5 Compensation and Reward Management

Compensation and Reward Management  Benefits
o Medical Insurance
What is Compensation?
o Retirement Job Analysis: process of getting all the information
 Compensation is the process of directly and about the job, details of job responsibility, skill, &
indirectly rewarding employees on a current or qualifications of physical & mental demands
COMPENSATION STRATEGIES
deferred basis, for their performance of Job Evaluation: systematic approach that use to
 Compensation Philosophies (help set the
assigned tasks. determine the relative value or diff job in
guidelines & principles & strategy that
organization use to design & administer organization, through this u will distinguish duties
Objectives of Compensation & responsibilities
compensation, how employee rewarded,
▪ Legal Compliance with all appropriate laws and Pay Survey: will serve as collecting data,
includes understanding competitive market)
regulations (its important to adhere in rules & compensation, & benefits
 Competency Based Pay (compensation
regulations and if u fail to comply it will lead to Pay Policies: set guidelines & principles to follow
strategized with the level of skills & knowledge
legal issues) Pay Structures: uses to determine how employees
& ability of employees to demonstrate
▪ Cost effectiveness for the organization are paid
competency)
(compensation strategies align w/ the budgetarian Performance Appraisal: compulsory that the
 Career Development (process of helping
constraint while still attracting & retaining top employee need to have feedback
employees advance and grow, includes
talent in the market, consider the cashflow of the Individual Pay: professional skills
training & mentoring, its important in every
organization) Implementation, communication, monitoring: how
employee to have a feedback)
▪ Performance enhancement for the organization u implement, includes transparency, salary change,
(compensation could enhance the performance of communication will help in understanding
DESIGNING EFFECTIVE COMPENSATION PROGRAM
the employee, rewarding the employee based on
individual performance, giving feedbacks)
Compensation Types
Direct (monetary rewards)
 Base Pay
o Wages Salary Structure
o Salaries
 Variable Pay
o Bonuses
o Incentives
o Stock Options
Indirect (promote work-life balance)

REWARD STRATEGY
LAWLER’S MODEL OF REWARD STRATEG
Extrinsic (external reward that inheritably related
to the past or activity itself, provided by external
sources such as employer, motivate or influence
behavior, it is typically tangible like salary &
bonuses)
COMPENSATION POLICIES AND PROCEDURES Financial – salary & bonuses, monetary,
▪ Know what the competition is doing and compensation, commissions
benchmark your structure to reflect competitive Non-Financial – recognitions, verbal praise, award,
practices for retention and recruitment purposes. certificate
▪ Salaries should reflect level of responsibility Intrinsic (promotion & advancement, career RELATIONSHIP BETWEEN HR & REWARD PRACTICES
employees may have in the organization. progressions, increase job responsibility, health & BUSINESS PERFORMANCE
▪ Form a compensation committee (preferably card, can provide short-term motivation,
represented by management and employees) intangible)
▪ Create a structure where salaries and any EFFECTIVE REWARD STRATEGY
increases reflect company performance as EXTRINSIC FINANCIAL REWARDS
espoused by the compensation committee.
▪ Develop and document a general company policy
and strategy for pay increases.
▪ Liaison with the compensation committee for HR Practices: its important for HR to know their
review, adjustments, and approval. functions. The HR recruitment and talent
1 – focuses on salary & wages, its individual reward acquisition that give effective practices in
Reward System Management at includes hourly wages, compensation recruitment, it is essential to attract right candidate
Rewards 2 – payment made by specific performance for the right job & skill that qualify work force &
 Saying ‘thank you’ for a job well done, and achievement such as sales target positively impact to the business performance by
thereby motivating the recipient to continue 3 – some organization offer this program that could contributing productivity and innovations in the
to do those things that benefit the distributed portion of the company profit among company. Business Performance: should have focus
organization employee on HR is training & development, invest in
4 – DOLE implementing guidelines that leave are employee development & enhance skill &
combine with sick leave performance.
5 – only 5 leaves for every employee Job Satisfaction: employee overall contentment w/
6 – one of the privileges for some employee their job & working environment, if they are
satisfied they tend to engage commitment and
productive, high job satisfaction lead to low organization must be aware of market dynamic
absenteeism & can also enhance customer to remain competitive
satisfaction  Talent management (attraction and retention
Employee Involvement/Communication: it of quality employees) (this will helping &
practices inclusion, being transparent, being developing retaining high quality employees)
engage in meeting the organization, u ensure that  Talent management policies (should guide
every employee are part of the organization that organizations in their effort to make their
will help them to be committed. workplace effectively
• To attract employees (through recruitment
or employer branding)
• To develop employees (through career
development program)
• Retain employees (through ensuring
competitive compensation & benefits)
• Motivate employees (through performance
management & recognition)
Reward to Business Performance

• Link between reward and business performance.
• Gain sharing
– A commitment to employee
involvement that ties additional pay to
Reward Policies improvements in workforce performance.
 Reward Policies provide guidelines for the • Profit sharing
implementation of reward strategies and the – A plan under which an employer pays to
design and management of the reward eligible employees, as in addition to their normal
process. remuneration, additional sums in the form of cash
or shares in the company related to the profits of
Retention policies the business.
 Capelli says “market determines the
movement of employees, not the company” (it
indicate that statement of labor are exert
significant influence of employee movement
including recruitment turnover & retentions,

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Compensation and Reward Management  Benefits

Indirect (promote work-life balance)

Reward to Business Performance

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