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薪酬体系的设计与管理 PowerPoint PPT Presentation


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薪酬体系的设计与管理. 工资管理. 薪酬管理的宏观战略. 本节目标. 在本节中,您会了解到以下内容: 薪酬的定义 薪酬管理的原则 薪酬总体构成 薪酬战略的组成部分 薪酬管理的步骤. 人是任何企业中最关键的资源,没有了他/她,公司 的财力、物力均不能得到最佳的发挥

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薪酬体系的设计与管理

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  • People are the key resource in any organization.Without them neither its physical resources nor the financial resources will be used to their best effect.


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Class overview

Class Overview (

  • Session 1: Compensation Program Management

  • Session 2: Market Survey

  • Session 3: Statistic Basics&Application

  • Session 4: Pay Structure Design

  • Session 5: Merit Pay System

  • Session 6: Compensation Cost

  • Session 7: Salary Administration


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Compensation Management


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  • To develop and deliver total compensation solution which must be

    • Attracting retaining and motivating the best talent the company have

    • Flexible enough to support both business strategy and employees needs

    • Balanced with both competitiveness and affordability

    • Easy to administrate/operate

  • To communicate the programs with clarity that make sure

    • The program is understood/accepted

    • The expectations are well managed


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  • Focus on total compensation programs

  • Leverage effective market survey to get competitive market information

  • Differentiate pay with the following to make sure equity

    • Skills Using a skills based job system

    • Performance linking with performance mgmt system

    • Value to the business using retention programs for top talent

  • Efficient labor cost management Using the money wisely


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Company

Employee

Equity

Consistency

Valuable

Competitiveness

Affordability

Flexibility

Balance point

Labor cost management

Merit system


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Company Executive -Decision

Compensation position

Competitive position

Labor cost

Managers -Execution

Human Resources -Proposal

Job description evaluation

Performance evaluation

Salary increase decision

Job Evaluation system

Compensation System

Benchmarking

Labor cost analysis


Discussion

Discussion

  • What makes you to be a compensation professional?


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  • Internal understanding

    • Understand the company business strategy and priorities

    • Understand organization structure and jobs in the organization

  • External understanding

    • Economic environment

    • Labor market situation and trend

    • Labor law /policy update

  • Networking / interpersonal skills

    • Have a resources pool to leverage for information sharing for other companys practices

  • Analytical skills for interpreting the market information

  • Have fun with numbers!

  • Good communication skills both oral and writing


Program management cycle

Program Management Cycle

Companys Strategy and plan

Human Resources Strategy

Compensation Strategy

Evaluation

Design

Communication &Training

Administration

Implementation


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Market Survey


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  • Self conducted survey

  • Buy survey report

  • Company sponsored survey

  • Participant in group sponsored survey


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  • Easy to conduct

  • Data quality

  • Cost

  • Turn over time


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  • Purpose of the survey

  • Target market

  • Target jobs

  • Information required

  • Data of delivery expected

  • Contents of report required/Format

  • Additional request,if any


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  • Your company is a IT multi-national company based in Beijing ,the company is gong to set up a R&D center in Tianjin ,you do not have branch there currently.As a compensation professional,you are invited by the project office to give come advise on how to set up Tianjin R&D centers compensation and benefits terms. As you do not have contact in Tianjin , you decide to get some information from consulting company.

  • Raise a ROS to state your needs


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  • Purpose

  • Target market

  • Information needed

  • Method of survey

    • Telephone calls

    • Email questionnaire

  • Design your questionnaire /

  • Report

  • Result analysis


Define your market

Define your market

  • Your companys basic profile

    • Industry you are in

    • Type of organization

    • Major competitors

    • Other considerations in talent competing,image competing,management system competing,etc

  • Size of the market

    • No less than 10 companies 10

  • Consistency consideration

    • Should maintain 80% repeated rate ever year to keep consistency

    • 80


Contents of survey

Contents of survey

  • Cash Compensation items

  • Benefits practice

  • Pay policies

  • Retention policies

  • Company profiles


Define your questions

Define your questions

  • Use common terms,put in explanations if necessary

  • Use closed question with YON answer instead of open ended questions

  • Make choices available for participants


Exercise

Exercise

  • Company want to revisit the relocation allowance policy as the number of relocation is growing and the allowance is relative high and without update for 3 years

  • Please design a questionnaire so that you could ring around to get some market information


Importance of job matching

Importance of Job Matching

  • Understand the methodology of survey companys benchmarking system

  • Understand the benchmarking job description provided by survey company

  • Understand internal organization and job description

  • Invite business manager to participant in job matching activities why?

  • --


Survey data categories

Base pay

Monthly base salary times 12

*12

Guaranteed pay

Including allowances ,year end bonus without measurements

Total cash

Including any variable bonus,incentive with measurements

Total compensation

Any cash payment or benefits portion

Total Remuneration

Survey data categories

Total Rem

Total Cash

Guaranteed

Cash


Analysis of survey data

Analysis of Survey Data

  • To understand

    • How data was collected

  • How to read the survey report

    • What the data represents for

    • How can we use the data

      • Your competitive position

      • Define your future salary structure


Survey reports contents

Survey reports contents

  • Executive summary

    • A high level economic /labor market trend report

  • Detailed remuneration data

    • Usually by job families

  • Market position comparison

    • What is your companys pay position

  • Questionnaire analysis

    • Salary administration policies

    • Benefits programs

    • Retention programs


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Statistic Basics & Application


Statistics terms

Statistics Terms

  • Mean

    • Unweighted mean

    • Weighted mean

  • Median

  • Percentile

  • Quartile


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Mean

  • The average of a set of data points .it is sum of the data divided by the no. of points

  • Unweighted mean

    • Obtained by computing the average of the values of the data points

  • Weighted mean

    • Obtained by weighting each value by the no. of data occurred then computing the average


Example of computing mean

Example of Computing Mean


Exercise of computing mean refer to survey data

Exercise of Computing Mean Refer to Survey Data


Exercise of calculating mean

Exercise of Calculating Mean


Median

Median

  • The point along an ordered data points at which an equal no. of data points fall above and below

  • For an odd no. of data points ,median is the middle data points

  • For an even no. of data points ,median is the average of the 2 middle-most data points


Example of computing median 1 1

Example of computing median(1) 1


Example of computing median 2 2

Example of computing median(2) 2


Computing percentile

Computing Percentile

  • Definitions ()

    • Px , the desired percentile points,where

    • Px ,

      • x , the percentile rank desired (e.g. 10 , 25 , etc..)

      • x ,

      • v, the rank order position (from bottom ) for the percentile point value of interest , v is calculated as follows :

        • V = x/100*(n+1)

      • v

        • V = x/100*(n+1)

      • n , the number of data points in the sample

      • n


Example of computing percentile 1 1

Computing P25

v = 25/100*(7+1)=2

P25 should be the 2nd data point

P25

Which is 2800

So , p25 = 2800

Please calculating P75 by self

P75

Example of Computing Percentile (1)1


Example of computing percentile 2 2

Computing P25

v = 25/100*(8+1)=2.25

P25 should be the 2.25th data point which in between 2nd and 3rd data,

P252.25,23

Which is in between 2800 and 3000

So , p25 = 2800+0.25*(3000-2800)

=2850

Please calculating P75 by self

P75

Example of Computing Percentile (2)2


Quartiles

Quartiles

  • In compensation analysis ,percentiles are often expressed in terms of quartiles.there are 4 quartiles in a set of data points

  • 4

    • 1st quartile: the AREA where the bottom 25 percent of values occur ,corresponds to 25th percentile

    • 25

    • 2nd quartile: the AREA where the 2nd 25 percent of values occur,corresponds to 50th percentile

    • 25P-50P

    • 3rd quartile: the AREA where the 3rd 25 percent of values occur,corresponds to 75th percentile

    • 50P-75P

    • 4th quartile: the AREA where the top 25 percent of values occur,corresponds to the 100th percentile

    • 25


Market survey analysis

Market survey analysis

  • Read & understand the reports

  • Data comparison apple to apple

    • Time :age market data

    • Value:market comparable base pay

    • Position to market :market index


Analysis survey result

Analysis survey result

Data

Information

Knowledge

Evaluation

Mgmt Decision


Aging market data

Aging market data

  • Determine annual aging factor

    • Data coming from survey reports , salary increase plan % reported by participating companies

  • Determine date to which to age data

    • Effective date of salary structure

    • Lead , lag , or lead/lag philosophy Lead , lag , or lead/lag

      • Lead , structure will compete the year end market

      • Lead ,

      • Lag , structure will compete the year end market

      • Lag ,

      • Lead /lag , structure will compete the midyear market

      • Lead /lag ,


Example of aging market data

Example of aging market data

  • Survey data effective date is October 1 , 2002

  • 2002101

  • Annual aging factor is 8% for 2002 , 6% for 2003

  • 2002820036

  • The companys structure will effective July 1 , 2003

  • 200371

  • Please calculate the aging factors separately for lead , lag , and lead /lag policy

  • lead , lag , and lead /lag


Come out market comparable base pay

Come out market comparable base pay

  • You get annual pay data from survey , which need to be converted to your companys monthly salary amount

  • What is your companys pay policy ?

  • What is the market annual pay includes ?

    • Base pay

    • Guaranteed cash

    • Total cash

    • Total remuneration


Abc company pay practices abc

ABC Company Pay Practices ABC

  • ABC company pay practices

  • ABC

    • 12 months salary annually

    • 12

    • 1 month year end fixed bonus

    • 1

    • 1month variable bonus measured by company performance

    • 1

    • Monthly allowance of RMB 500 per month

    • 500

    • Housing subsidy of 10% monthly salary paid by cash

    • 10


Calculating market comparable base pay

Calculating Market Comparable Base Pay


Market index

Market Index

  • Compare company average salary with market average salary

  • Make Apple to Apple comparison

    • Same point of time

    • Same job

    • Same pay components

      • Base to base , total cash to total cash


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An exercise of data comparison


Market index1

Market Index


Pay structure design

Pay Structure Design


Something about pay structure

Something about pay structure


An ideal compensation program

An Ideal Compensation Program

  • Internal equity

  • External competitiveness

  • Affordability

  • Legally defensible

  • Understandable /salable /

  • Efficient to administer

  • Safeguards the organizations resources

  • Flexible

  • Meets the organizations unique needs


General and specific factors affecting pay structures

General and Specific Factors Affecting Pay Structures

  • Corporate culture and values

  • Management philosophy

  • External economic environment

  • Labor market demand and supply

  • Corporate strategy and policy

    • Centralized compensation policy

    • Decentralized compensation policy

    • Short-term vs. . Long-term consideration


Example of a pay structure

1

2

3

4

5

6

7

8

8800

7800

6800

5800

4800

3800

2800

Example of a Pay Structure

Grade


Pay structure design1

Pay Structure Design

  • Base pay policy line

  • Number of job grades/bands

  • Midpoint progression

  • Range spreads

  • Range overlap

  • Number of pay structures


Profile of a base pay structure

a: Range min dc : Range overlap

b: Range max e-f , f-g : Range progression

a-b :Range spread e-f-g :Base pay policy line

Base Pay

Policy Line

g

$

b

c

f

e

d

a

Job Value

Profile of a Base Pay Structure


Range spreads

Range Spreads

Plus and minus midpoint percent

(1+desired)/(1-% desired) -1=range spread

(1+20% ) (1-20%) = 0.5 or 50%

Minimum to maximum

(max min ) / min = range spread

(4500-3000) / 3000=0.5 or 50%


Exercise on midpoint and range spread

Exercise on Midpoint and Range Spread


Exercise for calculating min max from midpoint

Exercise for calculating Min /Max from Midpoint


Range progression

Range Progression

  • Percentage difference between grade midpoints

  • To consider the following when design the jump

    • Market competitiveness

    • Cost of promotions

    • Midpoint-to-midpoint differential guidelines (ideal situation)

      • 5-10% for clerical / production 5-10/

      • 8-15% for professional and management 8-15

      • 15-25% between supervisor and subordinates 15-25

      • 30-35% for executive levels 30-35


Typical range spreads

Typical Range Spreads


Developing a pay structure

Developing a Pay Structure

  • Internal equity

    • Job evaluation system

    • Equity within a job family

    • Equity among various job families

    • Cross functional / location consistency

  • External competitiveness

    • Achieve attract , retain and motive purpose

    • Get most recent market data


Developing a pay structure1

Developing a Pay Structure

  • Define internal pay grads

  • Slot jobs into pay grads

  • Decide your pay policies

    • Lead ,lag or lead/lag

    • Lead ,lag lead/lag

    • Competitiveness position (which market trend line to follow ,25th ,50th ,or 75th

    • 25p,50p,75p)

    • How many structures you need


Developing a pay structure2

Developing a Pay Structure

  • Apply most update market data

  • Age the market data according to pay policies

  • Grouping market data by job families you need for specific structure

  • Calculating the mean of those market data

  • Find out market inconsistencies and smooth out grade midpoints

  • Review differences between midpoints and market data

  • Resolve inconsistencies between internal and external equity

  • Developing pay ranges around the proposed midpoints


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exercise on

developing a company's

pay structure


Building your structure

Building Your Structure

  • Decide your midpoint

  • Smooth out where you lack of market data

  • Decide your range spread

  • Calculate the minimum and maximum

  • Calculate the midpoint progression

  • Further smooth out the range by appropriate progression and range spread


Build your structure assumptions

Build Your Structure Assumptions

  • Market movement

    • 8% for 2002

    • 6% for 2003 projection

  • Structure policy

    • Lead

    • Lag policy

    • Lead/lag policy


A sample salary structure

A Sample Salary Structure


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Merit Pay System

Link Performance With Pay


Merit pay system

Merit Pay System

  • Pay differentiation by individual performance

  • Link pay with performance management

  • Internal equity


Salary range profile

Salary Range Profile

Performance definitions

pay

75%

Midpoint

25%


Position in range pay progression with range

Position in Range Pay Progression with Range

Range

Penetration

Pay Range Maximum

100% Outstanding

75% Exceed Standards

Pay

50% Meet Standards

25% Does Not Meet Standards

0%

Pay Range Minimum

Time


Quartiles of a range

Quartiles of a Range


Position in range compa ratio calculations compa ratio

Position in Range Compa-Ratio Calculations Compa Ratio

Salary

Individual Compa-Ratio

(actual to structure)

---------------

=

Midpoint

Average Salary

Organisational/Unit Compa-Ratio

(actual to structure)

=

-----------------------------

Midpoint

Average Salary

Market Index

(actual to market)

=

---------------------------

Market Average


Exercise on calculating compa ratio compa ratio

Exercise on Calculating Compa-ratioCompa-Ratio


Position in range range penetration control

Position in Range Range Penetration Control

1200

1200

1000

900

800

800

Pay Rate - Minimum

-------------------------

Range Penetration

=

Maximum - Minimum


Exercise on calculating penetration

Exercise on Calculating Penetration


Merit increase guidelines

Merit Increase Guidelines

  • Performance only

  • Performance and position in range


Based on performance only increase an percent of base pay

Based on Performance Only Increase an Percent of Base Pay


Based on performance and position in range

Based on Performance and Position in Range


Factors when defining the increase percentage

Factors when Defining the Increase Percentage

  • Average increase budget

  • Salary structure movement percentage

  • Performance rating distribution

  • Average pay position in range

    • Compa-ratio

    • Penetration

    • quartile

  • Pay differentiation


Salary increase budget

Salary Increase Budget

  • Percent necessary to match market as of January 1

  • Anticipated percent of next years market movement (lead ,lag ,lead/lag)

  • Desired position above or below the market (pay policy)


Percentage increase example

Percentage Increase Example

  • Percent Increase = 8%

    Percent to match market 0.2%

    Total market salaries /Total company salaries 1

    Market movement 3%

    Company pay policy 5%


Exercise for salary increase matrix

Exercise for Salary Increase Matrix

  • Average salary increase budget 8%

  • 8

  • Performance evaluation distribution

    • Outstanding 10%

    • Meet all target 50%

    • Meet most target 30%

    • Does not fully meet target 10%

  • Maximum increase percentage 16%

  • 16

  • Population distribution in salary range

    • 1Q 40% , 2Q 30% , 3Q 20% , 4Q 10%

  • Flexibility adder 2%


Exercise on merit matrix population in each cell

Exercise on Merit Matrix Population in each cell


Exercise on merit matrix merit assumption

Exercise on Merit Matrix Merit % Assumption


A sample of pay structure merit matrix

A Sample of Pay Structure & Merit Matrix


Salary increase program cost

Salary Increase Program Cost

  • Point in time cost for a month

  • Annualized cost considering impact to other items

    • If there is any impact to other pay programs

  • Year end bonus

    • Sales incentive

    • Benefits cost


Salary increase program ccost

Salary Increase Program Ccost

  • Point in time cost for a month

    • Total payroll increase % based on merit increase % calculation

    • E.g. the example shows the total payroll will increase by 8% from July 1

    • What is the average increase % for eligible employees ?


Allocating salary increase budget

Allocating Salary Increase Budget

  • 8% average company salary increase budget to allocate to 3 BUs

  • 83

    • Method 1 : Give 8 % to each BU equally

    • Method 2 : Allocating budget consider the BU average Compa-ratio

    • Compa-ratio

      • A compa ratio is 80% 8%/80%=10%

      • A compa ratio is 100% 8%/100%=8%

      • A compa ratio is 120% 8%/120%=6.7%

    • Need to calculate the total to make sure within budget


Labor cost calculation

Labor Cost Calculation


Annual labor cost calculation

Annual Labor Cost Calculation

  • Salary increase program cost

  • Promotion cost

  • Resources changes cost


Annual cash flow cost of monthly payroll

Annual Cash Flow Cost of Monthly Payroll

  • January payroll increase will generate 100% cost impact to the year (8%) increase from January will cost 8% annually

  • 100

  • July increase will generate 50% impact to the year ( 8% increase from July will cost 4% annually)

  • 50


Promotional cost calculation

Promotional cost calculation

  • How many % population will get promoted ?

  • What is the average increase %

  • Does promotion happen anytime during the year ?

  • Annual promotional % = % population x avg inc% x cash flow factor


Resources changes consideration

Resources Changes Consideration

New Hires Cost (+)

New hire average salary x

No. of new hire x

new hire cash flow factor (average on board months of new hires /12 mths)

Separations Cost (-)

Separation average salary x

No. of separations for the year x

separation cash flow factor (average months left during the year /12 mths)


Salary administration

Salary Administration


Objective of salary administration

Objective of Salary Administration

  • Maintain healthy average compa-ratio

  • compa-ratio

  • Overall salary program efficiency

  • Overall competitiveness

  • Maintain healthy resource structure

  • Way of labor cost management


Promotion guideline

Promotion guideline

  • Criteria

    • Career driven / skills

    • Performance

    • Time stay in current level

    • Business needs

    • Resources structure

  • Salary increase %

    • Consider the range progression rate

    • Last increase date

  • Cost of promotion

    • Average promotion rate per year

    • Average promotion increase %

    • Impact to total compensation / labor cost

    • Inflation of banding

  • Demotion / Re-classification


New hire salary

New Hire Salary

  • Fresh graduate

    • At / Below range min (80% -100% of range min )

  • Experience hire

    • Consider the experience , could be put into different quartile , normally not exceeding midpt

  • Saving of cost when backfill with less pay


Demotion

Demotion

  • Causes of demotion

    • Poor performance

    • Reorganisation or re-engineering

    • Employee request

  • Pay actions

    • Take away money

      • Immediately

      • By step

    • Freeze pay


Reclassification

Reclassification

  • Change in job responsibilities

  • Change in company job system

  • Change in market value

  • Could result in higher or lower level

  • Pay policy

    • Increase or decrease

    • No change


Geographic differentials

Geographic Differentials

  • Better fit local market

  • Commonly used for low level jobs

  • Differentiation consideration

    • Cost of living

    • Cost of labor

  • Approaches

    • Individual pay adjustment in base pay , allowances

    • Different pay structure


Re cap

Re cap

Understand

Business

Structure

Market

Information

Analysis

Your

Labor Cost

Attract

Retain

Motivate

Interpret

Market

Information

Create a

Merit Pay

Matrix

Design

Your

Salary Structure


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Benefits Management


Objectives of this session

Objectives of this session

During this session , you will get an overall picture of

following

  • Definition of benefits

  • Why are benefits important

  • Different kinds of benefits


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Employee benefits

Employee Benefits

  • That part of the total compensation package , other than pay for time worked , provided to employees in whole or in part by employer payments

  • E.g. , life insurance , pension plan , vacation , etc .


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Characteristics of effective benefit programs

Characteristics of Effective Benefit Programs

  • 1. Specific objectives /

  • 2. Employee involvement /

  • 3. Flexibility /

  • 4. Willingness to modify benefit mix /

  • 5. Communication of benefits information /

  • 6. Administrative cost controls /

  • 7. Promote wellness programs /


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Reliable

Credible

Attractive

Recognition

empathic

reliable care


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Retention

Recognition

Reward

3R


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Not fringe benefits any more

Not fringe benefits any more !

  • In 1953-54 , benefits programs were 15% of total gross annual payroll

  • In 1992 , the conference board of Canada reported that total benefit costs averaged 26%

  • Some organizations reported benefit costs as high as 52% of payroll


Pressures for growth in benefits

Pressures for growth in benefits

  • Wage controls /

  • Union or competitive pressures /

  • Employer initiative /

  • Cost effectiveness /

    • Favourable tax treatment /

    • Lower group rates /

    • Other advantages beyond direct cost /


Issues in benefits administration

Issues in benefits administration

  • Flexibility of coverage /

    • Average employee /

    • Cafeteria plans /

  • Financing benefits /

    • Non contributory /

    • Contributory /

    • Employee financed /


Benefits an be made more effective

Benefits an be Made More Effective

  • Cost sharing /

  • Aggressive Cost Management /

  • Engaging Employees in Benefit Choices /

  • Target specific benefits to make workforce more productive /

    • Childcare , wellness , employee assistance


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Issues in benefits planning

Issues in benefits planning

  • Employer preferences /

  • Employee preferences /

  • Administration /

    • Communicating benefits /

    • Relations with regulators , etc /

    • Cost analysis and control /

    • monitoring /


Flexible benefit plans cafeteria

Flexible benefit plans (cafeteria)

  • Workers get more value /

  • Helps make employees more aware of benefit costs /

  • Addresses different employees needs /

  • Maybe reduce some costs for benefits not needed /

  • Increased design and administrative /


Anatomy of a cafeteria benefit plan

Anatomy of a cafeteria benefit plan

  • Estimate fund available for each employee /

  • Core of mandatory benefits /

  • Nucleus of necessary benefits /

  • Optional benefits ( employee can choose to the maximum available to him /her) /

  • Decision on surplus availability /

  • Procedure for periodic review and change /


Managing benefits

Managing Benefits

  • Survey & benchmarks

  • Cost control

    • Managed care

    • Co insurance

  • Workforce demographics

  • Communicating with employees /


Guidelines for design

Guidelines for Design

  • Improved Communication Increases Saliency of Benefits

  • Employee Involvement in the Program Design

  • Linking Benefits ( where possible ) to the desired word behaviors


Wages v benefits

Wages v . benefits

  • Value the amount an individual is willing to pay for a goods or service

    • If price is too high , the worker wouldnt buy

  • Worker may be willing to pay more for the benefit than it costs (e.g. , group rates , taxes)

  • Willingness to trade wages for benefit

    • Salary = 55827-1836(health plan )

    • Salary with health plan $ 53991


Employees undervalue benefits

Employees Undervalue Benefits

  • Unaware of costs

  • Every benefit does not suit every worker


Benefit summary

Benefit Summary

  • Benefits usually do not motivate

  • Usually viewed an entitlement

  • Benefits may help attraction and retention

  • Often undervalued by employees

  • Communication important in the process


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Variable Pay Management


Objectives of this session1

Objectives of This Session

During this session , you will get an overall picture of following

  • Profit Sharing

  • Sales Commission

  • Gain Sharing


Objectives of performance based rewards

Objectives of Performance Based Rewards

  • To attract and retain high performing employees

  • To motivate employees to attain the goals of the organization

  • To increase employee satisfaction by ensuring individual equity


Conditions for pay to serve as a motivator of good performance

Conditions for pay to serve as a motivator of good performance

  • Pay should be desirable

  • Good performance should be perceived to lead to higher pay

  • Quality of performance should be related equitably to the amount of effort expended

  • Plusses of good performance should outweigh the minuses

  • Employees should see good job performance as the most appealing possible behaviors


Level of aggregation decision factors

Level of Aggregation Decision Factors

  • Technology

  • Information system

  • Size of the organization

  • Trust between employees and mgt


Individual performance

Individual performance

  • Technology less complex so as to permit independent job tasks

  • Info system allows objective measures of the individuals performance

  • Larger size organization usually non unionized

  • Employee trusts the supervisor


Group firm level

Group/firm level

  • Complex technology = tasks interdependent

  • Objective measures only at group level

  • Small size means individuals can influence the outcome of organization

  • Employees must understand & accept goals and have a high level of trust

  • Union must support the plan /


Approaches to relating pay to performance

Approaches to relating pay to performance

  • Automatic progression /

  • Pure merit /

  • Combination /

  • Bonus vs salary increase /

  • Size of the increase /

  • Openness of system /


The dimensions of performance

The dimensions of performance

  • Past performance /

  • Current performance /

  • Future performance /

  • Length of payout period /


Profit sharing plans

Profit Sharing Plans

  • Link C&B to firms performance /

  • Promote partnership / group incentive /

  • Encourage employees to care about the firms results /

  • Create retention by deferring payout /

  • Lower base pay as some is now variable /

  • Line of Sight issueCOMMUNICATION /


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