Bài giảng QUản trị nguồn nhân lực part 7 eng

Human Resource Management
Session 7
DIRECT FINANCIAL
COMPENSATION

1


Primary Determinants of Direct Financial
Compensation
Organization
Compensation Policies
Organizational Level
Ability to Pay

Employee
Job Performance
Skills
Competencies
Seniority
Experience
Organization Membership
Potential
Political Influence
Luck

Job
Direct Financial
Compensation

Pricing

Labor Market
Compensation Surveys
Expediency
Cost of Living
Labor Unions
Economy
Legislation

Job
Job Analysis Job
Descriptions Job
Evaluation
2


Organization as a Determinant of
Direct Financial Compensation
• Compensation Policies
• Organizational Level
• Ability to Pay

3


Compensation Policies
• Pay leaders - Pay higher wages and salaries
• Market rate, or going rate - Pay what most
employers pay for same job
• Pay followers - Pay below market rate because

poor financial condition or believe do not
require highly capable employees

4


Ability to Pay
Organization’s
assessment of ability
to pay is important
factor in determining
pay levels

5


Compensation Surveys
• What are other firms
paying?
• Geographic area of
survey
• Specific firms to
contact
• Jobs to include
6


Cost of Living
• When prices rise
over a period of time

and pay does not,
real pay is actually
lowered
• Some firms index
pay increases to
inflation rate
7


The Economy
• Affects financial
compensation
decisions
• Depressed economy
generally increases
labor supply
• Cost of living often
rises as economy
expands
8


Job Analysis and Job Descriptions
• Before organization
can determine
relative difficulty or
value of jobs, must
first define content
• Done by job
analysis/job

descriptions
9


Ranking Method
• Simplest method
• Raters examine
description of each
job
• Jobs arranged in
order according to
value
10


Factor Comparison Method
• Five universal job factors Mental requirements, skills,
physical requirements,
responsibilities, and working
conditions
• Raters need not keep entire job in
mind as they evaluate; instead,
they make decisions on separate
aspects or factors of job
11


Procedure for Establishing Point
Method of Job Evaluation
Select Job Cluster

Identify Compensable Factors
Determine Degrees and Define Each
Compensable Factors
Determine Factor Weights
Determine Factor Point Values
Validate Point System
12


Job Evaluation Worksheet (500Point System)
Degree of Factor
Job Factor

Weight

1

2

3

4

105 140

Education

35%

35

70

Job Knowledge

25%

25

50

75

100

Contacts

18%

18

42

66

90

Complexity of Duties

17%

17

51

85

5%

5

10

15

Initiative

20

5
175
125

25

13


Job Evaluation Worksheet for
Administrative 2 Position

Degree of Factor
Job Factor

Weight

1

2

3

4

105 140

Education

35%

35

70

Job Knowledge

25%

25

50

75

100

Contacts

18%

18

42

66

90

Complexity of Duties

17%

17

51

85

5%

5

10

15

Initiative
Total Job Value

20

5
175
125

25
239
14


The Hay Guide Chart-Profile Method
•
•
•
•
•

Refined version of the point method
Know-how
Problem Solving
Accountability

Additional compensable elements, such
as working conditions
15


Job Pricing
• Placing dollar value on worth of job
• Pay grades - Grouping of similar jobs to
simplify pricing jobs
• Wage curve - Fitting of plotted points to create
smooth progression between pay grades
• Pay ranges - Minimum and maximum pay rate
with enough variance between to allow for
significant pay difference
16


Job Pricing (Cont.)
• Broadbanding - Collapses many pay grades
into few wide bands to improve effectiveness
• Single rate system - Pay ranges not appropriate
for some workplace conditions such as some
assembly lines
• Adjusting pay rates - Overpaid and underpaid
jobs

17


Scatter Diagram of Evaluated Jobs Illustrating Wage Curve, Pay

Grades, and Pay Ranges
Average Pay per Hour (Current Rates or Market Rates)
$19.80

5

18.50

4

17.20

3
ur
C
e
ag
W

15.90
14.60
14.00
13.30
12.90
12.00

100
1

Summary

Evaluated Points
0- 99
100-199
200-299
300-399

ve

200
300
Evaluated Points
2
3
4
Pay Grades
Pay Grade
1
2
3
4
5

Pay Ranges for Pay
Grades

2
1

400

500
5

Minimum
$12.00
13.30
14.60
17.20

Midpoint
$13.30
14.60
15.90
17.20
18.50

Maximum
$14.60
15.90
17.20
18
19.80


Average Pay Per Hour

Broadbanding and Its Relationship to Traditional Pay
Grades and Ranges
Grade 5
Grade 4

Grade 3
Band B

Grade 2
Grade 1
Band A
Low

High
Job Worth
19


Employee as Determinant of Direct
Financial Compensation
• Performance—Performance-based Pay
• Skills—Skilled-based Pay
• Competencies—Competency-based Pay
• Seniority
• Experience
• Membership in the organization
• Potential
• Political Influence
• Luck
20


Performance-Based Pay
• Merit pay - Pay increase given to employees based on
level of performance as indicated in appraisal

• Variable Pay - Compensation based on performance
• Bonus - Most common type of variable pay for
performance. One-time financial award based on
productivity
• Spot bonuses - Relatively small, gifts to employees for
outstanding work or effort
• Piecework - Employees paid for each unit they produce

21


Skill-Based Pay
Compensates on basis of job-related skills and
knowledge
• Employees and departments benefit when
employees obtain additional skills
• Appropriate where work tends to be routine
and less varied
• Must provide adequate training opportunities
or system becomes demotivator
22


Seniority
• Length of time employee has been
associated with company, division,
department, or job
• Labor unions tend to favor
seniority

23


Experience
• Regardless of nature of job, very few
factors have a more significant impact
on performance than experience
• Dot-com world has changed attitude
with regard to experience

24


Team-Based Pay
If team is to function
effectively, firms
should provide
reward based on
overall team
performance
25