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8/2/2019 18. Pay Delivery Admin
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PAY DELIVERY ADMINISTRATIONPresented by:
Geetika Mittal
Neha Agarwal
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Why? To ensure an effective compensation program that develops internal
as well as external equity
To keep track of personnel cost change significantly affects firmsprofitability
Maintaining employee confidence in stability & fairness ofcompensation system
Though administration increase systems complexity , it makes pay
delivery more understandable Affect organizational budgets & makes a significant part of firmsfinancial resources
To ensure proper decisions are made among allocations to variouscompensation components
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The Budget Process Defines how the organization will spend its money for coming planned
period or plan year.
Written plans expressed in terms of dollars or some kind of units.
Includes : Capital budget and Operating budget
Consists of all kinds of staffing related expenses such as wages &
salaries,merit increases,pay structure adjustments ,benefits ,bonuses,overtime,incentives,allowances for contract or outside labor.
Merit or Salary Increase Budget largest share of increase in personnelbudget over preceding year
OperatingOfficer
DivisionManager
Division
Recommendations
Financialfeasibility
Controller
FinalApprovals
COO/CEO
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Compensation Committee Small select group of 3-5 directors
Significant influence on compensation received by seniormanagement
Review compensation opportunities made available to all employees
Exercises almost total authority over the compensation practices ofentire organization
Functions include : Periodically review & appraise the performance of CEO & top
managementReview compensation of competitive companies
Set compensation for CEO
Monitor executive perquisites and expenses
Review and approve personnel-related budgets
Report findings to the full board
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Others involved in Budget Decisions
ultimate responsibility for all decisions , final decisionmaker, reviews , makes recommendations & approvespersonnel budgets
CEO
Responsible for development of initial amounts to bedescribed in personnel budget
Develops projections of revenue , identify major costs, etc
Finance department/officeof controller
3-7 members , reviews the total budget & make allocationdecisions & allocations
Reviews past records , reviews recommendations, etc
Job evaluation committees
Salary admin committee
Includes various management representativesEnsures internal fairness among jobs by determining job worthacc. to some evaluation plan
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Administration of Pay3 steps:
Providing merit or salary increase budget data & information Adjusting pay structure in line with compensation policy, the
market, approved merit or salary increase budget for planned year
Moving employees in the pay grade relative to level of performance,seniority & location in the pay grade
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Typical Pay Adjustment & PromotionRecommendation ResponsibilitiesParty Involved Function
Immediate Supervisor Appraise performance; makes pay adjustments or promotionrecommendations
Reviewing manager ofmanagers
Reviews recommendations of subordinate supervisors & changes ,endorses , approves , or initiates action for pay adjustment &promotion
HR & Compensationdepartments
Reviews dept head recommendations for compliance with policy& budget, merit increase , promotion guidelines. Advises dept
heads on propriety of actions. Processes all necessary recordkeeping data and information
Senior Management Grants final approval for all compensation adjustments and jobchanges . Approves or denies requests that extend beyond policiesand guidelines . Approves policy changes.
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Using Merit Increase and Pay StructureSurvey Data Various surveys provides data on pay structure adjustments &
general increases.
Assist in development of organizational budget recommendations Validity guaranteed huge participant base
Two issues to be considered while designing pay structureAdjustment : Established Compensation policy & Amount ofapproved merit budget
Allocating Merit Budget funds Making any necessary changes in pay structure
Allocating the merit pool too various departments of organization
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Lag , Lead-Lag , Lead Pay Structure Policy
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Department Allocation of Merit Funds
Each department gets a % of merit pool equal to departmentspayroll as a % of total payroll of organiz.
Many organizations review pay structure practices of eachdepartment
Determination of compa-ratio of employees within department
Can determine the underpaid employees & hence larger percentageof merit pay to be allotted to them
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Adjusting pay of each employee Major issues to be considered:
Current level of performance Recognizes individual contribution
Tenure on present job
Seniority or length of service plan
One time seniority bonus
Common review date- date hired or promoted to present job
Date of last adjustment
Reason for last adjustment
Location in pay grade
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Annual Performance Bonus One time, lump-sum performance bonus
Less costly award
Paid once or twice in a year
Timings of Pay Adjustments
Pay Adjustments are given on Anniversary date orcommon review date
Time of year have critical effect on employees reaction
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Tools for Planning and Administration
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Compa-Ratio
Index number to do analysis of pay grade or salary range
The average of the employee's actual pay divided by the pay
range midpoint within the job grade Use
Pay grade analysis
Department analysis
Relating performance appraisal rating to pay adjustments
Merit Budget decisions
Pay structure analysis
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Control Point Pay policy rate that reflects relationship with the market
Procedure:
Evaluate the job and obtain a point score
Assign rate of pay to point score which can be paid to
proficient employee in job
Call the dollar rate the control point of job
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Range Index
Range function =
actual rate of pay minimum rate of pay
Maximum rate of pay minimum rate of pay
A range index of 0.50 means employee is at midpoint ofpay grade
Managers are informed about movement of employeethrough pay grade
Target Salary Combine current rate of pay, location of rate of pay and
level of performance
Budget and monitor the pay of an individual or all
employees
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Other Compensation Administration Issues
Guidelines for promotion and demotion adjustments
Available options for keeping employees whole
Attracting workers with knowledge and skills that are in shortsupply
Paying all employees a salary
Overtime for exempt employees
Adjusting pay for nonunion employees
Compensating temporary part- and full-time employees and regular
part-time employees
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Guidelines for promotion and demotion
adjustments
Promotion guidelines are set relative to
Individual location in the pay structure
Pay grade movement
Increase in point scores from current job to promoted job
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Available options for keeping employees
whole
Equal dollar pay adjustment
Cost of Living Adjustment (COLA)
Pay of employees is adjusted to meet inflationary pressure
at marketplace
CPI measures the relative change in goods and services
Area Wage Differential
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Attracting workers with knowledge and
skills that are in short supply
Possibility of bringing new employee at an advanced step
or location Causes a conflict with current employees
Solution
Add some responsibility and duties to the job
Separate pay structure for high demand jobs
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Paying all employees a salary
For fair treatment to all
Solution:
Keep a record of number of hours worked by eachemployee whether or not they are on salary
Disadvantage for pay-for-performance system
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Overtime for exempt employees
Overtime payments to employees who work for more
than 40 hours per week
Overtime payment may be
Straight hourly rate
Payment of time and a half
Compensatory time off
Year end bonus
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Differences In Compensation For Regular,
Temporary, Part- Time, And Full Time Employees
Regular Full Time employee hired and scheduled to
work for number of hours per week and weeks per year(generally 52 weeks)
Part Time Employees Scheduled to work from 20 to 32
hours per week (less than a full workweek)
Temporary Employees hired to perform assignments (
generally up to 6 months)
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Regular part time and temporary full time and part timeemployees differ from regular full time
Regular part time and temporary entry level rates andpay adjustments
Regular part time vacation, holiday and sick paybenefits on proportion to hours of work
Medical, disability and life insurance vary acrossorganizations
Retirement programs applicable to all who work at least1,000 hours
Second party employer pay the personnel cost oftemporary worker
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DUE PROCESS
Carry out legal proceedings to ensure individual rights in
accordance with established rules and procedures
Process to protect ownership rights to jobs
Process include:
Identifying and describing job requirements
Training employees
Assisting employees to set performance standards Active participation in performance appraisals
Rewards
Document Management
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How to Ensure Due Process in
Organization Process followed:
Auditing
Monitoring
Appeals
Auditing Report Information
Management gets the following information from Auditors reports
Purpose of the Audit
Units audited
Critical Issues or Problems that require further review
Overall results or summary of the findings of the audit
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Areas to be Audited
Completeness and accuracy of job description Adequacy and use of performance standards for
reviewing and rating employee performance Proper classification and grading of jobs
Compliance with ADA requirements Pay policy lines Relationship between pay adjustments and performance
and performance and current level of pay
Provision of pay adjustments Analysis of base pay, ratings and pay adjustments for anykind of illegal discrimination
Consistency of use of actual merit pay adjustments andfunds budgeted for merit pay
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Monitoring Report Information
Covers all parts of the units
Information gathered from monitors report:
Which individuals/units are not implementing compensationprograms as designed? Are Employees treated fairly?
Are job activities and performance standards accurately statedin understandable form
Are raters ratings being reviewed by higher-level managers?
Are performance appraisal schedules and standard operatingprocedures being followed?
Are jobs properly evaluated, classified and graded?
Are most appropriate methods and tools being used to identify
market levels of pay and other compensation opportunities?
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Appeals Process
Need of Appeal Process
There is a body of rules that must be followed
Each person has the right to voice his or her side
Decisions will be made on the basis of facts
Every effort will be made to treat everyone the same
Appeal is granted when there is:
Disagreement with received performance rating and pay adjustments Failure to receive requested transfer and promotions
Disagreement with evaluation of job
Dissatisfaction with Job Description and performance standards
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Guidelines to Due Process To treat employees equal and equitable, compensation
system must :
Follow set procedures
Be visible and known
Be predictable
Be institutionalized
Be perceived as equitable
Be easy to use
Be applicable to employees
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THANK YOU