Establishing Pay Plans by Dr. G C Mohanta

Establishing Pay Plans by Dr. G C Mohanta

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  Establishing Pay Plans Dr.G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt) Professor Al-Qurmoshi Institute of Business Management Hyderabad
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  Purpose of Compensation Wednesday,October 9, 2013 2 Motivate & Retain Staff Attract talent Contribution based Remuneration Administratively Efficient Reward Valued Behavior Effective Compensation Ensure Equity Institutionalized Processes Legal Compliance
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  Establishing Pay Plans Wednesday,October 9, 2013 3 Business GoalsBusiness Goals Business Strategy Business Strategy CEOCEO Compensation Philosophy/ activities serve Business Objectives Compensation Philosophy/ activities serve Business Objectives Business Strategy – This defines the direction in which organization is going in relation to its environment in order to achieve its objectives. Compensation Philosophy – Consists of a set of beliefs which underpin the reward/compensation strategy of the organization and govern the reward policies that determine how reward processes operate
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  Establishing Pay Plans Wednesday,October 9, 2013 4 Business GoalsBusiness Goals Business Strategy Business Strategy Compensation Plan Compensation Plan Compensation Strategy Compensation Strategy Non-Financial Rewards Non-Financial Rewards Org.StructureOrg.Structure CEOCEOHRHeadHRHead Compensation activities serve Business Objectives Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation Strategy – defines the intentions of the organization on reward policies, processes and practices required to ensure that it has the skilled, competent and well-motivated workforce it needs to achieve its business goals
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  Establishing Pay Plans Wednesday,October 9, 2013 5 Business GoalsBusiness Goals Business Strategy Business Strategy Compensation Plan Compensation Plan Compensation Strategy Compensation Strategy Non-Financial Rewards Non-Financial Rewards Org.StructureOrg.Structure CEOCEOHRHeadHRHead Compensation activities serve Business Objectives Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation strategy is periodically reevaluated and the Compensation plan periodically developed  A strategic perspective on compensation takes the position that how employees are compensated can be a source of sustainable competitive advantage
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  Establishing Pay Plans Wednesday,October 9, 2013 6 Business GoalsBusiness Goals Business Strategy Business Strategy Compensation Plan Compensation Plan Market SurveysMarket Surveys Compensation Strategy Compensation Strategy Job EvaluationJob Evaluation Unit InputsUnit Inputs Total remuneration Total remuneration Performance Management Performance Management Non-Financial Rewards Non-Financial Rewards Org.StructureOrg.Structure Performance linked Pay Performance linked Pay Individual PayIndividual Pay Contribution /outputs Contribution /outputs Internal EquityInternal Equity External EquityExternal Equity CEOCEOHRHeadHRHeadEmployeeEmployeeC&B/SMC&B/SM Pay levels / structures Pay levels / structures Compensation activities serve Business Objectives Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation Manager, along with team is responsible for carrying out compensation related activities Compensation Manager, along with team is responsible for carrying out compensation related activities
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  Establishing Pay Plans Compensation PlanDesign Job Analysis Job Description Market Wage Survey Job Evaluation Pay Structure 7
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  Job Analysis • Processto identify & determine particular job duties and requirements • Relative importance of duties • Judgments are made about data collected on job • Used in compensation to identify or determine: •skill levels •compensable job factors •work environment •responsibilities •required level of education 8
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  Job Description - Outputfrom job analysis used to develop job description and its specification - Summarize job analysis information in readable format - Provide basis for job-related actions - Identify individual jobs by providing documentation - Identify tasks, duties and responsibilities of a job - Describes what is done, why it is done , where it is done, and how it is done . 9
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  Job Evaluation The methodsand practices of ordering jobs or positions with respect to their value or worth to the organization. 10
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  Market Wage Surveys -Goal of market wage surveys is to find data from employers with whom organization competes for employees - Data collected & analyzed - Simplest analysis involves comparing going market rate & approximating this rate within organization's own pay structure 11
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  Methods of WageSurveys Generally three methods are employed for wage surveys; • Personal Interviews • Mailed Questionnaires • Telephone Inquiries 12
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  Pay Structure -Basis forestablishing pay plan is pay structure - Hierarchy of jobs with pay ranges and/or rates assigned - Pay structures designed so that greater the worth of a job, higher the pay grade and range 13
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  Objectives of PayPlans • Internal equity. • External equity (or competitiveness), • Individual equity, • Process equity, • Performance or productivity incentives, • Maximum use of financial resources, • Compliance with laws and regulations, and • Administrative efficiency 14