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A Human Resource Management ApproachSTRATEGIC COMPENSATION A Human Resource Management Approach Chapter 6 Person-Focused Pay Prentice Hall, Inc. © 2006 Prepared by David Oakes
Person - Focused Plans job - related Knowledge SkillsRewards employees for acquiring job - related Competencies Knowledge Skills 2 main types Pay - for - knowledge Skill - based pay Prentice Hall, Inc. © 2006
Competency - Based Pay ProgramsPay - for - knowledge Skills - based A combination of both Prentice Hall, Inc. © 2006
Pay Programs Rewards employees for improving or acquiringnew 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
Competencies Uniquely combined characteristics ofthe person that enables employees to fulfill job requirements well Core competencies are derived from company’s strategic statements Prentice Hall, Inc. © 2006
Vertical Skills ProgramsWorks well for work teams Service industry Manufacturing industry Employees Learn functional skills Perform managerial tasks Prentice Hall, Inc. © 2006
Pay - For - Knowledge PlansReasons for adoption Removes entitlement label Connects pay to job-related abilities Increases employee autonomy Technological innovations Increased global competition Prentice Hall, Inc. © 2006
Pay-for-Knowledge ModelsStair - step Skill - block Job - point accrual Cross - departmental Prentice Hall, Inc. © 2006
Stair - Step Model Jobs from same job family Jobs differ in complexityHigher the step, greater the skills Companies use separate models Models designed to match jobs Prentice Hall, Inc. © 2006
Skill – Block Model Applies to jobs in same job familyEmployees expected to progress to increasingly complex jobs Skills may not build on each other Emphasizes horizontal & vertical skills Prentice Hall, Inc. © 2006
Job - Point Accrual ModelApplies 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
Cross - Departmental ModelEmployees develop skills usable in other departments Helps manage sporadic, short – term staffing shortages Helps meet seasonal fluctuations Prentice Hall, Inc. © 2006
Person - Focused Pay Compensates employees for flexibilityCompensated for potential contributions Based on skills & knowledge Used for jobs not easily assessed For skills and knowledge Prentice Hall, Inc. © 2006
Job - Based Pay Compensates employees for current jobsPay limits set for each job Evaluations based on job descriptions & objectives 2 main types Merit pay Incentive pay Prentice Hall, Inc. © 2006
Employee Advantages Can provide job enrichmentCan provide job security Can make jobs more intrinsically motivating Can make jobs more interesting Increases employees’ flexibility Prentice Hall, Inc. © 2006
Job Characteristics TheoryEmployees more motivated to perform jobs that contain Skill variety Task identity Autonomy Feedback Prentice Hall, Inc. © 2006
Core Characteristics Skill variety Task identity Autonomy FeedbackRequires using different abilities Task identity Enables employees to do entire job Autonomy Allows employees to choose Feedback Provides clear communications Prentice Hall, Inc. © 2006
Advantages To EmployersLeads to enhanced job performance Leads to reduced staffing Leads to greater flexibility Improves quality Increases productivity levels Prentice Hall, Inc. © 2006
Disadvantages Can increase hourly labor costsCan increase training costs Can increase overhead costs May not mesh well with existing incentive pay systems Prentice Hall, Inc. © 2006
Lowest - Cost Competitive StrategyLowers output costs per employee Training should improve productivity Improves product & service quality Long - term gains should outweigh short - term costs Prentice Hall, Inc. © 2006
Differentiation Competitive StrategyRequires employees who are Creative Open - minded Risk - takers Requires long - term focus Pay - for - knowledge effective with work teams Prentice Hall, Inc. © 2006
1 Copyright © 2011 by Mosby, Inc., an affiliate of Elsevier Inc. Chapter 9 Developing Management Skills.
ORGANIZING THE BUSINESS
Chapter 5 Transfer of Training
Planning Reports and Proposals
Managers and Management
CHAPTER 1 Basic Concepts of Strategic Management
Groups, Teams and Organizational Effectiveness
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Standard Costs: Direct Labor and Materials Chapter Twelve.
10-1 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
1 Copyright © 2010, Elsevier Inc. All rights Reserved Fig 2.1 Chapter 2.
0 - 0.
DIVIDING INTEGERS 1. IF THE SIGNS ARE THE SAME THE ANSWER IS POSITIVE 2. IF THE SIGNS ARE DIFFERENT THE ANSWER IS NEGATIVE.
Chapter 7 Work Design. Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 2 Purpose and Overview Purpose –Provide a framework for jobs.
©2007 by Prentice Hall2-1 Managing Work Flow and Conducting Job Analysis Chapter2 Chapter 2.
1 Market Pricing Organizations seek to offer market based pay rates in order to attract and retain competent employees There are two basic methods to recognize.
What is Pay & Performance?
Person Centered Pay Nancy Brown Johnson © Person Centered Pay Pay-for-Knowledge –Competency Based Pay –Skill Based Pay.
Chapter Two Company and Marketing Strategy
MANAGEMENT RICHARD L. DAFT.
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