Compensation Management (8520)

LEVEL: MBA (3.5)

SEMESTER: SPRING, 2020
ASSIGNMENT 1

NAME : SANIA SAAD

ROLL NUMBER : BU551482
Q1: Describe how you determine the appropriate method of job evaluation and the
procedure of doing so?

JOB EVALUATION

The procedure for weighing up the role of an employee and orienting it in the broader structure
of the company. The weight given to the role of an employee will then provide the basis for
determining its salary.

A career appraisal is a comprehensive way of assessing a worker 's value / worth in comparison
to other employment within an organization. It tries to make a systematic comparison between
jobs for the purpose of establishing a rational pay structure to assess their relative worth. Work
assessment needs to be differentiated from task analysis. Job analyzes are a structured way to
gather knowledge about a work. Any type of work assessment requires at least some basic job
research to include accurate details about the workers in question. Therefore, work assessment
starts with job analysis and finishes when the importance of a job is calculated in order to
achieve pay equality between workers and specific roles.

Three common methods of a job evaluation are the ranking method, the classification method
and the point method.

The Ranking Method

The system of classification is a traditional hierarchy within a company. Employees rank in the
order of duties and strength. Often this is seen in smaller firms with fewer than 40 employees.
The top of the hierarchy is considered to be the most important level; most authority is granted to
the individual who sits atop. Duties are less skilled when you go down in the ranking system and
workers are deemed less valuable or expendable. Usually, wages are created in order to be of job
value to the company.

The vice president of operations over the marketing director may have one example of the
ranking process. The sales manager could be the marketing director accompanied by a clerk and
a receptionist.
  It's the fastest way out.
 Putting it into practice is relatively economical.
 It takes less time, and requires less paper work.

The Classification Method

For each job the method of classification creates a grading system. The job position may be
generic, such as creative associate, but there are specific skills and specific duties for the person
filling this level of competence. You can advertise the job , for example, with a pay
commensurate with experience and education. Then, the classifications will divide this
knowledge and education into three levels: level one, level two and level three.

Level three with a four-year university degree and three years of related experience may be the
most qualified person. Level two can require a two year degree and two years of experience. The
level one candidate does not have a degree but has two years of experience in related jobs.

The Point Method

The point system is used in large organizations, and is usually more expensive to set up, but is
easier to implement after it has been established. Within a broad company it determines positions
similar to a ranking structure but through various types of skill sets. This method also takes into
consideration 11 to 28 factors which define a specific job's level of expertise, importance and
need. Knowledge and skills, for example, could be an important factor for a firm. The work
environment may be another, while communication skills are another.

The factor is classified, and the sum determines where a role or an individual sits in the
hierarchy. For starters, a senior manager will need to possess a high degree of knowledge and
communication skills. The point score, which could be 1,100 when counted. A clerk may not
require the same amount of expertise or skills and the point score for that work may be just 400.
The work is graded from there, with the upper-level positions earning a higher rating. The
manager will sit in Grade 10, while the clerk is in Grade 4.
PROCEDURE OF JOB EVALUATION

1. Preliminary Stage
This is the stage setting for the task evaluation program. At this point, the necessary
information about the current procedures is collected, decisions are made about the need
for a new program or modification of an existing one and a clear choice is made about the
type of program to be used by the organization.
2. Planning Stage
The assessment plan is being drawn up at this point, and advising the job holders to be
affected. Due arrangements are made for the creation of joint working groups and a
review of the list of workers to be evaluated.
3. Analysis Stage
This is the stage when collecting needed information about the work sample. This
knowledge acts as the basis for job assessment both internally and externally.
4. Internal Evaluation Stage
Next to the level of review is the period of internal assessment. The sample of benchmark
jobs is graded in the internal assessment process using the assessment scheme chosen as
drawn up at the planning stage. Jobs are then classified based on data awaiting market-
rate data collection. The relative value of workers is calculated by comparing the grades
among the workers.
5. External Evaluation Stage
Around that point in time, information is being gathered about market prices.
6. Design Stage
The pay structure is planned at this level , having ascertained grades for jobs.
7. Grading Stage
It is the stage where different workers are slotted into the pay system as set out in the
preceding stage 6.
8. Developing and Maintaining Stage
This is the final stage of a work appraisal program. At this point, wage structure
maintenance procedures are being established with a view to accommodating inflationary
pressures at wage levels, integrating new workers into the system and taking into account
changes in their roles and market conditions for the current employment.
Q2: Explain how one would make incentives part of the wage and salary program?

Q. 3 Explain how one would determine the role and size of compensation within human
resource function?

Compensation shall be the results or rewards that the employees receive for their work.
Compensation includes payments such as bonuses , profit sharing, overtime pay, sales
commission and recognition rewards etc.

Compensation may also provide non-monetary incentives such as a company-paid vehicle,

corporate-paid accommodation, and stock options. Compensation is a critical part of human
resource management which helps to attract employees and improve the productivity of the
organization.

From the point of view of a manager, the compensation plan given to the workers of a
organization is important not just because it saves money but also because it is likely to be the
primary reason that the workers work for the company.

Compensation packages with a decent pay and benefits will help attract and retain the best staff.
A fast workplace compensation survey is likely to show the assumption that salaries should be
equal and cover basic living costs, keep up with inflation, leave some room for savings (maybe
for retirement) and leisure, rise over time.

Even the compensation plan for a company tells a lot about the principles and cultures of the
business. Often workers look at what a corporation charges, rather than what it says. People act
in many ways as they are rewarded.

A compensation scheme is projecting what the firm expects from its employees. For example, if
quality is an important value, then some aspect of the total compensation system will enforce it.
Importance of compensation and benefits

There are two reasons why compensation and benefits are important.

First, without pay people won't be working for you. So it's illegal to ask them to work for you for
free, unless you're a non-profit organization. This is a social contract between the employer and
the employee, where the employee positions the job and this is compensated by the employer.
Compensation and benefits are a key component of that equation.

Second, benefits amount to 31.4 per cent of the cost of employing someone as of June 2019. It's
a considerable expense with a clear goal so businesses can't overlook that. Therefore it is so
important to pay careful attention to a fair compensation and benefits system.

What is pay and benefits determined by HR Departments?

Compensation rewards and job recognition is all about money. HR professionals working in this
field therefore need to be numerous, commercially aware and have detailed knowledge of the
financial laws and regulations. As well as analyzing the wage levels and benefits of their own
company, these people may be expected to examine and evaluate their competitors'
compensation rates.

It's not just about numbers, paychecks and payrolls though. These guys need excellent
communication skills to make recommendations on pension and insurance schemes for
employees, and to liaise with government departments and trade unions on issues of
compensation and benefits.

Although governments set the floor for salaries, known as minimum wage, it is usually safe for
employers to set their own wages. And you would be hard pressed to employ a minimum wage
accountant. You'll have to pay a market rate, instead.

In fact, these roles also have a strategic element, as the needs of the company and the employees
must be effectively balanced. In addition, the compensation and benefits are directly linked to
changes in the market. Consequently, within this department, tough decisions on compensation
and benefits adjustments can need to be made.
A market-rate can also be defined as a "going rate" and is the amount that people are willing to
pay for a specific good or service. Employees offer their services, and they fall within this
definition. There are market rates for each job but this can be difficult to ascertain since people
are rarely open regarding wages.

A compensation specialist will use salary surveys to help find a market rate for her. A salary
survey asks several businesses to share their job compensation details. The data is then
anonymised and re-sold to businesses. Under this way, an organization can decide that a junior
accountant's average rate is $X while a marketing manager's average rate is $Y.

Since jobs vary from business to business, you can't just look at the wage list and base all of the
wages on someone with that title's average pay. Within a Fortune 500 corporation a marketing
manager would have a somewhat different job description than a marketing manager in a 25-
person business.

Compensation managers should not only decide an appropriate salary for a role but also a pay
range. Since the candidates vary wildly, charging the same sum to different individuals doesn't
always make sense. One individual may have more experience and skills than another, so they
deserve a higher salary. Each range has a midpoint, which can be perceived as a comp-ratio. If
you have a 100 per cent comp-ratio, that means you’re at the midpoint of the salary scale.

In general, people who work with pay and benefits are responsible for creating plans for the
salaries, rewards and reward programs of an company. Might include:

 Salaries
 Bonuses
 Commission
 Company cars
 Pensions
 Life assurance
 Profit-sharing
 Dental plans
 Medical insurance
 Vouchers
 Capital bonds reward schemes.

Objectives of Compensation Policy

 Allure fitting staff.
 Keep workers trained.
 Develop reward structures that are equitable between differently valued jobs with logical
and fair pay relationships.
 Manage pay structures which show inflationary effects.
 Ensure that rewards and salary costs handle change in market rates or changes in
organization.
 Appraise success, obligation and commitment, and ensure advancement.
 Abide by statutory requirements.
 Maintain levels of wages and differentials under review, and monitor salary or benefit
costs.
Company success usually depends on the abilities and talents of the employees.
Managers of HR salaries and benefits will lead to growth and productivity by ensuring
that wage systems and benefit programs are competitive, and that they are structured and
managed to attract and maintain a high quality work force.
Q4

Q. 5 Outline in detail how to promote organization wide communication?

ORGANIZATIONAL COMMUNICATION
Organizational communication is characterized as the communication networks and
forms that exist within organizations such as businesses, non-profits and governmental
bodies. This covers both correspondence within an entity and communications directed
towards the public. Individuals trained in organizational communication may work in,
among other areas, human resources, employee training and management , public
relations, marketing, communications consulting, public affairs, media management ,
policy and advocacy, and research and instruction.
 Ways to promote organizational communication
Maintaining good communication with coworkers is something that each individual
employee must work on consistently, with the support of informed and involved leaders,
of course, but it is the leadership's responsibility to create an environment of effective
communication.
These tips can help to promote good contact within the company.
 Check in frequently with the staff
Checking in with staff is an easy way to ensure there is good contact. Schedule meetings
every few weeks or months, in person or online. Address ventures, leadership reviews
and forward-looking ideas. You may also arrange stay interviews, or create surveys of
employees. Users want to express their views and feelings. By respecting and listening to
your staff, you will improve on-the-job communication.
 Strategize a process of onboarding new employees
Knowing the ropes at a workplace can be challenging for new workers. The intranet is the
best place to bring together a uniform training plan for the staff that any new worker
completes. Make internal information available on your company intranet through
documentation and training videos. Also, make sure that your directory of employees is
up-to - date and that Q&A forums are packed with information. This way, new members
will find people and answers quickly, and you will keep communication flowing
effectively.
 Assess your current internal communication strategy
Improving something is not easy if you do not know what holds you back. Contact
techniques, such as email , telephone, texting, and in-person meetings, are appropriate for
different communication types. Of example, email is probably not the most effective way
to find the response to a prompt and urgent query. So many organizations are replacing
email with collaborative tools and intranet software. Create a list of your present forms of
internal communication and decide what is successful and what is not. That way, you can
find out where any improvements to how people interact in the workplace are needed.
 Implement intranet software
 Intranet software is a great tool for enhancing connectivity in the workplace. An intranet
is also a robust internal communications platform with easy-to-use collaboration tools,
including tools that streamline daily business processes. It empowers employees to
connect in a judgment-free environment, and share ideas. Intranet software is becoming
increasingly popular at an exponential rate and is only becoming more intuitive to
support every aspect of business.

 Make internal documents and knowledge easily available

Communication is not just the verbal interchange of information between individuals. It
is information too. Regardless of the job, record management and information sharing are
essential to everyday tasks and the workers need to quickly locate files, spreadsheets and
responses. Centralize all this information into the knowledge base for your business. For
boost communication in the workplace, you need to give priority to how workers find
what they need to do their jobs.
 Take advantage of social media
Social networking is a important help to companies that connect with clients. It enhances
internal communication, too. Encourage staff to "like" the company, comment and share
informative content. This sparks conversations, educates employees about something
they haven't known about, and strengthens morale. They should also incorporate your
social media networks into the intranet, so staff are always aware of what they share with
the public.
 Organize your departments
If it's difficult to find department details, you can't expect good communication on the
job. Using the intranet to break teams into digital workspaces, in order to unify people
and information in those divisions. This makes it easier for those searching for
department-specific information and also for administrators who can connect with
stakeholders immediately via a notification system by exchanging documents and
sending notifications. You want a simple program. Communication should be simple
between the directors and team leaders. And it should also be easy to access information ,
reports and people inside a department.
 Pinpoint the right time
 Always find the time to discuss matters with staff and customers. Information-" positive
"and" poor "alike-should be posted at a time when it is well received. For example, if an
employee is especially upset about a client error, use your influence to motivate and
reignite them, and save the constructive feedback for a time when it would be more
beneficial to them. You increase the probability of a self-sufficient "can do" spirit
amongst employees when you model opportunistic thinking.
 Determine the message sender
The sender should be seen by the target audiences as accurate, trustworthy and
convincing for any given message. They should be someone who can inspire action, and
who has ample knowledge of material to correctly answer questions. Of instance, the
project manager may be more closely associated with the clients' work - but with a major
announcement or request, the message may be more powerful and suitable of the
company's owner to express.
 Determine the feedback mechanism
This is a "feedback loop" for effective communication to ensure that messages are
received and acted upon. Be sure the processes are in place the guarantee important
contact and input in the bogs of email / phone calls / meetings that are taking place are
not lost. Add more check-ins or updates along the way if needed.