© 2010 McGraw Hill Ryerson 6-1 COMPENSATION Third Canadian Edition Milkovich, Newman, Cole.
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Transcript of © 2010 McGraw Hill Ryerson 6-1 COMPENSATION Third Canadian Edition Milkovich, Newman, Cole.
© 2010 McGraw Hill Ryerson
6-2
Many Ways to Create Internal Structure
Business and Work-Related Business and Work-Related Internal StructureInternal Structure
Person-based (Chapter 6)Job-based(Chapters 4-5)
Job analysisJob descriptions
Job evaluation: classes or compensable factors
Factor degrees and weighting
Job-based structure
PURPOSEPURPOSE
Collect, summarize work information
Determine what to value
Assess value
Translate into structure
Skills Skills CompetenciesCompetencies
Skill blocks Competency sets
Certification process
Skill analysis Core competencies
Competency indicators
Person-based structure
Person-based structure
© 2010 McGraw Hill Ryerson
6-3
link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that is relevant to the work
pay individuals for all the skills for which they have been certified regardless of whether the work they are doing requires all or just a few of those particular skills
very different approach compared to a job-based plan, which pays employees for the job to which they are assigned, regardless of the skills they possess
Skill-Based Pay Structures
© 2010 McGraw Hill Ryerson
6-4
Types of Skill-Based Pay Plans
1. Specialist: In-Depth
2. Generalist / Multiskill-Based: Breadth
© 2010 McGraw Hill Ryerson
6-5
Purpose of the Skill-Based Structure
support the strategy and objectives
support work flow
fair to employees
motivate behaviour toward organizational objectives
© 2010 McGraw Hill Ryerson
6-6
a systematic process to identify and a systematic process to identify and collect information about skills collect information about skills required to perform work in an required to perform work in an organization.organization.
Skill Analysis
© 2010 McGraw Hill Ryerson
6-7
Determining the InternalSkill-Based Pay Structure
Skill analysis Skill blocksSkill certification
Skill-based pay structure
Basic Decisions • What is the objective of the plan?• What information should be collected?• What methods should be used to determine and certify skills?• Who should be involved?• How useful are the results for pay purposes?
© 2010 McGraw Hill Ryerson
6-8
Determining the InternalCompetency-Based Pay Structure
Core competencies
Competency sets
Behavioural descriptors
Competency – based pay structure
Basic Decisions • What is the objective of the plan?• What information should be collected?• What methods should be used to determine and certify competencies?• Who should be involved?• How useful are the results for pay purposes?
© 2010 McGraw Hill Ryerson
6-9
Competencies
underlying, broadly applicable knowledge,
skills, and behaviours that form the
foundation for successful work performance
(exhibited by excellent performers more
consistently than average performers)
© 2010 McGraw Hill Ryerson
6-10
CORE COMPETENCY
COMPETENCY SETS
COMPETENCY INDICATORS
Taken from mission statement; for example, “business awareness.”
Grouping of factors that translate core competency into observable behaviour; for example, cost management, business understanding.
Observable behaviours that indicate the level of competency within a competency set. For example, “identifies opportunities for savings.”
Competency-Based Pay Terminology
© 2010 McGraw Hill Ryerson
6-11
Competency Analysis
a systematic process to identify and collect information about the competencies required for successful work performance
collect information on:personal characteristicsvisionary competenciesorganization-specific competencies
establish certification methods
© 2010 McGraw Hill Ryerson
6-12
Top Twenty Competencies• Achievement orientation
• Concern of quality
• Initiative
• Interpersonal understanding
• Customer service orientation
• Influence and impact
• Organization awareness
• Networking
• Directiveness
• Teamwork & cooperation
• Achievement orientation
• Concern of quality
• Initiative
• Interpersonal understanding
• Customer service orientation
• Influence and impact
• Organization awareness
• Networking
• Directiveness
• Teamwork & cooperation
• Developing others
• Team leadership
• Technical expertise
• Information seeking
• Analytical thinking
• Conceptual thinking
• Self-control
• Self-confidence
• Business orientation
• Flexibility
• Developing others
• Team leadership
• Technical expertise
• Information seeking
• Analytical thinking
• Conceptual thinking
• Self-control
• Self-confidence
• Business orientation
• Flexibility
© 2010 McGraw Hill Ryerson
6-13
Purpose of job- or person-based pay plans Internal pay structure to help achieve
organizational objectives Aligned with internal alignment policy Supports business operations
Managing the plan Manual Communication to foster employee
acceptance
Internal Alignment: Job- or Person-Based Structures
© 2010 McGraw Hill Ryerson
6-14
Avoiding Bias in Pay Structures
1. Define the compensable factors and scales to include the content of jobs held predominantly by women.
2. Ensure that factor weights are not consistently biased against jobs held predominantly by women. Are factors usually associated with these jobs always given less weight?
3. Apply the plan in as bias free a manner as feasible. Ensure that the job descriptions are bias free, exclude incumbent names from the job evaluation process, and train diverse evaluators.
© 2010 McGraw Hill Ryerson
6-15
Contrasting Approaches (1 of 2)
Job-Based Skill-Based Competency-Based
What is valued Compensable factors Skills Competencies
Quantify the value Factor degree weights Skill levels Competency levels
Mechanisms to translate into pay
Assign points that reflect criterion pay structure
Certification and price skills in external market
Certification and price competencies in external market
Pay structure Based on job performed/market
Based on skills certified/ market
Based on competency developed / market
Pay increases Promotion Skill acquisition Competency development
Managers’ focus Link employees to workPromotion and placementCost control via pay for job and budget increase
Utilize skills efficientlyProvide trainingControl costs via training, certification, and work assignments
Be sure competencies add valueProvide competency – developing opportunitiesControl costs via certification, and work assignments
© 2010 McGraw Hill Ryerson
6-16
Contrasting Approaches (2 of 2)
Job-Based Skill-Based Competency-Based
Employee focus Seek promotions to earn more pay
Seek skills Seek competencies
Procedures Job analysisJob evaluation
Skill analysisSkill certification
Competency analysisCompetency certification
Advantages Clear expectationsSense of progressPay based on value of work performed
Continuous learningFlexibilityReduced work force
Continuous learningFlexibilityLateral movement
Limitations Potential bureaucracyPotential inflexibility
Potential bureaucracyRequires cost controls
Potential bureaucracyRequires cost controls
© 2010 McGraw Hill Ryerson
6-17
Conclusion
internal pay structures need to be aligned with the organization’s business strategy and values, the design of the work flow, and a concern for the treatment of employees
techniques for establishing internally aligned structures include the job-based approach (job analysis and job evaluation) and person-based approaches (skill/competency-based plans)
these techniques can aid in achieving the objectives of the pay system when they are properly designed and managed