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STRATEGIC REWARD AND COMPENSATION SYSTEMS

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PRESENTATION PLAN

1. Deference between reward and compensation

2. Strategic importance of compensation system

3. Employee benefits and benefit programs

4. Job evaluation5. Class group discussion

tasks

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REMUNERATION SYSTEM

Usually money Incentive to drive

achievement Given for special

service A satisfying return,

result or profit Gratify It could also be

something not given in retribution for inferior/evil activities

Is a money value given in exchange for work performed

Used to: Attract and retain

talent Maintain morale or

level of satisfaction Encourage peak

performance Achieve equity –

Internal/External Encourage loyalty Modify practices

Reward Compensation 13

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PAY BASED COMPETENCES FOR HR1

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Communication Team work Problem solving Coaching/

mentoring Customer care Integrity/Honesty ICT Application Leveraging

diversity

Employee Benefits

Labour Relations

Job Evaluation Searching,

attracting and recruitment

Core Competencies

Technical competencies

Strategic Competencies

•Change management•Guiding and Influencing•Project management•Strategic thinking

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STRATEGIC IMPORTANCE OF COMPENSATION SYSTEM Recruit and retain qualifies employees. Employer may need to adjust and

respond to market forces. Morale and job satisfaction are affected

by compensation levels. There has to be a balance between what

the employer is willing to pay and what the employee feels she/he is worth and is indeed the market value worth.

Use it to recognize exceptional performance – bonus pay, commission, stock, profit sharing, gain sharing

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ENSURING BALANCE AND STABILITY IN REWARD AND COMPENSATION

HRM should ensure:Development of job descriptions for

every job holderAnalysis of all jobsEvaluation of all benchmark jobsBanding, ranking and grading of all

jobsFrequent salary surveys Development of policies, guidelines

and other SOPs.

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Microsoft Office Excel 97-2003 Worksheet

Microsoft Office Excel 2007 Workbook

Microsoft Office Word 97 - 2003 Document

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EMPLOYEE BENEFITS AND BENEFIT PROGRAMSBase payCommissionsOvertimeBonuses, profit sharing, merit payStock optionsAllowances: travel, meals, housingBenefits: education, medical,

insurance, leave, holidays, retirement, taxation

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JOB EVALUATIONDetermine relative worth of jobs in the organization

Verify by comparing with industry market data and adjust as may become necessary

Prepare a matrix organizational review

Prepare rankingPrepare a matrix organizational review

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Establish jobs that cross lines and departments (matrix reporting)

Compare the matrix with data from both the company structure and the industry market realities

Prepare flow charts of all ranks for each department for ease of interpretation and assessment.

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Present data and charts to the compensation committee for review and adjustment

Determine gradesEstablish the number of levels, junior,

intermediate and beginner for each job family and assign a grade to each level

Determine the number of pay grades, or monetary range of a position at a particular level, within each department.

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Establish grade pricing and salary range

Establish benchmark/key jobsReview the market price of benchmark jobs within the industry

Establish a trend line in accordance with company philosophy – where the organization wants to be in relation to salary ranges in the industry

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Salary structure determinationDetermine the difference between each salary step.

Determine a minimum and a maximum percent spread.

Slot the remaining jobs.

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Salary administration policyReview job descriptions.Verify the purpose, necessity for maintaining the position.

Review with the compensation committee for adjustment and mandate to roll out.

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Develop, document and communicate the general policy and execute

Develop and document specific policies for selected groups

Develop and document a strategy for merit raises and other pay increases, such as cost-of-living adjustment, bonuses, annual review, promotions

Develop and document procedures to justify the policy - performance appraisal forms, merit raise schedule

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Executive approval for salary structure and roll outDevelop and present cost impact

studies that project the expense of bringing the present staff up to the proposed levels

Present data to the compensation committee for discussion and approval

Present data to the senior executive for buy-in

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Communicate the final program to employees and managersPresent the plan to the compensation committee for feedback, adjustment, review and approval

Make a presentation to the executive team and managers for approval or change, and incorporate necessary changes

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Develop a plan for communicating the new program to employees, using slide shows or movies, literature, handouts

Make presentations to managers and employees then execute the program

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Design and develop detailed systems, procedures, and forms

Work with HR information systems staff to establish effective implementation procedures, to develop appropriate data input forms, and to create effective monitoring report for senior managers.

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Have the necessary forms printed

Develop and determine format specification for all reports

Execute test runs on the human resources information system

Execute the program

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Monitor the programMonitor feed backAdjust as necessaryIdentify challenges in the program and adjust accordingly

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CLASS GROUP DISCUSSION TASKS

Is job evaluation a value adding exercise or a academic waste of time indulgence. Critically review the question from strategic HR perspective.

In an organization where there is an effective compensation structure, review why SHR people should concern themselves with developing rewards and benefits systems?

Eagles Synergy3 Team-Six

Many SHR Directors benchmark best practices in developing compensation a compensation system. Develop a case for benchmarking HR best practices.

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READING ASSIGNMENT Read Course Text Chapter

Cha. 11 – Strategic Compensation Systems - Pg.390 – 429

Cha. 13 – Benefit Plans - Pg.463 - 508

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END OF SESSION 6

Thank you

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