compen 1 Flashcards
based structures relies on the work
content tasks, behaviors, and responsibilities.
Job
based structures relies on the employee’s skills, knowledge, and competencies.
Person
External factors
- Economic pressures
- Govt. policies, laws
- Stakeholders
- Cultures and custom
Organization factors
- Human capital
- HR policy
- Employee acceptance
Internal structures
- Levels
- Differentials
- Criteria
Strategic choices in designing internal structures
- Tailoring the pay structure to the internal structure
a. Tailored pay structure
b. Loosely coupled structure - Egalitarian and Hierarchical Structures
Consequences of structures
- Efficiency
- Fairness
- Compliance
refers to the organization or classification of work roles in a company or institution based on specific job functions, tasks, responsibilities, and skills required for each position.
Job-Based Structure
This structure focuses on grouping similar jobs together to establish clear roles, responsibilities, reporting lines, and career paths for employees
Job-Based Structure
► What shapes internal structures?
External factors
Organization factors
It refers to the monetary rewards or
payments given to employees in
exchange for their work or services.
FINANCIAL COMPESATION
TYPES OF FINANCIAL
COMPENSATION
Salary or Wages
Bonuses
Commissions
Overtime Pay
Benefits
Stock Options or Equity
Incentives
is any employee compensation that doesn’t
involve cash. Many companies find creative ways to offer employee benefits that make them feel valued and appreciated. Often, this form of compensation can be a great method for establishing trust and loyalty between an
employer and an employee
NON-FINANCIAL COMPENSATION
TYPES OF NON-FINANCIAL COMPENSATION
Developmental Opportunities
Recognition
Flexible Schedules
A set amount of money paid to an employee
for their work.
Salary or Wages
Extra payments or rewards given based on
performance, company profits, or meeting specific goals.
Bonuses
Earnings that are directly linked to sales or business targets.
Commissions
Additional compensation for work performed
beyond the standard working hours, often paid at a higher rate.
Overtime Pay
Non-cash compensation, including health insurance,nretirement contributions, paid time off (PTO), life insurance, and other perks
Benefits
Ownership stakes or options to buy company shares, often offered by startups or large corporations as part of the compensation package.
Stock Options or Equity
Financial rewards given for achieving specific targets, often used to drive performance, such as achieving sales goals or completing projects ahead of schedule.
Incentives
Employers can choose to provide developmental opportunities
Developmental Opportunities
Employees prefer to be recognized by their
employers for the hard work they complete
Recognition
Employees seek flexible schedules when
searching for new roles in attempt to prioritize a healthy work-life balance when choosing an employer
Flexible Schedules
Often called, Internal Equity, it refers to the pay relationships. Among different
jobs/skills/competencies within a single organization
INTERNAL ALIGNMENT
It refers to the array of
pay rates for different work or skills within a single organization. The number of levels, the
differentials in pay between the levels, and the
criteria used to determine those differences
describe the structure.
Pay structure
These roles focus on administrative and support tasks, such as processing paperwork, maintaining employee records, and assisting with recruitment
Entry-Level (HR Assistant / Coordinator)
At this level, HR professionals take on more specialized or generalist responsibilities, such as employee relations, compliance, and benefits administration.
Mid-Level (HR Specialist / Generalist)
These roles involve strategic HR decision-making, managing teams, and working
closely with leadership on workforce planning
Senior-Level (HR Manager / Business Partner)
These executives shape company-wide HR strategies, align workforce initiatives with business goals, and influence company
Leadership-Level (HR Director / CHRO – Chief Human Resources Officer)
Criteria
Content
Value
refers to work performed in a job and how it gets done
Content
refers to the worth of the work; its relative contribution to the organization’s objectives
Value
reflects the value of goods or services an employee produces in a job.
Use value
is whatever wage the employer and employee agree on for a job
Exchange value
-Systematically determines the relative worth
of jobs
- Creates a job structure for the organization
JOB EVALUATION
Is based on a combination of
Job content
Skills required
Value to the organization
Organizational culture
External market
are compensation and job classification systems that focus on an individual’s skills, knowledge, and competencies rather than their specific job role or position. Instead of being based on job descriptions, these structures reward employees based on their abilities and expertise.
PERSON-BASED STRUCTURES
TYPES OF PERSON-BASED STRUCTURES
Skill-Based Pay
Competency-Based Pay
Knowledge-Based Pay
BENEFITS OF NON-FINANCIAL
COMPENSATION
A. Increases Employee Motivation
B. Enhances Employee Retention
C. Improves Job Satisfaction
D. Strengthens Company Culture
E. Fosters Loyalty and Commitment
F. Encourages Professional Growth
The pay structure should:
- Support the organization strategy,
- Support the work flow
- Motivate behavior
BENEFITS OF PERSON-BASED
STRUCTURES
Encourages employee learning and development
Creates a more flexible and skilled workforce
Motivates employees to acquire new knowledge
and skills
POTENTIAL CHALLENGES:
More complex compensation systems
Higher costs for training and skill assessment
