PRE-FINALS HRM

AUQ NA. TAMA NA.

Compensation

is defined as the total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required

Compensation

is the total of an employee’s pay and benefits

Compensation costs

are frequently the largest part of the total cost at today's firms.

Compliance.

Compensation must comply with the law, such as Republic Act No. 602 or an act to establish a minimum wage law, and for other purposes. Adhering to standards can complicate compensation management, but it will help protect the company against litigation and ensure fairness across the board.

Attract Top Talents.

One of the primary goals of compensation is to recruit qualified talents. When a company has a competitive compensation plan in place, it can attract top industry talents.

Retain & Reward Personnel.

Compensation affects the process of both attracting and retaining employees.

Boost Employee Motivation

When a compensation plan is structured effectively, it can drive motivation across teams in the organization.

Maximize Return on Investment (ROI)

Suppose the organization can create a compensation plan that stays within the budget while driving productivity through pay-for-performance and other motivational tactics. In that case, it can be both equitable for the company and advantageous for hardworking employees.

compensation system

includes anything that an employee may value and desire and that the employer is willing and able to offer in exchange.

Compensation components.

All rewards classified as monetary payments and in-kind payments such as base pay, allowances, bonuses, and commissions constitute the compensation component.

Non-compensation components.

All rewards other than monetary and in-kind payments such as free food in the cafeteria and gym membership constitute the non-compensation component.

Job Descriptions.

are defined in writing the responsibilities, requirements, functions, duties, location, environment, conditions, and other aspects of jobs. It may be developed for jobs individually or for entire job families.

Job Analysis.

It is the process of analyzing jobs from which job descriptions are developed. Its techniques include the use of interviews, questionnaires, and observation.

Job Evaluation.

It is a system for comparing jobs to determine appropriate compensation levels for individual jobs or job elements.

Job Ranking 

This method is one of the simplest to administer. Jobs are compared to each other based on the overall worth of the job to the organization. The 'worth' of a job is usually based on judgments of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions.

Job Classification 

In this method, jobs are classified into an existing grade/category structure/hierarchy. Each level in the grade/category structure has a description and associated job titles.

Factor Comparison

A set of compensable factors are identified as determining the worth of jobs. The typical number of compensable factors is small (4 or 5).

Point-Factor 

This is an extension of the factor comparison method where a set of compensable factors are identified as determining the worth of jobs

Pay Structures

It is useful for standardizing compensation practices.

Salary Surveys.

This part includes the collections of salary and market data. It may also include average salaries, inflation indicators, cost of living indicators, and salary budget averages.

Policies and Regulations.

This part depends on the company’s or organization’s policies and regulations.

Base pay.

It is typically a flat rate, either as an hourly wage or salary. In the National Capital Region (NCR), the daily minimum wage rate is Php 537.00.

Wage and salary add-ons.

These include overtime pay, shift differential, allowances, premium pay for working weekends and holidays, and other add-ons.

Incentive pays.

These are also known as variable pays. It is a pay for performance, and it commonly includes items such as piece work in production and commissioned sales.

Benefits

It is indirect compensation that provides something of value to the employee. This may include health insurance (those payments to employees if they are unable to work because of sickness or accident), retirement pay contributions, and provision of a wide variety of desired goods and services such as cafeteria service, tuition reimbursement, and many other items.

Direct compensation.

It is the form of compensation that goes directly to the employees as part of their paycheck. The first three (3) compensation components, such as base pay, add-ons, and incentive pay

Indirect compensation

It is the compensation where employees do not get any funds, such as a benefits program. Employees never see these funds, and most do not realize how costly these benefits are to the firm.

Expectancy Theory

It is a process theory of motivation which means that an individual goes through a cognitive process to evaluate a situation. It proposes that employees are motivated when they believe they can accomplish a task and that the rewards are worth the effort. 

Expectancy

is the person’s perception of their ability to accomplish or probability of accomplishing an objective.

Instrumentality

is the perception that a particular level of performance is likely to provide the individual with the desired reward.

Valence

refers to the value a person places on the outcome or reward because not all people value the same reward.

Equity Theory

developed by J. Stacy Adams

Equity Theory

proposes that people are motivated to seek social equity in the rewards they receive (outcomes) for their performance (input).

equity theory

proposes that employees are motivated when the ratio of their perceived outcomes to inputs is at least roughly equal to that of other referent individuals.

under rewarded

they may try to reduce the inequity by increasing outcomes (e.g., requesting a raise or committing theft), decreasing inputs (e.g., doing less work, being absent, taking long breaks, etc.), or rationalizing (e.g., finding a logical explanation for the inequity).

overrewarded

When most employees perceive that they are _______, they rationalize it in some way and accept it.

equitably rewarded

When employees perceive that they are ______, they are motivated to continue to put forth the same effort for the organization so long as they are content that inputs and outcomes are in balance.

longevity or seniority

means accumulating years of service with the firm by promotions and raises over time (assuming the employee meets minimal organizational standards) regardless of performance because they have been loyal members of the organization.

performance

which means being able to complete certain tasks or doing certain things faster or better than average, or just being there and being loyal to the firm.

Skill

It means the company pays members of the workforce for individual skills or competencies that they bring to work, whether those skills are necessary for the individuals to do their current job.

Competencies

involve the individual’s level of knowledge in a particular area.

Skill

involve the ability to apply that knowledge set in that field.

competencies

this include negotiating contract agreements, applying physics principles to a new equipment design, or making a high-quality decision based on a good analysis of a situation.

Efficiency wage theory

states that if a company pays higher wages, it can generally hire better people who will be more productive.

A salary structure (or pay scale)

is a system that employers use to determine an employee’s compensation.

standard salary structure

considers merit, length of employment, and pay compared to similar positions

Traditional salary structures

These are the second most commonly used system. These are divided into numerous pay grades. Salary increases are relatively small jumps between pay grades. Employers can use traditional structures to prevent employees from capping out at the maximum salary too quickly.

Broadband structures 

These are more flexible than traditional salary structures. These salary structures utilize fewer pay grades, and each pay grade has a wider salary range than traditional structures.

Market-based structures 

This structure is now the most popular system. These are based on what other employers pay employees. Under this salary structure, it conduct an external pay audit to determine your salary ranges for each position.

Salary structures and wages 

are determined by factors such as nature of work, workplace location, working hours, type of industry/sector, and others.

Labor Code of the Philippines

which prescribes employment regulations and labor laws for companies operating in the Philippines.

25%

Payment of overtime work shall consist of an addition of at least ____  of the regular wage per hour worked

30%

Payment of overtime work during holidays or rest days shall consist of an addition of at least

pay structure

is a hierarchy of jobs and their rates of pay within the organization. It allows individuals to identify what the pay range is for each job.

job structure

the workers' job hierarchy from the lowest to the highest level.

Pay levels

also known as pay grades, can be made up of different jobs, and each pay level has a maximum pay rate and a minimum pay rate.

Labor market competitions

refer to the labor supply and demand in the market that should be recognized to set the minimum value for a particular pay level.

Product market competition

is a function of the value of the product or service sold to the customer that determines the top of the pay level.

pay curve

Once the benchmark jobs are placed in a plot of the company’s pay levels, the market pay line comes after, which is also called a

rate range

which provides the maximum, minimum, and midpoint of pay for certain jobs

red-circle rates

Individual pay rates that fall outside the pay range on the high side are called

green-circle rates

those that are lower than the bottom of the pay range are

Delayering

is changing the company structure to get rid of some of the vertical hierarchy (reporting levels) in an organization

Broadbanding

is accomplished by combining multiple pay levels into one.

compensation plan

is a complete package that lists details about employees' wages, salaries, benefits, and payment terms.

Develop a program outline 1

Set an objective for the program.

Develop a program outline 2

Establish target dates for implementation and completion.

Develop a program outline 3

Determine a budget

Designate an individual to supervise the design of the compensation program1 

Determine whether this position will be permanent or temporary.

Designate an individual to supervise the design of the compensation program 2

Determine who will oversee the program once it is established.

Designate an individual to supervise the design of the compensation program 3

Determine the cost of going outside versus looking inside.

Designate an individual to supervise the design of the compensation program 4

Determine the cost of a consultant's review.

Create a compensation philosophy 1

Form a compensation committee (presumably consisting of officers or at least including one (1) officer of the company).

Create a compensation philosophy 2

Decide what, if any, differences should exist in pay structures for executives, professional employees, sales employees, and so on (e.g., hourly versus salaried rates, incentive-based versus noncontingent pay).

Create a compensation philosophy 3

Determine whether the company should set salaries at, above, or below market.

Create a compensation philosophy 4

Decide the extent to which employee benefits should replace or supplement cash compensation.

Conduct a job analysis of all positions 1

Conduct a general task analysis by major departments. What tasks must be accomplished by whom?

Conduct a job analysis of all positions 2

Get input from senior vice presidents of marketing, finance, sales, administration, production, and other appropriate departments to determine the organizational structure and primary functions.

Conduct a job analysis of all positions 3

Interview department managers and key employees, as necessary, to determine their specific job functions.

Conduct a job analysis of all positions 4

Decide which job classifications should be exempt and which should be non-exempt.

Conduct a job analysis of all positions 5

Develop model job descriptions for exempt and non-exempt positions, distribute the models to incumbents for review and comment; adjust job descriptions.

Conduct a job analysis of all positions 6

Develop a final draft of job descriptions.

Conduct a job analysis of all positions 7

Meet with department managers, as necessary, to review job descriptions.

Conduct a job analysis of all positions 8

Finalize and document all job descriptions.

Evaluate jobs 1

Rank the jobs within each senior vice president's and manager's department, and then rank jobs between and among departments.

Evaluate jobs 2

Verify ranking by comparing it to industry market data concerning the ranking, and adjust if necessary.

Evaluate jobs 3

Prepare a matrix organizational review.

Evaluate jobs 4

Based on required tasks and forecasted business plans, develop a matrix of jobs crossing lines and departments.

Evaluate jobs 5

Compare the matrix with data from both the company structure and the industrywide market.

Evaluate jobs 6

Prepare flow charts of all ranks for each department for ease of interpretation and assessment.

Evaluate jobs 7

Present data and charts to the compensation committee for review and adjustment.

Determine grades 1

Establish the number of levels (senior, junior, intermediate, and beginner) for each job family and assign a grade to each level.

Determine grades 2

Determine the number of pay grades, or monetary range of a position at a particular level, within each department.