7 MANAGING PEOPLE Compensation & Incentive Plans MATHISHA - - PowerPoint PPT Presentation
7 MANAGING PEOPLE Compensation & Incentive Plans MATHISHA HEWAVITHARANA Managing Human Resources MBA (Col),BBA Sp.Mktng (Col), PPG DIP. In Mktng (UK), MCIM (UK), Chartered Marketer 14 th edition (UK), Practicing Marketer (SL), ACMA, CGMA
PowerPoint Presentation by Charlie Cook The University of West Alabama
Bohlander • Snell
14th edition
MATHISHA HEWAVITHARANA
MBA (Col),BBA Sp.Mktng (Col), PPG DIP. In Mktng (UK), MCIM (UK), Chartered Marketer (UK), Practicing Marketer (SL), ACMA, CGMA CIMA (UK), DBF (IBSL), AIB (IBSL), MSLIM(SL),
Head of Branches - Siyapatha Finance PLC
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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employees and arising from their employment."
rewards that is equitable to the employer and employee alike. The desired outcome is an employee who is attracted to the work and motivated to do a good job for the employer whilst employer gets the best outcome for the incurred cost.
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growth while alligning employee efforts with the objectives of the
tool of securing a competitive advantage for the business.
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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Standard by which managers tie compensation to employee effort and performance & this refers to a wide range of compensation options
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Relationship between Pay Equity and Motivation
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A theory of motivation that holds that employees should exert greater work effort if they have reason to expect that it will result in a reward that they value / expect. Employees also must believe that good performance is valued by their employer and will result in their receiving the expected reward.
Pay-for-Performance and Expectancy Theory
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An organizational policy prohibiting employees from revealing their compensation information to anyone which Creates misperceptions and distrust of compensation fairness and pay-for-performance standards.
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the basis of weekly, or monthly pay periods
provisions
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Factors Affecting the Wage Mix
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The systematic process of determining the relative worth of jobs in
worth.
Directions: Place an X in the cell where the value of a row job is higher than that of a column job.
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A system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades.
A quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it.
A job evaluation system that seeks to measure a job’s worth through its value to the organization. Jobs are be valued relative to financial, operational, or customer service objectives of the organization.
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Job evaluation technique uses three factors to evaluate executive and managerial positions.
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surveying organization’s relevant labor market
workers
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Freehand Wage Curve
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Single Rate Structure
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Compensation for the different skills or increased knowledge employees possess rather than for the job they hold in a designated job category. Greater productivity, increased employee learning and commitment to work, improved staffing flexibility to meet production or service demands, and the reduced effects of absenteeism and turnover. Broadbanding Collapses many traditional salary grades into a few wide salary bands.
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Assessing the effectiveness of compensation system is important to linking compensation with corporate strategy;
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This displays the results for all the measures that a company uses to monitor and compare compensation among internal departments or units Creates a comparative tool within the organization that can reinforce desired outcomes that are unique to the company’s strategy
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Davis-Bacon Act 1931 Required minimum wage, prevailing wage rates, 1½
Walsh-Healy Act 1936 Required overtime payments after 8 daily or 40 regular work hours for workers on federal contracts. Fair Labor Standards Act (FLSA) 1938 (as Amended) Interstate commerce clause used to cover workers except agricultural and exempted (managerial) employees, child labor (under 16) is prohibited. Wage & Hour Provisions Minimum Wage & Pay Compression Chils Labour Provisions Exemption from Overtime Provisions Pay Equity Provisions
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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variable pay programmes of the entity and in general following types of incentive plans are practiced.
Individual Group Enterprise Piecework Team Compensation Profit Sharing Standard Hour Plan Scanlon Plan Stock Options Bonuses Improshare ESOP’s (Employee Stock Ownership Plans) Merit pay Lump sum Merit Pay Incentive Awards Sales Incentives
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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Performance
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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are essential for a successful Incentive Scheme.
the measurements.
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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In straight piecework method employees receive a certain rate for each unit produced. In differential piece work method once the production exceeds the standard output will receive a higher rate for their work.
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Incentive rates are set on the basis of predetermined “standard time” for completing a job. Early completion will enable the staff member to gain an incentive.
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This a lump sum incentive payment given to employees beyond their normal pay
immediately for an exceptional performance level with out waiting for the normal time line of announcing the company bonus.
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These are the increments offered by fixing to the base pay due to the exceptional performance of the employee. Organization will not be able to take the benefit back in future even though there will be a possibility of under performance in future..
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Organization may offer recognition to employees in terms of appraising their high performance and normally this can be done in regular time intervals . Organization may use a specific performance evaluation guideline to define the employee eligibility for the above recognition & reward.
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Sales staff is motivated through a Sales Incentive scheme by recognizing their additional efforts taken in driving a high sales volume. Organizations generally use following methods to activate above;
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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In order to appraise the collective combined efforts take by the employees, Team Compensation schemes are used. The contents of the Incentive Scheme will depend on the nature of the team, Nature of the task and other situational and contingency factors. Organizations generally use a “three step” approach in establishing a Team Incentive plan based on the output of employees.
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These are Organizational programmes designed to increase productivity
Involved employees will gain a share of the incremental positive result of the increased productivity of cost reduction. Productivity can be improved through; a) Getting higher output with a similar level or less input b) Gaining equal output with les input
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This is a specific type of a Gain Sharing Plan. Under this employees should offer innovative / creative ideas to improve productivity Employees must actively participate and get involved in activating the proposed productivity improvement initiatives.
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Improshare incentives / bonuses are paid on the overall productivity of the work team. Incentive is paid based on the productivity gains resulted from the reduction of time taken to produce a finished good.
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
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These are the incentives offered based on the overall profitability of the company. Employees are given the opportunity to increase their earning parallel to the profit growth of the company. Profit Sharing basis will definitely improve the overall scope of the employee in maintaining the performance level by sharing a feeling of business ownership.
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Under the Stock Option alternative, employees are offered the right of purchasing a specific number of shares of the company's stocks at a guaranteed attractive price. This method also creates a feeling of ownership to the employee which in return will motivate him to enhance his performance.
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ESOP is an employer established trust which holds corporate shares contributed by the company. Stock allocation will be done based on employee seniority and wages. At the time of retirement employees will be able to realize the benefits by disposing their own allocated shares.
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1. What is Compensation 2. Compensation Management 3. Incentive Plans 4. Strategic Reasons for Incentive Plans 5. Setting Performance Measures 6. Individual Incentive Plans 7. Group Incentive Plans 8. Enterprise Incentive Plans
PowerPoint Presentation by Charlie Cook The University of West Alabama
Bohlander • Snell
14th edition