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7/27/2019 2_Establishing Strategic Pay Plans
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UNIT 3HR Subsystems III
Establishing strategic pay plansPay for performance & financial incentivesManaging global HR
Managing Strategic organisational Renewal
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Establishing strategic
pay plans
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What is Remuneration
Remuneration is the compensation anemployee receives in return for his or her contribution to the organisation.
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Components of RemunerationFinancial/Monetary
Wages & SalaryIncentivesFringe benefitsPerquisites
Non Financial/Non MonetaryChallenging job responsibilitiesRecognition of merits
Growth prospectsSupervisionWorking conditionsJob sharing
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Theories of Remuneration
Reinforcement & Expectancy TheoriesEquity Theory
Agency Theory
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Importance of IdealRemuneration System
Do you think people work mainly for pay?
Cons equ enc es of pay d iss at i s fac t ion - Desire for more pay
PerformanceStrikesGrievancesSearch for higher paying jobs
AbsenteeismTurnover
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Importance
Pay dissatisfactionLower attractiveness of job
Turnover Job dissatisfaction
Psychological withdrawalVisits to doctors
Poor mental health Absenteeism
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Factors influencing employeeremuneration
External factorsLabur Market
Demand for & supply
of Going rate of payProductivity
Cost of living
Labour unionsLabour lawsSocietyThe economy
Internal factorsBusiness strategyJob evaluationPerformanceappraisalThe employee
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Remuneration plans & businessstrategy
BusinessStrategy
MarketPosition &
Maturity
RemunerationStrategy
Blend of Remuneration
Invest togrow
Merging or growth rapidly
Stimulateentrepreneurship
High cash with averageincentives for individualperformance. Modestbenefits
Manageearnings protect
markets
Normal growthto maturity
Rewardmanagement skill
Average cash withmoderate incentives onindividual, unit, or
corporate performance.Standard benefits
Harvestearnings reinvestelsewhere
No real growthor decline
Stress on costcontrol
Below average cashwith small incentivetied to cost control.Standard benefits
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Devising a remuneration plan
Job descriptionJob evaluation
Job hierarchyPay surveyPricing jobs
Pay levelsDetermining pay grades
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Challenges of remuneration
Skill based payPay reviews
Pay secrecyComparable worthEmployee participation
Eliticism v/s EgalitarianismBelow market v/s above marketMonetarty v/s non monetary
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Concept of Wages
Wages represent hourly rate of payTypes of wages:
Minimum wageProviding sustenance of life + efficiency of worker
Fair wageEqual to the rate prevailing in the same trade or equal to
the predominant rate for similar work.Living wage
Higher than fair wages. Provides for bare essentials pluscomforts.
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Remunerating special groups
Team based payRemunerating professionals
Contract employeesExpatriates & Executives