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A Human Resource Management Approach

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Presentation on theme: "A Human Resource Management Approach"— Presentation transcript:

1 A Human Resource Management Approach
STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 6 Person-Focused Pay Prentice Hall, Inc. © 2006 Prepared by David Oakes

2 Person - Focused Plans job - related Knowledge Skills
Rewards employees for acquiring job - related Competencies Knowledge Skills 2 main types Pay - for - knowledge Skill - based pay Prentice Hall, Inc. © 2006

3 Competency - Based Pay Programs
Pay - for - knowledge Skills - based A combination of both Prentice Hall, Inc. © 2006

4 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. © 2006

5 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. © 2006

6 Vertical Skills Programs
Works well for work teams Service industry Manufacturing industry Employees Learn functional skills Perform managerial tasks Prentice Hall, Inc. © 2006

7 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. © 2006

8 Pay-for-Knowledge Models
Stair - step Skill - block Job - point accrual Cross - departmental Prentice Hall, Inc. © 2006

9 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. © 2006

10 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. © 2006

11 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. © 2006

12 Cross - Departmental Model
Employees develop skills usable in other departments Helps manage sporadic, short – term staffing shortages Helps meet seasonal fluctuations Prentice Hall, Inc. © 2006

13 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. © 2006

14 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. © 2006

15 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. © 2006

16 Job Characteristics Theory
Employees more motivated to perform jobs that contain Skill variety Task identity Autonomy Feedback Prentice Hall, Inc. © 2006

17 Core Characteristics Skill variety Task identity Autonomy Feedback
Requires using different abilities Task identity Enables employees to do entire job Autonomy Allows employees to choose Feedback Provides clear communications Prentice Hall, Inc. © 2006

18 Advantages To Employers
Leads to enhanced job performance Leads to reduced staffing Leads to greater flexibility Improves quality Increases productivity levels Prentice Hall, Inc. © 2006

19 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. © 2006

20 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. © 2006

21 Differentiation Competitive Strategy
Requires employees who are Creative Open - minded Risk - takers Requires long - term focus Pay - for - knowledge effective with work teams Prentice Hall, Inc. © 2006

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