1. Human Resource Management
HRM
Human Resource Management
Wage, Salary and Reward Administration
Developed by N. Zaidi

2. Chapter Content: We will cover the following:
HRM
Chapter Content:
We will cover the following:
Remuneration & its Components
Compensation Administration Process
Wage & salary Administration
Different types of reward
Different types of Incentives and Incentives Plan
International Compensation.
Developed by N. Zaidi

3. Remuneration & Its Components
HRM
Remuneration & Its Components
Definition: Remuneration' is a general term covering the monetary and related entitlements of employees - paid by employers in return for the work of employees.
Components:
Remuneration
Financial
Non Financial
Hourly and monthly Rated Wages and Salaries
Incentives
Individual Plans
Group Plans
Fringe Benefits
P.F, Gratuity, Medical Care, Accident Relief, Health and Group insurance
Perquisites
Company Car, Club Membership, Paid Holidays, Furnished House, Stock option scheme, etc
Job Content
Challenging job, Responsibilities, Recognition, Growth prospects, Supervision, Working conditions, Job sharing, etc.
Direct
Indirect
Developed by N. Zaidi

4. Compensation Administration Process
HRM
Compensation Administration Process
Developed by N. Zaidi

5. HRM
Job Analysis
It contains two parts: Job Description & Job Specification. This can help to know about the duties and responsibilities will be covered by the specific job and also the quality of the people engaged in that job. This is necessary to set a rationale pay structure for a specific position.
Developed by N. Zaidi

6. Job Evaluation Methods
HRM
Job Evaluation
Job Evaluation: The systematic determination of the relative worth of jobs within an organization.
Methods of Job Evaluation
Ranking
Classification
Job Evaluation Methods
Factor Comparison
Point Method
Developed by N. Zaidi

7. Quantitative Job Evaluation Methods
HRM
Quantitative Job Evaluation Methods
Factor Comparison Job Evaluation Method
Step 1. Obtain job information
Step 2. Select key benchmark jobs
Step 3. Rank key jobs by factor
Step 4. Distribute wage rates by factors
Step 5. Rank key jobs according to wages assigned to each factor
Step 6. Compare the two sets of rankings to screen out unusable key jobs
Step 7. Construct the job-comparison scale
Step 8. Use the job-comparison scale
Developed by N. Zaidi

8. The Point Method of Job Evaluation
HRM
The Point Method of Job Evaluation
Step 1. Determine clusters of jobs to be evaluated
Step 2. Collect job information
Step 3. Select compensable factors
Step 4. Define compensable factors
Step 5. Define factor degrees
Step 6. Determine relative values of factors
Developed by N. Zaidi

9. Job Evaluation Methods: Ranking
HRM
Job Evaluation Methods: Ranking
Ranking each job relative to all other jobs, usually based on some overall factor.
Steps in job ranking:
Obtain job information.
Select and group jobs.
Select compensable factors.
Rank jobs.
Combine ratings.
Developed by N. Zaidi

10. Job Evaluation Methods: Job Classification
HRM
Job Evaluation Methods: Job Classification
Raters categorize jobs into groups or classes of jobs that are of roughly the same value for pay purposes.
Classes contain similar jobs.
Grades are jobs that are similar in difficulty but otherwise different.
Jobs are classed by the amount or level of compensable factors they contain.
Developed by N. Zaidi

11. Developing Pay Surveys
HRM
Developing Pay Surveys
Select Employers with Comparable Jobs
Determine Jobs to be Surveyed
Decide What Information Is Needed
Conduct Survey
Developed by N. Zaidi

12. Pay Structures Common Pay Structures Hourly and salaried
HRM
Pay Structures
Common Pay Structures
Hourly and salaried
Office, plant, technical, professional, managerial
Clerical, information technology, professional, supervisory, management, and executive
Factors that affect Remuneration/Pay Structure:
External:
Labor market
Cost of Living
Society
The economy
Geographic Location
Internal Factor:
Business Strategy
Job Evaluation & Performance Appraisal
The employee
Kind of business
Developed by N. Zaidi

13. Establishing Pay Structures
HRM
Establishing Pay Structures
Developed by N. Zaidi

14. HRM
Wage & Salary
Wages: Wages are compensation. This includes basic wages, allowances, bonuses etc. On the employers’ points of view, wages form that part of cost of production which is attributed as compensation paid to labor. Wages are paid in the form of time rate or piece rate to the workers, who are directly involved in the production or commercial activities.
Salary: This is compensation paid to the indirect labor in the form of cash. Indirect labor involves supervisors, managers and supporting staff like office assistants, clerks, etc. Salaries are paid in the form of time rate, mostly on monthly basis.
Developed by N. Zaidi

15. HRM
Wage & Salary
On the basis of the employee needs and ability of the organization, there are various kinds of wages. Wages are generally four types:
Subsistence wages
Minimum Wages
Fair Wages
Living Wages
Subsistence wages: This is level of wage bellows the minimum level which can lead inhuman life to the employees.
Minimum Wages: This is a wage level fixed by government which is considered adequate, taking into account the cost of living. All the organizations are bound to follow this direction so that no employee is paid a wage less than the minimum wage fixed by government irrespective of grade, class or nature of work.
Developed by N. Zaidi

16. HRM
Wage & Salary
Fair Wages: This is fixed by employer. This level of wage varies from industry to industry. The main criteria are the capacity of payment. Fair wage is a wage above the minimum wage but below the living wage.
Living Wages: Living wage is one which should enable the earner to provide for himself and his family not only the bare essentials of food, clothing and shelter, but a measure of frugal comfort, including education for his children, protection against ill health, requirement of essential social needs and a measure of insurance against the more important misfortune including old age.
Developed by N. Zaidi

17. HRM
Reward
People do what they do to satisfy some need and they look for a payoff or reward.
The most obvious reward is pay, but there are many others, including:
promotions
desirable work assignments
peer recognition
work freedom
Developed by N. Zaidi

18. Types of Reward
HRM
Developed by N. Zaidi

19. Types of Reward Intrinsic versus Extrinsic Rewards
HRM
Types of Reward
Intrinsic versus Extrinsic Rewards
Intrinsic rewards (personal satisfactions) come from the job itself, such as:
pride in one’s work
feelings of accomplishment
being part of a work team
Extrinsic rewards come from a source outside the job
include rewards offered mainly by management
Money
Promotions
Benefits
Developed by N. Zaidi

20. Types of Reward Financial versus Non-financial Rewards
HRM
Types of Reward
Financial versus Non-financial Rewards
Financial rewards include:
wages
bonuses
profit sharing
pension plans
paid leaves
purchase discounts
Non-financial rewards emphasize making life on the job more attractive; employees vary greatly on what types they find desirable.
Developed by N. Zaidi

21. Types of Reward Performance-based versus Membership-Based Rewards
HRM
Types of Reward
Performance-based versus Membership-Based Rewards
Performance-based rewards are tied to specific job performance criteria.
commissions
piecework pay plans
incentive systems
group bonuses
merit pay
Membership-based rewards such as cost-of-living increases, benefits, and salary increases are offered to all employees.
Developed by N. Zaidi

22. Incentive Compensation
HRM
Incentive Compensation
Incentives can be added to the basic pay structure to provide rewards for performance. It may be 3 types:
1. Individual Incentives
2. Group Incentives
3. Plant-wide Incentives
Individual Incentives include
merit pay plans (annual increase, based on performance)
piecework plans (pay based on number of units produced typically in a specified time period.)
time-savings bonuses and commissions
Work best where clear objectives can be set and tasks are independent.
Developed by N. Zaidi

23. Incentive Compensation
HRM
Incentive Compensation
Incentive Compensation Plans:
Group Incentives
Incentives can be offered to groups, rather than individuals, when employees' tasks are interdependent and require cooperation.
Plant-wide Incentives: Direct employee efforts toward organizational goals (such as cost reduction)
Scanlon Plan - supervisor and employee committees suggest labor-saving improvements
IMPROSHARE - formula is used to determine bonuses based on labor cost savings
Developed by N. Zaidi

24. Different types of Incentive Plan
HRM
Different types of Incentive Plan
Incentive Plan /Incentives Payments
There are following three types of incentive plans:
The Rowan plan
Taylor’s Differential Piece Rate Plan
Emerson’s Efficiency Plan
Halsey System
Bedeaux system
Taylor’s Differential Piece Rate System
Merrick Differential Piece Rate System
Gantt Task Method
Developed by N. Zaidi

25. HRM
Rowan Plan
In Rowan Plan, bonus paid to the employee is equal to the proportion of time saved to the standard time. Under the Rowan plan, standard time and rate per hour are fixed. If the time taken to complete the job in equal to or exceeds the standard time, the employee is paid for the time taken at the rate per hour. If the time taken is less than the standard time, the employee is entitled to bonus, in addition to the time wages. The bonus takes the form of a percentage of worker’s time-rate. This percentage is equal to the proportion of the saved time, to the standard time.
Developed by N. Zaidi

26. Example of Rowan Plan Standard time = 10 hrs Rate per hour = Tk.1
HRM
Example of Rowan Plan
Standard time = 10 hrs
Rate per hour = Tk.1
Case-1
Time Taken = 10 hrs
Earnings = 10X1= Tk
Case-2
Time Taken = 12 hrs
Earnings = 12X1= Tk
Time Taken = 8 hrs
Earnings = 8X1= Tk. 8.00
Bonus =2/10x8=Tk Tk
Developed by N. Zaidi

27. HRM
Halsey Plan
In this method bonus paid to a worker is equal to 50% of time saved multiplied by rate per hour. a standard time is fixed on the basis of previous performance for the completion of a job. When the work is completed in less than the standard time, for the time actually spent on the job, he is paid at an hourly rate on a percentage (50%) of the time saved by him.
Standard Time = 10 Hrs; Rate per hour = Tk. 1
Case-1: Time taken = 10 hrs
Earnings = 10*1= Tk 10
Case-2: Time taken = 12 hrs
Earnings = 12*1=Tk 12
Case-3: Time taken = 8 hrs
Earnings:
Time wages = 8*1 = Tk 8.00
Bonus = ½*2*1 = Tk 1.00
Tk 9.00
Developed by N. Zaidi

28. Taylor’s differentiate piece rate system
HRM
Taylor’s differentiate piece rate system
An efficient (output exceeds standard) worker is paid 120% of the piece rate and an inefficient (output bellow standard) worker is paid only 80% of the piece rate.
Example: Standard output: 100 units, Standard Rate: Tk 1.
Earnings at 120 units output=120*120/100*1=144
Earnings at 90 units output = 90*80/100*1=72
Developed by N. Zaidi

29. HRM
Emersion’s Plan
In this method upto 67% of efficiency, only time rate is paid to the worker. Beyond this, a graduated bonus of 20% at 100% efficiency is paid. Thereafter, an additional bonus of 1%, for each additional bonus of 1% for each additional 1% efficiency is added
Example: Standard output is 100 units in 10 hrs and rate per hour = Tk 1
Earnings at 50 units in 10 hrs= 10*1=Tk 10 [as the efficiency is <67%, the employee will be entitled to time wage only.]
Earning at 100 units in 10 hr=10*1+(10*20%)=Tk 12 [use 20% bonus]
Earning at 130 units in 10 hr = 10*1 + (10*20%) + (10*30%) =Tk 15 [use 20% for 100% efficiency & additional 1% for 1% more than 100% efficiency]
Developed by N. Zaidi

30. Executive Compensation Components
HRM
Executive Compensation Components
Developed by N. Zaidi

31. Executive Compensation Programs
HRM
Executive Compensation Programs
Salaries of Top Managers
Executive salaries, bonuses and stock options may seem high.
Top twenty CEOs average more than $100 million in total compensation.
Competition for executive talent raises the price of hiring an executive.
High salaries can be a motivator for executives and lower-level managers
Developed by N. Zaidi

32. Executive Compensation Programs
HRM
Executive Compensation Programs
Supplemental Financial Compensation
Deferred bonuses – paid to executives over extended time periods, to encourage them to stay with the company.
Stock options – allow executives to purchase stock in the future at a fixed price.
Hiring bonuses – compensate for the deferred compensation lost when leaving a former company.
Developed by N. Zaidi

33. Executive Compensation Programs
HRM
Executive Compensation Programs
Supplemental Non-financial Compensation: Perquisites
Perks may include the following:
Golden parachutes protect executives when a merger or hostile takeover occurs by providing severance pay or a guaranteed position
Developed by N. Zaidi

34. International Compensation
HRM
International Compensation
International compensation packages generally consider the following four factors:
Base Pay: The pay of employees in comparable jobs at home.
Differentials: Compensation given to offset higher costs of living abroad.
Incentives: Inducements given to encourage employees to accept overseas assignments.
Assistance Programs: Payment for expenses involved in moving a family abroad and in providing some services overseas.
Developed by N. Zaidi