Compensation: systematic approach to providing monetary values to employees in exchange for work performed. • Goals of compensation plans: • To attract and retain employees who will contribute to the organization’s success. • To make employees feel that they are compensated / rewarded fairly or equitably for their efforts and contributions to an organization’s success.
pay rates. 2. Link compensation to organizational objectives. 3. Establish the pay-for-performance standard. • Expectancy theory and pay 4. Determine the wage mix • Job evaluation systems ESTABLISHING STRATEGIC PAY PLAN
forms of pay or rewards going to employees and arising from their employment. • Direct financial payments: pay in the form of wages, salaries, incentives, commissions, and bonuses. • Indirect financial payments: pay in the form of financial benefits such as insurance. ESTABLISHING STRATEGIC PAY PLAN
components: evaluating the individual components of the compensation program to see whether they advance the needs of employees and the goals of the organization. • The employer’s basic task is to create a bundle of rewards—a total reward package—specifically aimed at eliciting the employee behaviors the firm needs to support and achieve its competitive strategy. • The HR or compensation manager will write the policies in conjunction with top management, in a manner such that the policies are consistent with the firm’s strategic aim. For instance: • The rate of pay within the organization and whether it is to be above, below or at the prevailing market price. • The ability of the pay program to gain employee acceptance while motivating employees to perform to the best of their abilities. • The pay level at which employees may be recruited and the pay differential between new and more senior employees. ESTABLISHING STRATEGIC PAY PLAN
standard by which managers tie compensation to the employee effort and performance. • Varieties: merit-based pay, bonuses, salary commissions, job and pay banding, team/group incentives, and gainsharing programs. • Purpose: to differentiate between the pay of average performers and that of outstanding performers. ESTABLISHING STRATEGIC PAY PLAN
employee’s perception that compensation received is equal to the value of the work performed. ESTABLISHING STRATEGIC PAY PLAN My input/output ratio Comparison person’s input/output ratio My input/output ratio Comparison person’s input/output ratio My input/output ratio Comparison person’s input/output ratio Inequity (Feelings of being underpaid) Equity (Feelings of being paid fairly) Inequity (Feelings of being overpaid) Dong more, receiving less Dong same, receiving same Dong less, receiving more
PLAN Compensation strategy of organization Worth of job Employee’s relative worth Employer’s ability to pay Conditions of the labor market Area wage rate Cost of living Collective bargaining Legal requirements WAGE MIX Internal factors External factors
the systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization. • Several methods available: 1. Job ranking system 2. Job classification 3. Point system ESTABLISHING STRATEGIC PAY PLAN • Method 1: Job ranking system • Ranking each job relative to all other jobs, usually based on some overall factors. • Steps involved: obtain job information, select and group jobs, select compensable factors, rank jobs, and combine rating. • Compensable factor = A fundamental, compensable element of a job, such as skills, effort, responsibility, and working conditions.
PLAN • Method 2: Job classification • Raters categorize jobs into groups or classes of jobs that are of roughly the same value for pay purposes. • Classes contain similar jobs. • Grades are jobs that are similar in difficulty but otherwise different. • Jobs are classed by the amount or level of compensable factors they contain.
PLAN • Method 3: Point method • A quantitative technique that involves: 1. Identifying the degree to which each compensable factors are present in the job. 2. Awarding points for each degree of each factor. 3. Calculating a total point value for the job by adding up to the corresponding points for each factor. • Requires the use of a Point Manual
• Medical, prescription drugs, dental, and vision • Wellness programs: • Many employers are starting to see the value from incorporating wellness initiatives into their work places such as disease management, health risk assessments, and fitness programs. • Although it is believe that wellness programs can improve productivity/reduce absenteeism/increase presenteeism, it is difficult to measure the Return on Investment (ROI) of these programs. • Welfare benefits: • Provide safety and monetary security beyond health • Basic insurance, short-term disability (STD) insurance, and long-term disability (LTD) insurance. • Retirement benefits? • Vacation: • May be provided under separate program or combined under a PTO (paid time off) plan with sick days.
• Industrial relations is the relationship between an employer and his employees, especially where the employees are members of a trade union. • Also known as employment relations and labor relations. • The focus of industrial relations: 1. Relationship between employer and trade unions. 2. Laws relating to employment. 3. Disciplinary procedures and termination of employment.
Can you name the statutory law for each of the following categories? • Laws providing basic benefits and rights for employees and employers • Laws establishing a framework for the industrial relations system • Social security laws • Safety laws • Laws restricting employment of non-Malaysians
human resources important? • The global HRM challenges: 1. Deployment – the extent to which it is easy to get the right skills to where we need them, regardless of geographic location. 2. Knowledge and innovation dissemination – spreading state-of-the-art knowledge and practices throughout the organization regardless of where they originate. 3. Identifying and developing talent on a global basis – to what extent can HR effectively identify and develop a talent’s abilities in a global organization. 4. Managing cultural and language orientation and training: • Ethnocentric – the notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host country has to offer. • Polycentric – a conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market. • Geocentric – the belief that the firm’s whole management staff must be scoured on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates.
operating worldwide: • International organization – an organization that sets up one or a few facilities in one or a few foreign countries. • Multinational company – an organization that builds facilities in a number of different countries in an effort to minimize production and distribution costs. • Global organization – an organization that chooses to locate a facility based on the ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage.
in the global context: • Culture – a community’s set of shared assumptions about how the world works and what ideals are worth striving for. • Cultural characteristics influence the ways members of an organization behave toward one another as well as their attitudes toward various HRM practices. • Cultural differences can affect how people communicate and how they coordinate their activities.
of Culture 1. Individualism/Collectivism Describes the strength of the relation between an individual and other individuals in the society. 2. Power Distance Concerns the way the culture deals with unequal distribution of power and defines the amount of inequality that is normal. 3. Uncertainty Avoidance Describes how cultures handle the fact that the future is unpredictable. 4. Masculinity/Femininity The emphasis a culture places on practices or qualities that have traditionally been considered masculine or feminine. 5. Long-term/Short-term Orientation Suggests whether the focus of cultural values is on the future (long term) or the past and present (short term).
in the global context: • Organizations must prepare managers to recognize and handle cultural differences. • Recruit managers with knowledge of other cultures • Provide training • For expatriate assignments, organizations may need to conduct an extensive selection process to identify individuals who can adapt to new environments.
Expatriates or expats are noncitizens of the countries in which they arte working. • How to select a candidate for oversea assignment? 1. Competency in the employee’s area of expertise 2. Ability to communicate verbally and nonverbally in the foreign country 3. Flexibility, tolerance of ambiguity, and sensitivity to cultural differences 4. Motivation to succeed and enjoyment of challenges 5. Willingness to learn about the foreign country’s culture, language, and customs 6. Support from family members
Why expatriate assignments fail? 1. Personality 2. Personal intentions 3. Family pressures 4. Inability of the spouse to adjust 5. Inability to cope with larger overseas responsibility 6. Lack of cultural skills
in International Assignee Success, and Their Components I. Job Knowledge and Motivation Managerial ability Organizational ability Imagination Creativity Administrative skills Alertness Responsibility Industriousness Initiative and energy High motivation Frankness Belief in mission and job Perseverance II. Relational Skills Respect Courtesy and fact Display of respect Kindness Empathy Non-judgmentalness Integrity Confidence III. Flexibility/Adaptability Resourcefulness Ability to deal with stress Flexibility Emotional stability Willingness to change Tolerance for ambiguity Adaptability Independence Dependability Political sensitivity Positive self-image IV. Extracultural Openness Variety of outside interests Interest in foreign cultures Openness Knowledge of local language[s] Outgoingness and extroversion Overseas experience V. Family Situation Adaptability of spouse and family Spouse’s positive opinion Willingness of spouse to live abroad Stable marriage Source: Adapted from Arthur Winfred Jr., and Winston Bennett Jr., “The International Assignee: The Relative Importance of Factors Perceived to Contribute to Success,” Personnel Psychology 18 (1995), pp. 106–107.
S. A., & Konopaske, R. (2017). Management: Leading & collaborating in a competitive world. 12th edition. McGraw- Hill. • Snell, S. & Bohlander, G. (2007). Human resource management. Thomson. • Relevant Internet resources.
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