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Prentice Hall, Inc. © A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 6 Person-Focused Pay
Prentice Hall, Inc. © Person - Focused Plans Rewards employees for acquiring job - related Competencies Knowledge Skills 2 main types Pay - for - knowledge Skill - based pay
Prentice Hall, Inc. © Competency - Based Pay Programs Pay - for - knowledge Skills - based A combination of both
Prentice Hall, Inc. © Pay Programs Rewards employees for improving or acquiring new skills / knowledge Horizontal Those at same level of responsibility or difficulty Vertical Those at a higher level of responsibility or difficulty Depth Level of expertise or specialization
Prentice Hall, Inc. © Competencies Uniquely combined characteristics of the person that enables employees to fulfill job requirements well Core competencies are derived from company’s strategic statements
Prentice Hall, Inc. © Vertical Skills Programs Works well for work teams Service industry Manufacturing industry Employees Learn functional skills Perform managerial tasks
Prentice Hall, Inc. © Pay - For - Knowledge Plans Reasons for adoption Removes entitlement label Connects pay to job-related abilities Increases employee autonomy Technological innovations Increased global competition
Prentice Hall, Inc. © Pay-for-Knowledge Models Stair - step Skill - block Job - point accrual Cross - departmental
Prentice Hall, Inc. © Stair - Step Model Jobs from same job family Jobs differ in complexity Higher the step, greater the skills Companies use separate models Models designed to match jobs
Prentice Hall, Inc. © Skill – Block Model Applies to jobs in same job family Employees expected to progress to increasingly complex jobs Skills may not build on each other Emphasizes horizontal & vertical skills
Prentice Hall, Inc. © Job - Point Accrual Model Applies to jobs from different job families Creates organizational flexibility Points assigned to skills Higher the number of points, the higher the core compensation level
Prentice Hall, Inc. © Cross - Departmental Model Employees develop skills usable in other departments Helps manage sporadic, short – term staffing shortages Helps meet seasonal fluctuations
Prentice Hall, Inc. © Person - Focused Pay Compensates employees for flexibility Compensated for potential contributions Based on skills & knowledge Used for jobs not easily assessed For skills and knowledge
Prentice Hall, Inc. © Job - Based Pay Compensates employees for current jobs Pay limits set for each job Evaluations based on job descriptions & objectives 2 main types Merit pay Incentive pay
Prentice Hall, Inc. © Employee Advantages Can provide job enrichment Can provide job security Can make jobs more intrinsically motivating Can make jobs more interesting Increases employees’ flexibility
Prentice Hall, Inc. © Job Characteristics Theory Employees more motivated to perform jobs that contain Skill variety Task identity Autonomy Feedback
Prentice Hall, Inc. © Core Characteristics Skill variety Requires using different abilities Task identity Enables employees to do entire job Autonomy Allows employees to choose Feedback Provides clear communications
Prentice Hall, Inc. © Advantages To Employers Leads to enhanced job performance Leads to reduced staffing Leads to greater flexibility Improves quality Increases productivity levels
Prentice Hall, Inc. © Disadvantages Can increase hourly labor costs Can increase training costs Can increase overhead costs May not mesh well with existing incentive pay systems
Prentice Hall, Inc. © Lowest - Cost Competitive Strategy Lowers output costs per employee Training should improve productivity Improves product & service quality Long - term gains should outweigh short - term costs
Prentice Hall, Inc. © Differentiation Competitive Strategy Requires employees who are Creative Open - minded Risk - takers Requires long - term focus Pay - for - knowledge effective with work teams
STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 5: Person-Focused Pay Copyright © 2015 Pearson Education, Inc.5-1.
STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 5: Person-focused Pay Copyright © 2013 Pearson Education, Inc. Publishing as Prentice.
Chapter 7 Work Design. Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 2 Purpose and Overview Purpose –Provide a framework for jobs.
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Person Centered Pay Nancy Brown Johnson © Person Centered Pay Pay-for-Knowledge –Competency Based Pay –Skill Based Pay.
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Prentice Hall, Inc. © A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 1 Strategic Compensation: A.
MANAGEMENT RICHARD L. DAFT. Designing Adaptive Organizations CHAPTER 9.
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11-1 Groups, Teams and Organizational Effectiveness Group Two or more people who interact with each other to accomplish certain goals or meet certain needs.
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1 12 Implementing Strategy in Companies That Compete in a Single Industry.
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Prentice Hall, Inc. © A Human Resource Management Approach STRATEGIC COMPENSATION Prepared by David Oakes Chapter 5 Incentive Pay.
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1 What Is Organizational Structure? Key Elements: Work specialization Departmentalization Chain of command Span of control Centralization and decentralization.
Robbins & Judge Organizational Behavior 13th Edition Chapter 16: Foundations of Organization Structure Student Study Slideshow Bob Stretch Southwestern.
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Chapter One Compensation: A Component of Human Resource Systems.
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What Is the Strategic Perspective? The strategic perspective involves thinking about how pay can assist in achieving organization success, while not being.
©2007 Prentice Hall Organizational Behavior: An Introduction to Your Life in Organizations Chapter 16 Organizational Structure as a Design Tool.
MULT. INTEGERS 1. IF THE SIGNS ARE THE SAME THE ANSWER IS POSITIVE 2. IF THE SIGNS ARE DIFFERENT THE ANSWER IS NEGATIVE.
1 Unit 1 Kinematics Chapter 1 Day
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