HRM Lecture 7 PDF

HUMAN RESOURCES MANAGEMENT COMPENSATION  COMPENSATION PACKAGE Package of all payments to the employee including: Salary Fixed regular sum paid monthly, or biweekly. Wage or hourly wage Fixed regular sum paid weekly or on worked hours basis. Commission...

HUMAN RESOURCES MANAGEMENT COMPENSATION  COMPENSATION PACKAGE Package of all payments to the employee including: Salary Fixed regular sum paid monthly, or biweekly. Wage or hourly wage Fixed regular sum paid weekly or on worked hours basis. Commission Extra payment for every sale made (fixed percentage)  Rewards or bonuses Extra pay for meeting certain criteria or achieving pre-determined goals. Profit-sharing Annual payment to employees based on the organization profits earned. Fringe Benefits Paid days or services, such as sick leave, paid vacation time, and health club memberships.  Medical benefits health and dental care benefits for employees. In addition, disability and life insurance benefits are offered. Retirement benefits Goals of compensation and benefits packages: Attracting people (at time of recruitment) Elevate the morale of the employees Satisfaction among employees Increase loyalty in the organization (avoid loss of trade secrets) Goals of compensation and benefits packages: Facilitates organizational growth and expansion Motivation and retention of current employees (happy and motivated employees, directly and indirectly, save money). There are various methods and approaches to motivate and retain your employees, such as a good work atmosphere, a reasonable workload to achieve work-life balance, continuous communication, compensation packages (bonuses, commission), and training and developing your employees.  Avoid turnover (voluntary/involuntary): to lose your employee either by voluntary turnover or termination. However, the organization will and should expect to bear costs of turnover that could be one, some, or all of the following:  Developing a Compensation Package How to determine a good compensation package: Job evaluation The process of determining the relative worth of jobs or positions in an organization to determine the pay structure. There are several approaches for job evaluation Job ranking system Where jobs are listed and ranked according to their importance to the organization.  Job evaluation Paired comparison Where each job is compared to other jobs in a ranking system (according to each job importance) and the overall score is computed for each job.  Pay grading After job evaluation the pay scale or range is to be set in a step called pay grading. Several types of pay systems include: Skill-based pay Broad-banding Variable pay system (pay basis + variable pay based on goals attainment)  Pay grading Other pay considerations include the size of the organization (global, regional, or national), and HR managers should always be aware of what others are paying in the industry by performing market surveys.