Presentation on Internal Alignment
Transcript of Presentation on Internal Alignment
Occupational
Inter-Firm
Inter-Industry
Inter-Regional
Sector
Sex Differential
NonCompeting Causes of Difference in Wages
Equalizing
Market ImperfectionsNonEqualizing
Different Labor Quality
Issues in Strategic Approach to pay
Settings objectives
Internal Alignment
Internal Alignment, often calledinternal equity, refers to the pay relationships among different jobs/skills/competencies within a single organization.
Internal Alignment addresses the RELATIONSHIP inside the organization . The RELATIONSHIP form a pay structure that include Supports the Organizational Strategy Supports Work Flow Motivates Behavior
Engineer:- limited use of basic principles and concepts.
Develops solutions to problems .
Senior Engineer :- Full use of standard principles and concepts. Under general supervision.
Systems Engineer :- Wide application of principles and concepts plus working knowledge.
Lead Engineer:-regular use of ingenuityAdvisor Engineer:- contributes to the development Consultant Engineer
Pay structure refers to the array of pay rates for different work or skills within a single organization. The number of levels, the differentials in pay between the levels, and the criteria used to determine those differences describe the structure.
The The
# of levels of work criteria used to determine the levels
and differentials The
pay differentials between the levels
Equity
theory
This applies not only for internal but also external
pay structure Tournament
theory
When the prize differentials are larger, all
participants play better Institutional
model
Pay, benefits, opportunities, etc.
the same, more or less
OUTCOME INPUTSeffort, ability, experience etc.
?
OUTCOME INPUTS
A person evaluates fairness by comparing their ratio with others.
People judge the fairness of their compensationusing multiple reference points. A person evaluates fairness by comparing with others. Comparing their jobs pay against external pay
levels.
External
Equity:- It involves employee perception of compensation fairness to relative to those outside the organization. Choice of lag or market policy is important. fair relative to the market Pay level decision: What is our pay level policy
vis--vis our labor market competitors?
Internal
Equity:- It involves perceived fairness of pay differentials within an organization. fair relative to other jobs within the firm Pay structure decision: By default or design, firms
have a pay structure basis for structure?
Individual
Equity
fair relative to other people performing the same
or similar jobs within the firm Individual pay determination: What should drive individual pay differences? Do pay differences actually reflect differences in individual contributions?
Closely Tailored Jobs are well-defined Strict definition of tasks
vs.
Loosely Coupledloosely defined Obscure definition
Egalitarian Small number of pay levels Smaller pay differentials
vs.
HierarchicalLarge number large differentials
Job based structure
vs.
Person based
EXTERNALEconomic Pressures
FACTORSStakeholders
Govt. Policies
ORGANIZATIONStrategy
FACTORSHR Policy
Technology
INTERNAL STRUCTURELevels Differentials Criteria