management Proper management of the pay system ensures that the right people get the right pay for achieving the right objectives in the right way.
Strategic Perspective A focus on compensation decisions that help the organization gain and sustain competitive advantage.
What are the four steps for developing a total compensation strategy? 1. Assess total compensation implications 2. Decide on total compensation strategy as outlined in the pay model. 3. Implement the strategy 4. Reassess the fit
Pay Structure the array of pay rates for different work or skills within a single organization; the number of levels, the differentials in pay between the levels, and the criteria used to determine these differences create a structure.
Job based structure looks at work content - tasks, behaviors, responsibilities.
Person based structure shifts focus to the employee. Skills, knowledge or competencies the employee possess, whether or not they are used on the particular job the employee is doing.
Marginal Productivity Theory unless an employee can produce something of value from his or her job equal to the value received in wages, it will not be worthwhile for an employer to hire that employee
Human Capital The education, experience, knowledge, abilities, and skills that people possess.
Internal labour markets rules and procedures that determine the pay for different jobs within a single organization and that allocate employees to those different jobs.
Procedural justice Fairness of a process by which a decision is made
Distributive Justice Fairness of a decision outcome.
Tailored structure pay structure for well-defined jobs with relatively small differences in pay.
Loosely coupled structure pay structure for jobs that are flexible, adaptable, and changing.
Equity Theory Fairness or equity of pay by comparison to that of other jobs both internally and externally.
Marginal Revenue of labor additional revenue generated by each additional unit of human resources, with other production factors held constant.
Reservation wage theory The idea that job seekers have a reservation wage level below which they will not accept a job. no matter how attractive the other job attributes.
Efficiency wage theory high wages may increase efficiency and lower labour costs by attracting higher-quality applicants who will work harder.
Job Analysis Procedures 1. Develop preliminary job information 2. Conduct initial tour of work site. 3. Conduct interviews 4. Conduct second tour of site 5. Consolidate job information 6. Verify job description
Job description Written summary of a job, including responsibilities, qualifications, and relationships.
Job specifications Qualifications required to be hired for a job. may be included in the job description.
Offshoring movement of jobs to locations beyond home-country borders.
Reliability consistency of results from repeated applications of a measure.
Validity accuracy of a measure
Benchmark job A job whose contents are well known, stable, and common across different employers.
Ranking Method job evaluation method that ranks jobs from highest to lowest based on a global definition of value.
Alternation ranking method
Created by: athenaadele
 

 



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