ELEMENTS OF A TOTAL COMPENSATION PROGRAM: base pay and benefits, Individual merit and incentives pay, team or group incentives reward, organization-wide incentives, recognition programs.
FOR DETERMINING THE INTERNAL EQUITY: job analysis, job description, job Evaluation, job hierarchy and salary structure.
Mid point progression:(lower midpoint* percentage )+lower midpoint
Pay grade minimum: midpoint/(1+(0.5*desired ranges))
Pay grade maximum: minimum*(1+desired)
25th percentile: (Midpoint+pay grade minimum)/2
75th percentile: (Midpoint+pay grade maximum)/2
Grades: Group job Evaluation data on horizontal axis, all jobs considered substantially equal for Pay purposes placed in same grade, each pay grade has its own pay range and all Jobs in a single grade have same pay range, enhances ability to move people Among jobs within a grade with no change in pay. The number of pay grades Depends on the number of jobs, the org hierarchy and the reporting Relationships.
RANGES SUPPORT: Some Flexibility within controls, relatively stable organization design, recognition Via titles or career progression, midpoint controls and comparatives, controls Designed into system, give managers freedom guidelines, up to 150 percent Rage-spread.
-MAXIMUM: minimum*100%+range spread
BANDS SUPPORT: Emphasis On flexibility within guidelines, global organizations, cross-functional Experience and lateral progression, reference market rates, shadow ranges, Controls in budget, few in system, give managers freedom to manage pay and 100-400% spreads.
VARIABLE PAY PLANS: PURPOSES: strengthens The performance culture, communicates the values of the organization, Transmitting business objectives and stimulates the sense of belonging and Ownership; focuses where to direct efforts; related compensation and results Provided, offsetting mentality “now that occupy the post, I can relax”.
VARIABLE REMUNERATION PROCESS POSITIVE EFFECTS IN: Productivity/efficiency, financial outcomes, reduce costs, satisfaction of Clients, quality.
-Pay for individual performance: piecework rates, standard hour plans, Merit pay, individual bonuses, sales commissions…
-Pay for group performance: Gain sharing, bonuses, team awards.
-Pay for organizational performance: profit sharing, stock options and employee Stockownership plans
A balanced scorecard can be used as the basis for awarding incentive Pay. It also helps employees to understand and care about the organization’s Goals.