Unit 4 Session 4.pptx

Online MBA Semester I Organizational Behaviour and Human Resource Management Course code - (OMBA-103) Unit 4 : Lesson 4 : Organizational behaviour and Human Resource Management Part 2 PART 1: LEARNING OUTCOMES At the end of the session you will know about: 1.Development of a base pay system 2.Fact...

Online MBA Semester I Organizational Behaviour and Human Resource Management Course code - (OMBA-103) Unit 4 : Lesson 4 : Organizational behaviour and Human Resource Management Part 2 PART 1: LEARNING OUTCOMES At the end of the session you will know about: 1.Development of a base pay system 2.Factors determining job evaluation and compensation (Hay System) 3.Types of variable pay (Direct financial compensation) 4.Types of benefits (Indirect financial compensation) HRM Landscape HR Strategy & Planning Change Change Managemen Managemen tt Talent Talent Acquisition Acquisition Candidat Candidat ee Selection Selection HR Organizatio n Talent Talent Developme Developme nt nt Work Work Compensati Compensati on on & & Benefits Benefits HR - IT Social Media Learnin Learnin gg Retentio Retentio nn HR Controlling Equit y • Distributive Equity • One's performance reward as compared to others (Individual equity, External equity) • Procedural Equity (Internal equity) • Do procedures to determine compensation lead to fair results? Total Reward Base Pay Total Compensation Variable Pay Non Financial Reward Benefits Individual/ Organisation Group Salary Piece Rate Wages One-time Bonus Target Bonus Commission Profit Sharing Insurance Appreciation Contacts Stock Ownership Pension Stock Options Services Privileges Title Development of a Base Pay BasedSystem on job value and market pay survey Job Analysis Job Evaluation Pay Survey Pay Policies Pay Structures Job Appointme nt Individual Pay Implementati on Communicati onMonitoring Factors Determining Compensation Responsib ility Strategic Relevance Performa nce Qualificati on Market Company Success Cost of Living Civil Status Tenure Compensable Factors – Hay The System is used for Job System Evaluation Knowledg e Problem Solving Accounta bility Functional Expertise 8 Managerial Skills 7 Human Relation 3 Environment 8 Challenge 5 Freedom to Act 8 Impact on End Results 4 Magnitude 7 Σ Job Evaluation Example: Consulting Company VARIABLE PAY (Based on performance and company success) One-Time Bonuses A one-time bonus is a one-time payment that does not become part of the employee‘s base pay Can be used to reward employees for contributing new ideas, coping with critical challenges, acquiring new skills Bonuses usually recognize performance of both the employee and the company Bonuses provide great flexibility in rewarding valued behaviours in particular situations Piece-Rate System and Commission Piece-Rate System Commission Daily Wage Salary variabl e variabl e fi x fi x Daily Performance Revenue Target Bonus • Employee and supervisor agree on both individual targets and the relation between target achievement and target bonus • Employees can choose from different options reflecting different risk preferences • Primarily used for managers and senior employees Target Bonus (%) 140 B 120 A 100 80 60 60 80 100 120 Target Achievement (%) 140 Employee Recognition System • Every employee can acknowledge special performance of his/her colleagues with a gift • Based on his/her own budget (% of base pay) • To operate the system there is an internal kind of giftplatform in the intranet • The value of gifts received by an employee can serve as a basis for performance appraisal • It‘s a rarely used approach but its popularity increases Pay for Organizational Performance Profit Sharing Proportions of organizational profits are distributed among employees according to their base pay Employee Stock Ownership Giving employees stock ownership of the organization or the right to acquire stocks at a price below market. Employees must keep stocks for a specific period of time Employee Stock Options The right to buy (exercise) a certain number of stocks at a specific price Types of Benefits Security Unemployment compensation Life insurance Disability insurance Early retirement options Disability retirement benefits Pension plans Health Health care insurance Sabbatical Free tennis courts, fitness centre usage Medical care Psychiatric counselling Types of Benefits Financial Interest-free building loan Company credits Financial counselling Offerings Company car Private cell phone, laptop usage Free lunch Cafeteria and food services Child care; Company kindergarten Cost advantages for company products Company accommodation Flexible Benefits (Cafeteria System) A plan that allows employees to select the benefits Flexible Benefit Plan they prefer from groups of benefits established by the employer Reasons for using “Flex Plans” Perceived value of benefits depends on employees’ age, family status etc. By tailoring the right benefit package employees gain maximum value without additional costs on employer’s side Flex plan increases employees awareness of the costs and value of benefits offered Flexible Benefits (Cafeteria System) Problems with Flexible Plans Inappropriate benefits package choices Adverse use of specific benefits by higher-risk employees Administrative and communication efforts Benefit requests are hard to predict Reasons Why Companies Offer Benefits Benefits protect employees and their dependents from financial risks associated with illness, disability, and unemployment Most benefits are not taxed. For this reason, they might represent a more valuable reward to employees than an equivalent cash payment Benefits may contribute to attracting, motivating and retaining human resources Reasons Why Companies Offer Benefits Some benefits add value to the employee without additional costs for the employer. As such, benfits might serve as substututes for financial compensation Some benefits are required by law (involuntary benefits) Deferred Compensation Tax-deductible Pension) Does Money Motivate? The Candle-Problem 1 2 3 Compensation keeps the wheel of production moving