Financial reward can be seen as a motivational factor, where employees may benefit, either from promotion or a bonus, it could be seen as an appraisal system. Mainly there are three types of financial rewards within organisations; individual performance related pay, profit related pay and skill based pay are the fundamental for both organisation and employees. Every organisations aim is to save cost at all expense but retain a better performance from employees, whereas employees seek to earn extra more from the organisation. It is an obvious fundamental for employee’s lifestyle as their contribution and duties to perform their job effectively and expectation are to be met due to their hard work, however such individual performance related pay as well as skill based pay and profit relative pay is all beneficial to employees as performance and productivity is enhanced, thus motivation is increased and cost is made, as well Continue reading
Compensation Management
Developmental Approach to Performance Appraisal
The developmental approach to performance appraisal has been related to employees as individuals. This approach has been concerned with the use of performance appraisal as a contributor to employee motivation, development, and human resources planning. The developmental approach contained all of the traditional overall organizational performance appraisal purposes and the following additional purposes: Provided employees the opportunity to formally indicate the direction and level of the employee’s ambition. Show organizational interest in employee development, which was cited to help the enterprise retain ambitious, capable employees instead of losing the employees to competitors. Provided a structure for communications between employees and management to help clarify expectations of the employee by management and the employee, and Provide satisfaction and encouragement to the employee who has been trying to perform well. Who are Appraisers? The appraiser may be any person who has thorough knowledge about the job content, contents to be appraised, standards Continue reading
Point Rating Method of Job Evaluation
Point Rating technique is the most widely used system of job evaluation. The method evaluates the compensable factors of each job. It involves a more detailed, quantitative and analytical approach to the measurement of job work. Under this method of job evaluation, jobs are broke down based on various identifiable factors such as skill, effort, training, knowledge, hazards, responsibilities and so on. Thereafter, points are allocated to each of these factors. Weights are given to factors depending on their importance to perform the job. Points so allocated to various factors of a job are then summed. Then, the jobs with similar total of points are placed in similar pay grades. The sum of points gives an index of the relative significance of the jobs that are rated. Point Rating System requires six steps and is usually implemented by a job evaluation committee or by an individual analyst. Determine critical factors Continue reading
Practical Problems in Using Job Evaluation Technique
Job evaluation is a technique used to determine the value of each job in relation to all jobs within the organization. Its main objective is to determine the relative worth of different jobs in an organization to serve as a basis for developing rational wages and salary structure. Like any other technique of human resource management, job evaluation is not free from certain shortcomings and limitations. Various practical problems in using job evaluation technique may be grouped into two categories: technical and operational. 1. Technical Problems There are some technical problems involved in effective job evaluation which are of the following nature. Job evaluation establishes hierarchy of jobs based on their worth. Though there are various methods developed for this purpose. These are not completely objective. Another problem in establishing job hierarchy through job evaluation comes in the form of changing profile of job factors because of changes in environmental Continue reading
Ranking Method of Job Evaluation
Ranking Method is the simplest form of job evaluation method. The method involves ranking each job relative to all other jobs, usually based on some overall factor like ‘job difficulty’. Each job as a whole is compared with other and this comparison of jobs goes on until all the jobs have been evaluated and ranked. All jobs are ranked in the order of their importance from the simplest to the hardest or from the highest the lowest. The importance of order of job is judged in terms of duties, responsibilities sand demands on the job holder. The following steps are involved in ranking jobs. Obtain job information – The first step of ranking method of job evaluation is the job analysis. Job descriptions for each job are prepared and these are the basis on which the rankings are made. The job ranking method usually ranks jobs according to ‘the whole Continue reading
Compensation Management Process
In order to achieve the objectives of compensation management, it should proceed as a process. The compensation management process has various sequential steps as shown: 1. Organisation’s Strategy Organisation’s overall strategy, though not a step of compensation management is the starting point in the total human resource management process including compensation management. Companies operating in different types of market/product having varying level of maturity, adopt different strategies and matching compensation strategy and blend of different compensation methods. Thus, it can be seen that organisations follow different strategies in different market situations and align their compensation strategy and contents with these strategies. In a growing market, an organisation can expand its business through internal expansion or takeover and merger of other organisations in the same line of business or a combination of both. In such a growing market, the inputs, particularly human resources, do not grow in the same proportion as Continue reading