Scribd
Upload
56 views31 pages

Remuneration Establishing Rewards and Pay Plans

This document discusses different types of reward and compensation plans. It describes intrinsic and extrinsic rewards, as well as various financial rewards like wages, bonuses, and benefits. Performance-based rewards linked to goals are also covered, including incentives for individuals and groups. Job evaluation methods are outlined for determining the value of roles. The document also examines supplemental compensation elements such as stock options, perks, and severance packages.

Uploaded by

Khrystyna Matsopa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
56 views31 pages

Remuneration Establishing Rewards and Pay Plans

This document discusses different types of reward and compensation plans. It describes intrinsic and extrinsic rewards, as well as various financial rewards like wages, bonuses, and benefits. Performance-based rewards linked to goals are also covered, including incentives for individuals and groups. Job evaluation methods are outlined for determining the value of roles. The document also examines supplemental compensation elements such as stock options, perks, and severance packages.

Uploaded by

Khrystyna Matsopa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 31

Remuneration

Establishing Rewards
and Pay Plans
lecture 3

Literature
Fundamentals of Human Resource
Management
DeCenzo and Robbins

Types of Reward Plans


Intrinsic rewards -
( -.
,
,
)
(personal satisfactions) come from the job itself,
such as:
pride in ones work
feelings of accomplishment
being part of a work team

Types of Reward Plans


Extrinsic rewards include rewards offered

mainly by management
Money
Promotions
Benefits

Types of Reward Plans


Financial rewards include:
wages
bonuses
profit sharing ( , )
pension plans
paid leaves ( )
purchase discounts

Types of Reward Plans


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

Types of Reward Plans


Performance-based rewards are tied to

specific job performance criteria.


commissions
piecework pay plans
incentive systems
group bonuses
merit pay

Types of Reward Plans


Membership-based rewards such as:

cost-of-living increases (
),
benefits,
salary increases are offered to all
employees.

Compensation Administration
The process of managing a compensation
program so that the organization can:
attract
motivate
retain
competent employees who
perceive that the program is fair.

Compensation Administration
Job evaluation the process used to
determine each jobs appropriate worth
within the organization.

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

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

Isolating Job Evaluation Criteria


Typically jobs are grouped according to
type and compared within their group
clerical jobs
sales jobs
professional jobs

Job Evaluation Methods


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

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

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.

Special Cases of Compensation


Incentive Compensation Plans
Incentives can be added to the basic pay
structure to provide rewards for
performance.

Incentive Compensation Plans


Individual Incentives include
merit pay plans (annual increase, based on
performance) -
piecework plans (pay based on number of
units produced typically in a specified time
period.) -
time-savings bonuses and commissions

Incentive Compensation Plans


Individual Incentives:
Work best where clear objectives can be set.

Incentive Compensation Plans


Group Incentives
Incentives can be offered to groups, rather
than individuals, when employees' tasks are
interdependent and require cooperation.

Incentive Compensation Plans:


Plant-wide Incentives:
Direct employee efforts toward organizational
goals (such as cost reduction)
Scanlon Plan - supervisor and employee committees
suggest labor-saving improvements
IMPROSHARE - formula is used to determine
bonuses based on labor cost savings

Paying for Performance


Pay is based on some measure of
performance.

Common performance measures


are:

piece-rate plans
(
,
,

Common performance measures


are:

gainsharing
- ;
- ;
- ,

,
;
-
,
.

Common performance measures


are:
wage incentive plans
profit sharing
lump sum bonuses -

Special Cases of Compensation


Paying for Performance
Competency-based compensation
Rewarded for skills, knowledge and behaviors

leadership
problem solving
decision making
strategic planning

Broad-banding - pre-set pay levels that


determine what people are paid based upon
the type and level of competencies they
possess.

Special Cases of Compensation


Team-Based Compensation
Incentives for empowered work teams to
exceed established goals and share equally in
rewards.
Depends on:
clarity of team purpose and goals
ability of the team to obtain needed resources
effective team communication skills and trust

Supplemental Financial
Compensation
Deferred bonuses ( ,
,
) paid to executives over
extended time periods, to encourage them to stay
with the company.
Stock options allow executives to purchase stock
in the future at a fixed price.
Hiring bonuses compensate for the deferred
compensation lost when leaving a former company.

Supplemental Nonfinancial
Compensation:
Perquisites
Perks () may include:

paid life insurance


club memberships
company cars
expense accounts
interest-free loans ( )
free financial
legal and tax counseling
mortgage assistance (
)

Supplemental Nonfinancial
Compensation: Perquisites
Golden parachutes protect executives when a
merger or hostile takeover occurs by providing
severance pay ( ) or a guaranteed
position.

,

,
.
,

You might also like