Primary Components of Compensation Management
By: Desteni Lawhorn
HR434 Compensation Management
Submitted: April 24, 2011
Too much focus on trends and hot topics. Not enough focus on customizing programs and processes to address real needs. People have programs looking for an application rather than analyzing the issue and then determining what's the best program or process. Too many start at the end and work toward the beginning. Logically they should start at the beginning.
Compensation management is more than just remuneration to appeal or retain capable employees, it is the leverage an organization utilizes to obtain, and retain its human ...view middle of the document...
Job analysis includes many specifications of the job including; training and development, selection, compensation and performance review or appraisal. In determining training needs, job analysis looks at; training content, assessment tests that measure effectiveness, the equipment in delivering the training, and the methods of training. The selection process involves job duties described in the advertisement of vacant positions, the appropriate salary level that helps dictate what salary should be extended to the job applicant, the minimum requirements pertaining to experience and education utilized for screening the candidate, interview questions, application tests or instruments, evaluation or appraisal forms, and any orientation materials for new hires. And finally, the performance review to develop or identify goals and objectives, performance standards, evaluation criteria, probationary periods, and evaluated duties.
There are many methods in conducting a job analysis which include; expert panels, job questionnaires or surveys, task inventories, check lists, direct or indirect job observation, work logs, and interviews involving incumbents or supervisors. All of these methods look at the duties or tasks to be completed including frequency, duration, skill, effort, complexity, the equipment used, and the standards required. Additionally factors involving the environment in which the employee is subjected or that may have an impact on the physical requirements needed in order to perform the job are assessed. The job analysis may also include the tools and equipment used in the job, the relationships both internal and external, and the requirements in regards to KSA’s, or knowledge, skills and abilities aptitude. This analysis assists companies in evaluating the positions offered, and gives a detailed description to compare to other industry positions and the pay received for similar jobs.
The second fundamental to review when looking at compensation management is pay structure. Pay structure is defined as, “an ordering of rates of pay for jobs or groups of jobs within an organization. A pay structure may be defined in terms of pay grades, job evaluation points, or pay policy lines (Henderson, Richard L. Compensation Management in a Knowledge Based World. 10th ed. 2006. P. 516).” Pay structure is an integral part of compensation management as it evaluates if an organization is either paying employees too less of a salary and losing vital talent to competitors, or if the organization is paying too much of a salary and wasting company resources. Several questions must be answered when looking at pay structures. Is there relative data for establishing an appropriate value to a specific job in the organization? What is the proper pay range for the job offered within the organization? And, what is the value allocated for each job position within the pay range? Once these questions are answered, the Human Resource department can conduct...