Final ReportHRM

Submitted To Mam.Humaira

Submitted byHina MubeenMBA 2nd“A”

[Establishing rewards & pay plans]Reward, objectives of rewards, classification of rewards, HR responsibilities-compensation, reward system, major phase of compensation management, key factors influencing the pay.

Establishing Rewards & Pay Plans

Reward:An employee reward system consists of an organizations integrated

Policies Processes Practices

For rewarding its employees in accordance to their

Skills Competence Market worth

OBJECTIVES OF REWARDS

ORGANISATION POINT OF VIEW

To drive desired behavior in employees. To attract, retain and motivate high quality people. To communicate organization values. Encourage behaviors that will contribute to

achievement of organization objective. Support quality, customer care, team work and

innovation.

EMPLOYEES POINT OF VIEW

Treat them as stake holders To meet their expectations that they will be treated

with equality, fairly and consistently.

Classification of rewards:There are some ways to classify rewards. Those are given bellow:

Intrinsic or extrinsic Financial or non financial Performance base or membership basedintrinsic/extrinsicintrinsicParticipation in decision makinggreater job freedom more responsibilitymore interesting workoppertunity for personal growthdiversity of activities

financial/non financial financialincentive planscommissonallowancesinsurance covermerit pay plansbonuseslabour marketing adjustmentsnonfinancialpreferred office furnishingpreferred lunch hourspreferred work assignmentsown secretaryimpressive titlebusiness card

HR responsibilities/Compensation:

In organization the rewards are established by HRM department. The system called as compensation program.

Reward system:

Every organization has its own ways to reward its employees. The reward system of any organization consists of financial rewards & employee benefits which together comprise total remuneration of employee. The system also incorporates nonfinancial rewards (recognisation, praise, achievement, responsibility & personal growth) & in many cases, performance management process.

Total earning = basic pay + additional payments

Employee benefits = pension, sick pay, insurance cover, company cars

Total remuneration = all cash payments + benefits

Non financial rewards = recognisation, praise, achievements, responsibility, personal growth

Pay levels = rates of pay for a particular job

Pay structure /pay plan = pay level for individual job

Reward system

Phases of reward/compensation management:

pay structurejob evaluationpay structurepay srtucturetotal rewardtotal reward

Phases of reward/compensation management:

Major phases of reward/compensation managementPHASE 1Job analysisidentify and study job phase 2job evaluationinternal equityphase 3wage &salary surveyexternal equityphase 4pricing the jobmatch internal & external worth

I. Job analysis:The process that identifies and studies the job in the organization & provides information about jobs currently being done & the knowledge, skills, & abilities that individuals need to perform the job adequately.

II. Job evaluation:It is the process used to check the internal worth of the job. It seeks to rank all the jobs in the organization & place them in a hierarchy that will reflect the relative worth of each. Job evaluation assumes normal performance of the job by a typical worker. The process ignores individual abilities or the performance of the jobholder. This is used to determine the pay structure.

III. Wage & salary survey:These surveys used to gather factual data on pay practices among firms and companies within specific communities. This process determines the equity and the worth of the job in the market.

IV. Pricing the job:The process is used to set the pay for a particular job by matching the internal & external equity of the job and employee.

Methods of job analysis:Observation methodIndividual interview methodGroup interview methodStructured questionnaire methodTechnical conference method

Diary method Observation method: In this method job analyst watches employees directly

or reviews films of workers on the job. This method requires that the entire range of activities be observed that is impossible for many jobs.

Individual interview method: In this method a team of job incumbents is selected &

exclusively interviewed. The result of each interviewed combined together into a single job analysis. This method is effective for assessing what a job entails, & involving employees in the job analysis is essential.

Group interview method: The group interview method is similar to the individual

interview method except that a number of job incumbents are interviewed simultaneously. Accuracy increased in assessing jobs, but group dynamics may hinder its effectiveness.

Structured questionnaire method: In this method, workers are sent a specifically

designed questionnaire on which they check or rate items on their job from a long list of possible task items. This technique is excellent for gathering information about jobs.

Technical conference method: This method uses supervisors with extensive

knowledge of the job. Here, specific job characteristics are obtained from the “experts.”

Diary method: This method requires the incumbents to maintain their

diaries of daily work activities. The diary method is the

mot time consuming method & may have to extend over a long time period. That increases the cost of using it that is why it is less preferable.

Methods of job evaluation:There are three basic methods of job evaluation currently in use;Ordering methodClassification methodPoint method

Ordering method:The ordering method requires a committee to arrange jobs in a simple rank order, from highest to lowest. The committee is composed of both management & HR.The committee merely compares two jobs & evaluates which one is more important, or more difficult to perform. Then they compare another job with the first two, and so on until all the jobs have been evaluated & ranked. There is some limitation to this method. The most obvious one is its sheer inability to be managed when there is large number of jobs. It is virtually impossible to do ranking correctly.Classification method:The classification method was made popular by the U.S Civil Services Commission, now the Office of Personnel Management (OPM). It requires that classification grades be established & published in General Schedules.

These classifications are created by identifying some common denominators with the desired goal being the creation of a number of distinct classes or grades of jobs. Common denominators are skills, knowledge, responsibilities. Once the classifications are established, they are ranked in an overall order of importance according to the criteria Chosen, & each job is placed in its appropriate classification. This latter action is generally done by comparing each position’s job description against the classification description & benchmarked jobs.

Point method:This process includes the breakdown of jobs into various identifiable criteria. These criteria may be skill, effort, & responsibility. & then allocate the points to each criterion. Depending on the importance of each cri to performing the job, appropriate weights are given, point are summed, & jobs with similar point totals are placed in the similar pay grades. The point method offers the greatest stability of the four approaches presented. Jobs may change over time, but the rating scale established under the point method intact.

Wage & salary survey:Once the job evaluation completed, the data gathered become the nucleus for the development of organization’s pay structure. That requires the external equity information to decide & finalize the pay structure of the organization. External equity can be found through various wage & salary surveys. These surveys

conducted by the department of labor, unemployment offices, employer associations, professional association or self conducted surveys. External equity surveys concluded the information of current pay practices with in the specific communities, & among the firms in their industry. This information is used for comparison purpose. After the compensation committee arrives at point totals from job evaluation & obtains survey data on what comparable origination are paying for the similar jobs, a wage curve can be fitted to the data.

Pricing the job:In this phase the compensation management finalize the pay of each grade or level. This is done by matching the worth of job in job evaluation method with the worth identifying through the labor market survey. There are four basic factors determining the pay rates & the factors that influencing the pay.

Establishing Pay Rates

Job Evaluation Points

AverageWageRates

* * * * *

* ** *

* * **

WageCurve

Step 4. Price Each Pay Grade – Wage Curves

Four basic factors determining pay rates: Legal considerationsUnion influencesCompensation policiesEquity Factor influencing the pay:Comparable rates levels elsewhereLabor market conditionGovernment actions, income policy/taxationOriginal/technological changeExisting differential/custom & policiesUnion lawProductivityCost of living/inflationBargaining strength of trade unionOrganization’s ability to pay

Key factors influencing pay

REFERENCES:

Pay rates & salary levelscompareble rate level elsewherelabor market conditiongovt.actionsoriginal/technological changeexisting differentials/custom & practiceunion lawproductivitycost of living/inflationbargaining strength of trade unionorganisation's ability to pay

HRM Practices, Michael Armstrong.7th editionHuman Resource Management, David A. Decenzo, Stephen p. Robbins. 7th editionHuman Resource Management, Robert L. Mathis, John H Jackson. 10th editionHuman Resources & Personnel Management, Willium B. Werther, Jr. Keith Davis. 5th editionPersonnel & HRM, Gerad Cole. 5th edition