Setting a pay level that is above, below or equal to the competitors

Determining the mix of pay forms relative to those competitors

Rating

Classification

Point Method

ACRONYM:  OHWH

1. Organization Strategy
2. Human Capital
3. Work Design (Technology)
4. HR Policies

Does it align with Business Strategy?

Does it align externally with economic & socio-potential conditions?

Does it align internally with the system?

Refers to work performed in a job or how it gets done

(Tasks, Behaviors, knowledge)

A series of classes covers the ranges of jobs.

Class descriptions are the labels a job description is matched to class descriptions to determine best fit.

Efficiency

Fairness

Ethics

Compliance

Guide the designs of pay systems

Serve as standards for judging the success of the pay systems

May be to develop or innovate new products

Job design or team training may be objective

Assessment of Total Compensation Implication

Business Strategy & Competitive dynamics

HR Strategy

Culture/Values

Social & Political context

Employee and union needs.

Refers to timeliness and the extent to which job information is up to date.  

Some jobs stay relatively stable over time, while others may change in important ways, even over short time periods

Something that counterbalances, offsets or makes up for something else

Refers to all forms of financial returns and tangible services and benefits employees as part of an employment relationship.

High Wages may increase efficiency and lower labor costs if:

• Attract higher quality applicants
• Lower Turnover
• Increase worker effort
• Reduce "Shirking" - Screwing around
• Reduce the need to supervise employees

• Economic Pressures
• Government Policies, laws & regulations
• Stockholders
• Cultures & Customs

Tie pay increases directly to performance

• Generally known beforehand
• can be tied to individual or group
• generally one-time payments
• Referred to as variable pay
• May be short-term or long term

JOB ANALYSIS

2 CRITICAL USES

1. ESTABLISHES SIMILARITIES & DIFFERENCES IN THE WORK CONTENT OF A JOB

2. HELPS ESTABLISH AN INTERNALLY FAIR AND ALIGNED JOB STRUCTURE

Process of Systematically determining the relative worth of jobs to create a job structure for the organization

Based on a combination of job content, skills required, value to organization, organizational culture and external market

Look at what people are doing and the expected outcomes

Relies on work content; task, behaviors, & responsibilities

MOST COMMON

Primary Method of Job Evaluation

Directly matching as many of your organization's jobs as possible to externaly pay survey's you use.

(EDCOE)

Establishing the purposes of the pay structure

Deciding on single or multiple pay plans

Choosing among alternative methods of evaluation

Obtaining the involvement of relevant stakeholders

Evaluating the usefullness of the results

Income Protection Programs

State Disability

Life Insurance

Savings Plans

Medical Insurance

Retirement Benefits

Work Life Balance

Allowances - Whatever is in short supply

Strategy

Technology

Human Capital

HR Policy

Employee Acceptance

Cost Implications

PAY MODEL IS CHARACTERIZED BY:

ACRONYM:  (OPT)

Compensation Objectives of the Pay System

Policy decisions underlying the systems Foundation

Techniques that link the policies to attainment of the objectives

• Consistently applied to all employees
• EMployees participated in process
• Appeals procedures are included
• Data used is accurate

Refers to the array of pay rates for different work or skills within an organization.

The # of Levels

The differential in pay between the levels

Criteria used to determine those differences

Performance is a function of

• Ability
• Motivation
• Opportunity

1. Conduct Job Analysis
2. Determine Compensable factors
3. Scale the factors
4. Weight factors according to importance
5. Communicate plan and train users, prepare manual
6. Apply to benchmark jobs

Legal & Regulatory Requirements

Cultural Differences

Changing Workforce Demographics

Expectations

How specifically tailored to the organization's Design and work flow to make the structure

How to distribute the pay throughout the levels in the structure.

How an organization does it work

Activities pursued to accomplish specific objectives for specific customers

TOTAL COMPENSATION STRATEGY 

STEP 2 

ACONYM = M (OACCM)

• Objectives
• Alignment
• Competitiveness
• Contributions
• Management

TOTAL COMPENSATION STRATEGY 

Step 3

Implement (I) 

Design System to Translate Strategy into Action

Choose Techniques to fit strategy

Smallest Unit of Analysis

Similar task can be grouped into a task dimension

Total Compensation Strategy

Step 4

Re-Assess (R)

Reassess

Realign as conditions change

Re-align as Strategy Changes

Assess Total Compensation Implications

Map a Total Compensation Strategy

Implement Strategy

Re-Assess 

USEFULLNESS REFERS TO THE PRACTICALITY OF THE

INFORMATION COLLECTED.  FOR PAY PURPOSES, JOB

ANALYSIS PROVIDES THE WORK-RELATED INFORMATION

TO HELP DETERMINE HOW MUCH TO PAY FOR JOB

EXAMINES CONVERGENCE OF RESULTS AMONG SOURCES OF DATA & METHODS

EXAMPLE:  IF SEVERAL JOB INCUMBENTS

REFERS TO WORTH OF WORK:

RELATIVE CONTRIBUTION TO THE ORGANIZATION's OBJECTIVES

Competition in labor market for people with various skills

Competition in the product and service market which affect the financial condition of the organization

Characteristics unique to each organization & its employees such as business strategy, technology, and productivity & experience of it's work force