HR Manager Compensation Strategy
Prepared to: Abdullah Iftikhar
Prepared by: NAZIM (123051053)
Course Code: 508
Deadline: 22 8th 2014
OBJECTIVE OF COMPENSATION:
Acquire qualified personnel: compensation needs to high enough to attract applicant. Pay level must respond to the supply and demand of worker in the labor market.
Retain current employee: employee must quit when compensation levels are not competitive, resulting in high turnover
Reward desired behavior: pay should reinforce desired
Control cost: a rational compensation system helps an organization obtain and retain worker at a reasonable cost. With effective ...view middle of the document...
It can take many forms. Bonuses, one time rewards and stock option.
BONUSES bonus programs have been used I American Business for some time. They usually reward individual accomplishment and are frequently used in sales organization to encourage salespersons to generate additional business or high profits.
PROFIT SHARING profit sharing refers to the strategy of creating a pool of moirés to be disbursed to employee by taking a stared percentage of a company profits.
STOCK OPTION previously the territory of upper management and large companies , stock options have become an increasing popular method in recent years of rewarding middle management and other employee in both mature companies and start ups.
GROUP BASED REWARD SYSTEM:
As small business use team structure to reach their goals, many entrepreneurs look for ways to reward cooperation between departments and individual. Bonuses, profit sharing, and stock option can all the used to reward team and group accomplishment
For small business owner and other managers, a recognition many appear to be merely extra effort on their part few tangible returns in terms of employee performance. While most employee certainly appreciate monetary awards for job well done.
TYPES OF REWARDS:
1. Monetary Rewards –salary bonus commission, medical and health benefits, holydays and retirement benefits.
2. Non- monetary – meaningful and challenging works, recognition and career advancement, safe and healthy working environment and fair treatment.
How HR managers can make use of compensation strategy?
Compensation is used to attract and retain performing employees. But this objective requires a firm to offer to a salary that equates the job and not lower than the market rates.
Equitable compensation is primarily considered by employees in any organization. Thus. It should be drawn up in the compensation strategy. When employee notice equities, their morale and motivation will be boosted.
DETERMINING PAY RATES.
Seniority based pay: Pay increase based on employee’s length of time spent on the job. This is a good strategy to motivate employee retention. In here, you are not rewarding performance.
Performance based pay: pay intended to motive employee to perform according to or above expectations.
Competency based pay: Pay increased based on job related skill s and knowledge. This is intended to motivate employees to gain additional skills, acquire new competencies and knowledge. In this method a firm not paying employees for the job they are doing, their job title nor seniority.
Team based pay: Rewards employee who works in a team. That means that individual employees are compensated based on the team performance. This system emphasizes on team performance sustainability.
When properly used money can be a motivating factor, but little money may have no effect. Motivation of executives therefore:
* Rewards should be meaningful
* Rewards should vary with...