Compensation Administration

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  COMPENSATION ADMINISTRATION EXCEL BOOKS 16-1 16 Chapter  ANNOTATED OUTLINE 16-2 INTRODUCTION Compensation is what employees receive in exchange for their contribution to the organization. Generally speaking, employees offer their services for three types of rewards    Base pay    Variable pay    Benefits Compensation Administration The most important objective of any pay system is fairness or equity, generally expressed in three forms    Internal equity:  where more difficult jobs are paid more    External equity:  where jobs are fairly compensated in comparison to similar jobs in labour market    Individual equity:  where equal pay is ensured for equal work  16-3 Objectives of compensation planning   Attract talent   Retain talent   Ensure equity   Reward appropriately(loyalty, commitment, experience, risk raking and other desired behaviours)   Control costs   Comply with legal rules   Ease of operation Compensation Administration  16-4 Equity And Pay Rates  Equity in pay rates could be achieved through five steps Compensation Administration Ensuring equity in pay rates   Find the worth of each job through job evaluation   Conduct a salary survey through the following methods   Key job matching   Key class matching   Occupational method   Job evaluation method   Broad classification method   Group similar jobs into pay grades(pay grades are groups of jobs within a particular class that are paid the same rate   Price each pay grade by using wage curve(curve in a scatter diagram representing the relationship between relative worth of jobs and wage rates)   Fix a pay rage for each grade (like pay for officer category I, II, III etc)
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