Total Returns for work (Milkovich)

Transactional and Relational Returns

Pay Model (Milkovich)

Total Returns (SCB)

Total Returns for work (Milkovich)

1. Assess Total Compensation Implication- Competitive Dynamics- Culture / Values- Social and Political Context- Employees / Union Needs- Other HR System

2. Fit Policy Decisions to Strategy- Objectives- Alignment- Competitiveness- Contributions- Management

3. Implement Strategy- Design System to Translate Strategy into Action- Choose Techniques to Fit Strategy

4. Reassess the Fit- Realign as Conditions Change- Realign as Strategy Change

Stake holders’ Stake holders’ ViewsViews

Social’s ViewsSocial’s Views

Employees’ ViewEmployees’ View Managers’ ViewsManagers’ Views

ValidityValidityReliabilityReliability

AcceptabilityAcceptability UsefulnessUsefulness

TopTop

ManagementManagement

Middle ManagementMiddle Management

SpecialistSpecialist

WorkersWorkers

Strategic WorkStrategic Work(Value Creation)(Value Creation)

Tactical WorkTactical Work(Value Added)(Value Added)

Transactional WorkTransactional Work(Routine Job or (Routine Job or

non value added)non value added)

Employees’ performance depend on 3 factors :

1.) 1.) SS – Skills and ability to perform tasks.– Skills and ability to perform tasks.

2.) 2.) KK – Knowledge of facts, rules, principles and – Knowledge of facts, rules, principles and procedures.procedures. 3.) 3.) MM – Motivation to perform. – Motivation to perform.

Compensation Management FrameworkCompensation Management Framework

BusinessBusiness StrategyStrategy

HRHR StrategyStrategy

CompensationCompensationManagementManagement

- High Performance

PMS

Pay for Position- Pay Structure- Special group pay

- Low Cost

Pay for Person- Competency based Pay- Knowledge & Skill based Pay

- High Quality- Service

- Special pay for special competency- Potential based pay (Starting

rate)- High Effective- Process

Pay for Performance

- High Employee-

Satisfaction

- Merit increase- Bonus Incentive- Profit Sharing- Gain Sharing

Compensation-

ManagementCompensatio

n- Management

Compensation-

Management