Compensation : Chapter 3-6 and 12 Flashcards
Refers to the relationships among different jobs/skills/competencies within a single organization → job structure.
Internal Alignment
Often referred to as internal equity.
Internal Alignment
Structure needs to:
Supports organization strategy
Supports work flow
Motivates behavior
the process by which goods and services are delivered to the customer
Work flow
relationship between each job and the organization’s objectives
Motivates behavior
Refers to the array of pay rates for different work or skills within a single organization
Internal Pay Structure
Factors that define internal pay structures
the number of levels,
the pay differentials between the levels, and
the criteria or bases used to determine those levels and differentials.
The pay differences among levels
Differentials
Higher pay is usually due to work:
requiring more skill/knowledge,
performed in unpleasant work conditions, or
work that adds more value to the company.
Work performed in a job and how it gets done
Content
The worth of the work.
Value
A structure based on this criteria ranks jobs based on skills required, complexity of tasks, problem solving, and/or responsibility.
Content
A structure based on this criteria focused on the relative contribution of the skills, tasks, and responsibilities of a job to the organization’s goals.
Value
relies on the work content – tasks, behaviors, responsibilities
Job- and Person-Based Structures
shifts the focus to the employee
person-based structure
The skills, knowledge, or competencies the employee possesses and if they are used in the job
person-based structure
What Shapes Internal Structure?
External Factors and Organizational Factors
What are the External Factors?
Economic Pressures
Government Policies, Laws and Regulations
Stakeholders
Cultures and Customs
Organizational Factors
Strategy
Technology
Human Capital
HR Policy
Employee Acceptance
Cost Implications
determine the pay for the different jobs within a single organization
Internal Labour Markets
allocate employees among those different jobs.
Internal Labour Markets
Strategic Choices in Designing Internal Structures
Tailored
Loosely Coupled
Egalitarian
Hierarchical
Adapted by organizations with a low-cost, customer-focused strategy
Tailored
Has well-defined jobs with detailed steps or tasks.
Tailored
Adapted by organizations that require constant innovation.
Loosely Coupled
Jobs are flexible, adaptable and changing
Loosely Coupled
Pay structures are more loosely linked to the organization to provide flexibility.
Loosely Coupled
Has well-defined pay structure
Tailored
Example of Tailored internal structure
McDonald’s, Walmart
Example of Loosely coupled structure
3M
Fewer levels and smaller differentials.
Egalitarian
Have multiple levels and have detailed job descriptions
Hierarchical
Equal treatment can mean knowledgeable employees feel underpaid, who may quit or change their behaviours.
Egalitarian
Results in higher performance when collaboration is required.
Egalitarian
Results in higher performance when work flow depends on individual effort.
Hierarchical
People compare the ratio of their own outcomes to inputs with that of others.
Fairness
Employees judge fairness by comparing:
to jobs similar to their own,
their job to others at the same employer, or
their pay against external pay levels.
Relationship between motivation and performance.
Tournament Theory
Works best in situations where individual performance matters most
Tournament Theory
Example of Tournament Theory
players perform better where prize differentials are sizeable.
Organizations use “best practices”, and are simply copied
Institutional Theory
Copy others and conform
Institutional Theory
Disadvantages of Institutional theory
What aligns with the strategy of one organization may not align with that of another.
It may not be possible to have “competitive advantage” by simply imitating practices.
Consequences of an Internally-Aligned Pay Structure / Internally-Aligned pay structure can help an organization achieved these?
Efficiency
Fairness
Compliance
Comply with regulations of the country.
Compliance
Fair differentials motivate.
Fairness
Aligned structures lead to better performance.
Efficiency
Potential Outcomes of an Internally-Aligned Pay Structure:
Undertake training
Increase experience
Reduce turnover
Facilitate career progression
Facilitate performance
Reduce pay-related grievances
Reduce pay-related work stoppages
What are the theoretical approaches
equity theory, tournament theory, institutional model.
look at what people are doing and the expected outcomes
Job-based structures
look at the person
Skill- and competency-based structures
What is the purpose of both Job-based and skill-and competency-based structures?
Collect and summarize work content information that identifies similarities and differences.
Determine what to value.
Assess the relative value.
Translate the relative value into an internal structure.
the systematic process of collecting information about the nature of jobs.
Job Analysis
Involves the identification and description of what is happening on the job
Job Analysis
Why does an organization needs to perform job analysis?
Job analysis potentially aids every HR function.
An internal structure based on job-related information provides a work-related rationale for pay differences.
In compensation, job analysis has two critical uses:
-it establishes similarities and differences in the work contents of the jobs, and
-it helps establish an internally fair and aligned job structure
The information to be collected in job analysis
Related to the job and Related to the Incumbent
Related to the job includes the following:
Job Identification and job content
Related to the incumbent includes the following:
Employee characteristics
Internal relationships
External relationships
includes job titles, departments, and the number of people who hold the job
Job Identification
elemental tasks or units of work, with emphasis on the purpose of each task
Job content
Methods for Collecting Information
Interviews
Focus Groups
Questionnaires
Observation
Journals and Diaries
Who Collects job information?
Human resource generalists and supervisors.
Someone thoroughly familiar with the organization and its job.
Who provides job information?
Jobholders and supervisors.
Subordinates and employees in other jobs that interface with the job under study.
Number of incumbents from which to collect data varies with the stability of the job and ease of collecting the information.
Outcomes of Job Analysis
Job description, job specification
A written record of the tasks, duties, and responsibilities that make up a job.
Job description
Identifies and describes the job title, job summary, relationships to other jobs.
Job description
Specifies the knowledge, skills, and abilities necessary to perform the job.
Job Specification
The steps to conventional job analysis include:
- develop preliminary job information
- conduct initial tour of work site,
- conduct interviews,
- conduct second tour of work site,
- consolidate job information
- verify job description.
The information that must be collected for job analysis includes :
job identification data, job content data, and data on qualifications necessary to do the job
True or False: Conventional methods are being replaced by online quantitative questionnaires or inventories which are more objective and less time-consuming
TRUE
What is the benefit of traditional job analysis?
that it provides the basis for defensible job-related decisions and establishes a foundation for career paths.
What is the disadvantage of traditional job analysis?
it is sometimes considered too rigid for today’s more flexible organizations with fluid work assignments.
Job analysis (both the process and the outcomes) should be ______ in order to achieve its purpose?
reliable, valid, acceptable, current and useful
A measure of the consistency of results among various analysts/methods/ sources of data, or over time.
Reliability
Examines the convergence of results among sources of data and methods.
Validity
Data and process must be acceptable to job holders and managers.
Acceptability
Refers to the practicality of the information collected, e.g. Can it be used for multiple purposes?
Usefulness
The job information must be current
Currency
Refers to the movement of jobs to locations beyond a country’s borders
Offshoring
How much detail is needed to make these pay decisions?
enough to set pay levels, encourage continuous learning, increase the experience / skill of the work force, and minimize the risk of pay-related grievances.
differences in work determine ____________
Pay differences
needed to determine pay
Work-related information
Employers are doing these in order to increase productivity and reduce cost
reducing jobs, cross-training employees so they can do a wider variety of tasks
This kind of job description can increase flexibility
Generic
True or False: Generic job descriptions can decrease flexibility
False - increase flexibility