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Objective. Chapter 9 (Chapter 11) Establishing Rewards and Pay Plans. Presenter: Sayed Moammer Mazhary BBA (Marketing & Finance) MBA (HRM) HR Manager KIHE. Outline. Introduction to Chapter Compensation Administration Job Evaluation and Pay Structure. Introduction.

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Objective

Chapter 9 (Chapter 11)

Establishing Rewards and Pay Plans

Presenter:

Sayed Moammer Mazhary

BBA (Marketing & Finance)

MBA (HRM)

HR Manager KIHE


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Outline

  • Introduction to Chapter

  • Compensation Administration

  • Job Evaluation and Pay Structure


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Introduction

  • People do what they do to satisfy some need and they look for a payoff or reward.

  • The most obvious reward is pay, but there are many others, including:

    • promotions

    • desirable work assignments

    • peer recognition

    • work freedom


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Introduction


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Types of Reward Plans

Intrinsic versus Extrinsic Rewards

  • Intrinsic rewards (personal satisfactions) come from the job itself, such as:

    • pride in one’s work

    • feelings of accomplishment

    • being part of a work team


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Types of Reward Plans

Intrinsic versus Extrinsic Rewards

  • Extrinsic rewards come from a source outside the job

    • include rewards offered mainly by management

    • Money

    • Promotions

    • Benefits


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Types of Reward Plans

Financial versus Nonfinancial Rewards

  • Financial rewards include:

    • wages

    • bonuses

    • profit sharing

    • pension plans

    • paid leaves

    • purchase discounts

  • Nonfinancial rewards emphasize making life on the job more attractive; employees vary greatly on what types they find desirable.


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Types of Reward Plans

Performance-based versus Membership-Based Rewards

  • Performance-based rewards are tied to specific job performance criteria.

    • commissions

    • piecework pay plans

    • incentive systems

    • group bonuses

    • merit pay

  • Membership-based rewards such as cost-of-living increases, benefits, and salary increases are offered to all employees.


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Compensation Administration

  • The process of managing a compensation program so that the organization can attract, motivate and retain competent employees who perceive that the program is fair.


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Compensation Administration

  • Job evaluation – the process used to determine each job’s appropriate worth within the organization.

  • Based on job analysis information.


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Compensation Administration

Government Influence on Compensation Administration

  • Fair Labor Standards Act: 1938 act which requires

    • minimum wage

    • overtime pay

    • record-keeping

    • child labor restrictions


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Compensation Administration

Government Influence on Compensation Administration

Fair Labor Standards Act

  • Exempt employees

    • include professional and managerial employees

    • not covered under FLSA overtime provisions

  • Nonexempt employees

    • eligible for premium pay (time and one-half)

    • when they work more than 40 hours in a week


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Compensation Administration

Government Influence on Compensation Administration

  • Equal Pay Actof 1963 act requires that men and women hired for the same job be paid the same.


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Compensation Administration

Government Influence on Compensation Administration

  • Civil Rights Act:

    • broader than Equal Pay Act

    • prohibits discrimination on the basis of gender

    • used to support comparable worth concept

  • Salaries should be established on the basis of skill, responsibility, effort, and working conditions.


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Job Evaluation and the Pay Structure

Job Evaluation

  • Use of job analysis information to determine the relative value of each job in relation to all jobs within the organization.

    • The ranking of jobs

    • Labor market conditions

    • Collective bargaining

    • Individual skill differences


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Job Evaluation and the Pay Structure

Isolating Job Evaluation Criteria

  • Judgment is involved in defining what factors should be used to compare jobs.

  • Typical criteria:

    • mental requirements

    • supervisory control

    • complexity

    • physical demands

    • personal contacts


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Job Evaluation and the Pay Structure

Isolating Job Evaluation Criteria

  • Typically jobs are grouped according to type and compared within their group

    • clerical jobs

    • sales jobs

    • professional jobs


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Job Evaluation and the Pay Structure

Job Evaluation Methods

  • Ordering method: A committee places jobs in a simple rank order from highest (worth highest pay) to lowest.


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Job Evaluation and the Pay Structure

Job Evaluation Methods

  • Classification method:

    • Jobs are placed in classification grades

    • Compare their descriptions to the classification description and benchmarked jobs

    • Look for a common denominator such as skills, knowledge, or responsibility


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Job Evaluation and the Pay Structure

Job Evaluation Methods

  • Point method:

    • Jobs are rated and allocated points on several identifiable criteria, using clearly defined rating scales.

    • Jobs with similar point totals are placed in similar pay grades.

    • Offers the greatest stability.


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