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Steps in Compensation ManagementBY: raghu yadaganti | Category: Management | Submitted: 2012-11-03 00:21:16
Article Summary: "Compensation Management highlights the way how the employee is fairly compensated. Compensation refers to all forms of financial returns and tangible service and benefits employee receive a part of employmen.."
Steps in compensation Management
1. Job analysis (The systematic process of collecting information that identifies similarities and difference in the work.
2. Job description (Summary report that identify defines and describe the job as it is actually performed.)
3. Job evaluation (Compensation of jobs within an Organization)
4. Job structure (an ordering of jobs based on their content or relative value.)
5. Pay structure (specify the employer's competitive pay policy)
1. Job analysis: Job analysis is done for identifying the skills and experience required to perform the work clarifies hiring and promotion standards and identifies training needs. A Good Job analysis collects sufficient information to adequately identify, define and describe a Job. In job analysis we collects data related to job like title of the job, Department in which Job is located, Number of People who holds Job, Tasks, activities, constraint on action, performance criteria, critical incidents, demand, working conditions.
Data collected related to employee. Like professional Knowledge, manual skills, verbal skills, written skills, quantitative skills, mechanical skills, conceptual skills, managerial skills, leadership skills, international skills, and employee international Relationship with boss and Other superiors, peers& subordinates and employee external Relationship with suppliers, customers, Regulatory professional industry, community, union, employee group.
2. Job description: The information collected should be organized and summarized and documented. That summary of the Jobs is the Job description. The Job description provides a word picture of the job.
3. Job evaluation: Job evaluation is the process of systematically determined the relative wroth of Jobs to create a job structure for the Organization. They are different methods to evaluate the job. They are ranking, paired Comparison, Print method.
4. Job structure: The final result of the Job analysis, Job description Job evaluation process is a structure.
5. Pay structure : In designing pay structure it includes steps like specify the employer's competitive pay policy, define the purpose of the survey ,select relevant market competitors, design the survey, interpret survey results and construct the market line, construct a pay policy line that reflects external pay policy and balance competitiveness with internal alignment through the use of ranges flat rates. Pay structure Undertake training. Increase experience. Facilitate career progression. Facilitate performance. Reduce pay - related grievance. Reduce pay - related work stop page.
6. Compensation: Is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees.
Compensation is of 2 types:
1. Cash Compensation 2. Benefit compensation.
1. Cash Compensation :
c) Incentives a.) Base: Base wage is the cash compensation that an employer pays for the work performed. Base Wage tends to reflect the value of the work (or) skills and generally ignores difference attributes to individual employees.
b) Merit: Merit increases are given as increments to the base pay in recognition of post work behavior.
c) Incentives: Incentives differ from merit adjustments Incentives don't increase base wage. It must be re-earned each pay period. The potential size of the Incentive payment will generally be known beforehand.
2. Benefit compensation:
a) Income Protection.
B) Work life Balance.
a) Income Protection: Medical insurance, retirement programs, life insurance and saving plans and common benefits. Which help protect employees from the financial risk inherent in daily life.
B) Work life Balance: Programs that help employees better integrate their work and life responsibilities include time away from work vocation, Jury duty) access to service to meet specific needs (drugs consuming, financial planning, referrals for child and elders care) and flexible work arrangements (tele commuting, on-traditional schedule) and non paid time off, Responding to the changing demographics of the work force.
C) Allowances: like housing (dormitories, apartment) and transportation allowances are frequently part of the pay package.
About Author / Additional Info:
raghu yadaganti, assistant professor in marketing JNTU
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