What are the basic factors that determine the pay plan or compensation
(Direct financial payments and indirect financial payments such as insurance)
The factors:
- legal
- union
- collective labor agreements
- company strategy/ policy
- equity
The reward system should be aligned with strategy, this means…
Rewards should provide a clear match between each reward and the specific business goal
What is external equity?
How a job’s pay rate in one company compares to job’s pay rate in other companies
Internal equity
How fair the job’s pay rate is, when compared with jobs of same company
Individual equity
Fairness of an individuals’ pay compared with coworkers’ pay
Procedural equity
Perceived fairness of procedures to make decisions regarding allocation of pay
Types of equity
- external
- internal
- individual
- procedural
What 2 basic approaches do managers use to setting pay rates?
- market-based approaches
- job evaluation methods
What is job evaluation
Comparison of the worth of a job to another. It involves assigning values to each job = results on salary structure
What are the job evaluation methods to determine value of job? (COMPENSABLE FACTORS)and ways of rating it?
- greater qualifications
- more responsibilities
- more complex job duties
- ranking (by departments)(factor: job difficulty. Explain factors to evaluators) (several ratings, rating committee does average
- job classification (grading and grouping into classes )
- point method (evaluating several compensable factors)=results in quantitative view
What is the system to find the adequate salary structure ?
- job description
- job evaluation
- performance appraisal
-market-competitive pay (employers pay rates are competitive with those on labor market)
Pay
