compensation mgt
TRANSCRIPT
DETERMINATION OF INTER AND INTRA
INDUSTRY COMPENSATION DIFFERENTIALS
In Intra Industry, we include
Size of IndustryFinancial successCompetitorsMarket PositionLeadershipOrganisational culture
Types of wage differentialsOccupational wage differentialsInter- Occupational wage differentialsInter firm differentialsSkill differentialsSex differentialsInter-Industry differentialsRegional wage differentialsSectoral differentials
Factor influencing wage differentialsDemand and SupplyBargaining PowerGovernment PolicyGoodwill of the CompanyCost of livingProductivity of labourComparative wagesAbility to PayJob Requirement
Principles of Wage Differentials
Commensurate with work
Equal pay for equal work
Wages to attract workers
Uses of wage differentialsTo induce employees to
change jobTo get employees to learn
and acquire new skillsTo shift employees from
declining industries to new industries
To get employees to accept more responsible position
Variants of people-based pay:
Skill-Based Pay
Knowledge-Based Pay
Credential-Based Pay
Feedback Pay
People-Based Pay
Competency-Based
Pay
Factors in Compensation Estimate
Value added FactorAbility-to-Pay FactorGovernment Wage
PolicyUnion PressureCost of living Factor
Hierarchy of JobsNon-Wage Benefit
factorSeniority factorHazard factorScarcity Factor
In Inter Industry, we include
Nature of IndustryKnowledgeTroublenceTechnology RequiredLevel of skills and
competenciesCompetitive strategy
Pay Secrecy or OpennessThere are degrees of pay secretiveness and openness
In many organizations, pay ranges and individual pay are open to the public and fellow employees (open system)
With the secret system, pay is known only to the employee, her/his superior, and HRM/payroll In some organizations, employees cannot discuss pay
matters and, specifically, their own pay Opening up a system has costs and benefits
To reduce the manipulative aura surrounding pay, a company must share pay information with employees
As firms post job openings, information on pay becomes a critical decision
When deciding on secrecy or openness: Determine what employees want to know about pay Decide if the information will harm or help the firm Weigh performance, interdependence, and causal
relationships
Pay Security
Current compensation can motivate performanceSo can the belief that there will be future compensation
security
Plans for providing this security include: A guaranteed annual wage Supplementary unemployment benefits Cost of living allowances (COLAs) Severance pay Seniority rules Employment contracts