November 4, 2012

MU0015 [Compensation Benefits] Set1 Q3

Q3. What are the factors that have to be determined before preparing the salary structure?
  
Ans:

The factors that have to be determined before preparing the salary structure are as under:-

Pay structure is the grouping of pay grades or pay bands. There can be more than one pay structure in a compensation plan. For instance, there may be one pay structure for service and maintenance positions, one for sales positions and one for managerial positions. Or, the organisation may have  just one structure for all positions. The process of developing the pay structure deals with internal and external analysis to assess the compensation package for the specific job profile.  Job description provides in-depth knowledge about the job profile and its worth.  

Pay  structure  helps  in  analysing  the  employee’s  role,  value  and  status  in  the organisation. It also helps in the assessment of incentives.

If  the  organisation  is  paying  very  less  to  employees,  then  it  may  lose  valuable employees. If the organisation is paying high, then it may be unwisely spending company resources.

The main  goal  of  developing  a  pay  structure  is  to  manage  and  demonstrate  an organisation’s compensation philosophy and to reflect and support the advancement of the company’s culture. An effective pay structure also helps to attract and retain the efficient employees.

An  organisation's  pay  structure  is  a  visible  demonstration  of  its  compensation philosophy  and  plan.  Pay structure is a tool, which is developed logically and communicated effectively to make the employees more motivated towards the job.

The following three factors have to be determined while developing a pay structure: 
The  proper  data  for  establishing  the  relative  value  of  a  particular  job  to  the organisation.
The proper pay range for a job with the defined value to the organisation. 
The value of each job position within the specified pay range.

Once the above factors are determined, pay structures can be developed through the following steps:

1. Group the jobs with those that have a similar value in the organisation.
2. Measure these groups to find out the number of pay ranges needed to group the jobs on the basis of their value to the organisation.
3. Create a salary range that has a minimum point, a mid-point and a maximum point for amounts allotted within the range and determine the pay for each job grouping.

An organisation’s compensation philosophy and pay strategy determines the approach that should be taken to allocate pay across job ranges. Factors to be considered are:
Number of years of experience.
Number of reporting staff members.
Performance evaluation results.
Hazardous working conditions.
Undesirable shifts.
Education and degrees.
Professional certifications.
Management opinions.

A successfully developed pay structure identifies career development in addition to promotion. It demonstrates and pays for the business results on which an organisation places value. An effective pay structure is worth the time and attention. It pays to get it right.

How an  organisation  structures  its  base  salary  program  is  basically  a  matter  of organisational   philosophy,  although  marketplace  practices  are  very  essential  to consider in highly competitive situations. In structuring this base pay program, several options are available:

Organisations can use a single rate structure in which the employees performing similar jobs will receive the same pay rate.
Organisations can use a tenure based approach which focuses on from how long an employee has been employed in a particular job.
Organisations can also use a combination of a tenure-based plan and a merit-based plan. For example usually employees begin their job at a fixed rate, and then progress to higher rates during their first year based on the number of years spent in the job, then any additional pay increase is awarded only on the basis of performance. 
Organisations can use a pay system based on productivity. An example for this would be an employee who is paid only a sales commission.
An  increasingly  popular  option  is  some  form  of  base  pay  with  an  incentive opportunity, either based on individual, team, unit, or company performance.

1 comment:

  1. Its like you read my mind! You appear to know a lot about
    this, like you wrote the book in it or something.

    I think that you can do with some pics to drive the message home a little bit, but
    instead of that, this is excellent blog. A fantastic read.
    I'll definitely be back.

    ReplyDelete

Labels

1st Sem (common) Subjects (150) 1st Sem BBA (10) 2nd Sem (common) Subjects (70) 2nd Sem BBA (10) 3rd Sem Banking Management (30) 3rd Sem BBA (8) 3rd Sem core/common subjects (37) 3rd Sem Environmental Management (2) 3rd Sem Event Management (8) 3rd Sem Finance Management (113) 3rd Sem HEALTH SERVICE MANAGEMENT (HSM/HCS) (65) 3rd Sem Human Resource Management (98) 3rd Sem Information Systems Management (8) 3rd Sem International Business (34) 3rd Sem Marketing Management (129) 3rd Sem Operations Management (8) 3rd Sem Project Management (103) 3rd Sem Retail Operations Management (8) 3rd Sem Supply Chain Management (SCM) (16) 3rd Sem Total Quality Management (TQM) (16) 4th Sem Banking Management (38) 4th Sem core/common subjects (65) 4th Sem Event Management (8) 4th Sem Finance Management (8) 4th Sem HEALTH SERVICE MANAGEMENT (HSM/HCS) (21) 4th Sem Human Resource Management (104) 4th Sem Information Systems Management (8) 4th Sem International Business (12) 4th Sem Marketing Management (8) 4th Sem Operations Management (37) 4th Sem Project Management (56) 4th Sem Retail Operations Management (8) 4th Sem Supply Chain Management (SCM) (8) 4th Sem Total Quality Management (TQM) (8) BBA101 - Communication Skills (2) BBA101 Set1 (1) BBA101 Set2 (1) BBA102 - Organization Behaviour (2) BBA102 Set1 (1) BBA102 Set2 (1) BBA103 - Business Environment (2) BBA103 Set1 (1) BBA103 Set2 (1) BBA104 - Quantitative Techniques in Business (2) BBA104 Set1 (1) BBA104 Set2 (1) BBA105 - Computer Fundamentals (2) BBA105 Set1 (1) BBA105 Set2 (1) BBA201 - Research Methods (2) BBA201 Set1 (1) BBA201 Set2 (1) BBA202 - Business Strategy (2) BBA202 Set1 (1) BBA202 Set2 (1) BBA203 - Financial Accounting (2) BBA203 Set1 (1) BBA203 Set2 (1) BBA204 - Marketing Management (2) BBA204 Set1 (1) BBA204 Set2 (1) BBA205 - Management Information Systems (2) BBA205 Set1 (1) BBA205 Set2 (1) BBA301 - Legal and Regulatory Framework (2) BBA301 Set1 (1) BBA301 Set2 (1) BBA302 - Human Resource Management (2) BBA302 Set1 (1) BBA302 Set2 (1) BBA303 - Quality Management (2) BBA303 Set1 (1) BBA303 Set2 (1) BBA304 - Advertising and sales (2) BBA304 Set1 (1) BBA304 Set2 (1) Differences between Managers and Leaders (1) EM0001 - Fundamentals of Environment (2) EM0001 Set1 (1) EM0001 Set2 (1) ET0001 - Human resource management for events (2) ET0001 Set1 (1) ET0001 Set2 (1) ET0002 - Corporate Event Project Management (2) ET0002 Set1 (1) ET0002 Set2 (1) ET0003 - Event marketing and management (2) ET0003 Set1 (1) ET0003 Set2 (1) ET0004 - Event Finance Management (2) ET0004 Set1 (1) ET0004 Set2 (1) ET0006 - Event Risk Management (2) ET0006 Set1 (1) ET0006 Set2 (1) ET0007 - Entrepreneurship (2) ET0007 Set1 (1) ET0007 Set2 (1) ET0008 - Special Events (2) ET0008 Set1 (1) ET0008 Set2 (1) ET0009 - Event Management for Tourism (2) ET0009 Set1 (1) ET0009 Set2 (1) IB0010 - International Financial Management (9) IB0010 Set1 (7) IB0010 Set2 (2) IB0011 - International Marketing (9) IB0011 Set1 (2) IB0011 Set2 (7) IB0012 - Management of Multinational Corporations (8) IB0012 Set1 (7) IB0012 Set2 (1) IB0013 - Export-Import Management (8) IB0013 Set1 (7) IB0013 Set2 (1) IB0015 - Foreign Trade of India (6) IB0015 Set1 (3) IB0015 Set2 (3) IB0016 - International Logistics and Distribution Management (2) IB0016 Set1 (1) IB0016 Set2 (1) IB0017 - International Business Environment and International Law (2) IB0017 Set1 (1) IB0017 Set2 (1) IB0018 - Export Import Finance (2) IB0018 Set1 (1) IB0018 Set2 (1) MA0036 - Financial Systems and Commercial Banking (14) MA0036 Set1 (7) MA0036 Set2 (7) MA0037 - Banking Related Laws and Practices (12) MA0037 Set1 (6) MA0037 Set2 (6) MA0038 - Banking Operations (2) MA0038 Set1 (1) MA0038 Set2 (1) MA0039 - Retail Banking (2) MA0039 Set1 (1) MA0039 Set2 (1) MA0040 (1) MA0041 - Merchant Banking and Financial Services (5) MA0041 Set1 (3) MA0041 Set2 (2) MA0042 - Treasury Management (14) MA0042 Set1 (7) MA0042 Set2 (7) MA0043 - Corporate Banking (9) MA0043 Set1 (5) MA0043 Set2 (4) MA0044 - Institutional Banking (10) MA0044 Set1 (8) MA0044 Set2 (2) MB0038 - Management Process and Organization Behavior (24) MB0038 Set1 (16) MB0038 Set2 (9) MB0039 - Business Communication (24) MB0039 Set1 (15) MB0039 Set2 (9) MB0040 - STATISTICS FOR MANAGEMENT (24) MB0040 Set1 (15) MB0040 Set2 (9) MB0041 - Financial Management and Accounting (24) MB0041 Set1 (15) MB0041 Set2 (9) MB0042 - Managerial Economics (30) MB0042 Set1 (15) MB0042 Set2 (15) MB0043 - Human Resource Management (24) MB0043 Set1 (15) MB0043 Set2 (9) MB0044 - PRODUCTION and OPERATIONS MANAGEMENT (16) MB0044 Set1 (8) MB0044 Set2 (8) MB0045 - Financial Management (9) MB0045 Set1 (7) MB0045 Set2 (2) MB0046 - Marketing Management (10) MB0046 Set1 (8) MB0046 Set2 (2) MB0047 - MANAGEMENT INFORMATION SYSTEMS (15) MB0047 Set1 (8) MB0047 Set2 (7) MB0048 - OPERATIONS RESEARCH (10) MB0048 Set1 (8) MB0048 Set2 (2) MB0049 - Project Management (10) MB0049 Set1 (8) MB0049 Set2 (2) MB0050 - Research Methodology (20) MB0050 Set1 (10) MB0050 Set2 (10) MB0051 - Legal Aspects of Business (17) MB0051 Set1 (13) MB0051 Set2 (4) MB0052 - Strategic Management and Business Policy (30) MB0052 Set1 (15) MB0052 Set2 (15) MB0053 - International Business Management (35) MB0053 Set1 (19) MB0053 Set2 (16) MF0010 - Security Analysis and Portfolio Management (39) MF0010 Set1 (21) MF0010 Set2 (18) MF0011 - Mergers and Acquisitions (24) MF0011 Set1 (14) MF0011 Set2 (10) MF0012 - Taxation Management (25) MF0012 Set1 (16) MF0012 Set2 (9) MF0013 - Internal Audit and Control (25) MF0013 Set1 (16) MF0013 Set2 (9) MF0014 (1) MF0015 - International Financial Management (2) MF0015 Set1 (1) MF0015 Set2 (1) MF0016 - Treasury Management (2) MF0016 Set1 (1) MF0016 Set2 (1) MF0017 - Merchant Banking and Financial Services (2) MF0017 Set1 (1) MF0017 Set2 (1) MF0018 - Insurance and Risk Management (2) MF0018 Set1 (1) MF0018 Set2 (1) MH0051 - Health Administration (15) MH0051 Set1 (5) MH0051 Set2 (10) MH0052 - Hospital Organisation Operations and Planning (26) MH0052 Set1 (12) MH0052 Set2 (14) MH0053 - Hospital and Healthcare Information Management (11) MH0053 Set1 (3) MH0053 Set2 (8) MH0054 - Finance Economics and Planning in HCS (13) MH0054 Set1 (10) MH0054 Set2 (3) MH0055 (1) MH0056 - Public Relations and Marketing for Healthcare Organisation (6) MH0056 Set1 (3) MH0056 Set2 (3) MH0057 - Management of Healthcare Human Resources (5) MH0057 Set1 (2) MH0057 Set2 (3) MH0058 - Legal Aspects in Healthcare Administration (5) MH0058 Set1 (3) MH0058 Set2 (2) MH0059 - Quality Management in HCS (5) MH0059 Set1 (3) MH0059 Set2 (2) MI0014 (1) MI0033 - Software Engineering (2) MI0033 Set1 (1) MI0033 Set2 (1) MI0034 - Database Management System (2) MI0034 Set1 (1) MI0034 Set2 (1) MI0035 - Computer Network (2) MI0035 Set1 (1) MI0035 Set2 (1) MI0036 - BUSINESS INTELLIGENCE TOOLS (2) MI0036 Set1 (1) MI0036 Set2 (1) MI0038 - Enterprise Resource Planning (2) MI0038 Set1 (1) MI0038 Set2 (1) MI0039 - eCommerce (2) MI0039 Set1 (1) MI0039 Set2 (1) MI0040 - Technology Management (2) MI0040 Set1 (1) MI0040 Set2 (1) MI0041 - Java and Web Design (2) MI0041 Set1 (1) MI0041 Set2 (1) MK0010 - Sales Distribution and Supply Chain Management (33) MK0010 Set1 (17) MK0010 Set2 (16) MK0011 - Consumer Behaviour (31) MK0011 Set1 (16) MK0011 Set2 (15) MK0012 - Retail Marketing (42) MK0012 Set1 (20) MK0012 Set2 (22) MK0013 - Market Research (23) MK0013 Set1 (12) MK0013 Set2 (11) MK0014 (1) MK0015 - Service Marketing And Customer Relationship Management (2) MK0015 Set1 (1) MK0015 Set2 (1) MK0016 - Advertising Management and Sales Promotion (2) MK0016 Set1 (1) MK0016 Set2 (1) MK0017 - eMarketing (2) MK0017 Set1 (1) MK0017 Set2 (1) MK0018 - International Marketing (2) MK0018 Set1 (1) MK0018 Set2 (1) ML0010 - Warehousing and Supply Chain Management (2) ML0010 Set1 (1) ML0010 Set2 (1) ML0011 - Buying and Merchandising (2) ML0011 Set1 (1) ML0011 Set2 (1) ML0012 - Store Operations (2) ML0012 Set1 (1) ML0012 Set2 (1) ML0013 - Retail IT Management (2) ML0013 Set1 (1) ML0013 Set2 (1) ML0014 (1) ML0015 - Services Marketing and Customer Relationship Management (2) ML0015 Set1 (1) ML0015 Set2 (1) ML0016 - Advertising Management and Sales Promotion (2) ML0016 Set1 (1) ML0016 Set2 (1) ML0017 - Mall Management (2) ML0017 Set1 (1) ML0017 Set2 (1) ML0018 - Project Management in Retail (2) ML0018 Set1 (1) ML0018 Set2 (1) MU0010 - Manpower Planning and Resourcing (31) MU0010 Set1 (16) MU0010 Set2 (15) MU0011 - Management and Organizational Development (20) MU0011 Set1 (10) MU0011 Set2 (10) MU0012 - Employee Relations Management (22) MU0012 Set1 (11) MU0012 Set2 (11) MU0013 - Human Resource Audit (25) MU0013 Set1 (15) MU0013 Set2 (10) MU0014 (1) MU0015 - Compensation Benefits (24) MU0015 Set1 (14) MU0015 Set2 (10) MU0016 - Performance Management and Appraisal (27) MU0016 Set1 (12) MU0016 Set2 (15) MU0017 - Talent Management and Employee Retention (24) MU0017 Set1 (12) MU0017 Set2 (12) MU0018 - Change Management (29) MU0018 Set1 (9) MU0018 Set2 (20) OM0010 - Operations Management (2) OM0010 Set1 (1) OM0010 Set2 (1) OM0011 - Enterprise Resource Planning (2) OM0011 Set1 (1) OM0011 Set2 (1) OM0012 - Supply Chain Management (2) OM0012 Set1 (1) OM0012 Set2 (1) OM0013 - Advanced Production and Operations Management (2) OM0013 Set1 (1) OM0013 Set2 (1) OM0014 (1) OM0015 - Maintenance Management (6) OM0015 Set1 (3) OM0015 Set2 (3) OM0016 - Quality Management (11) OM0016 Set1 (8) OM0016 Set2 (3) OM0017 - Advanced Production and Planning Control (11) OM0017 Set1 (3) OM0017 Set2 (8) OM0018 - Technology Management (9) OM0018 Set1 (7) OM0018 Set2 (2) PM0010 - Introduction to Project Management (26) PM0010 Set1 (14) PM0010 Set2 (12) PM0011 - Project Planning and Scheduling (25) PM0011 Set1 (14) PM0011 Set2 (11) PM0012 - Project Financing and Budgeting (26) PM0012 Set1 (14) PM0012 Set2 (12) PM0013 - Managing Human Resources in Projects (26) PM0013 Set1 (13) PM0013 Set2 (14) PM0014 (1) PM0015 - Quantitative Methods in Project Management (14) PM0015 Set1 (8) PM0015 Set2 (6) PM0016 - Project Risk Management (14) PM0016 Set1 (7) PM0016 Set2 (7) PM0017 - Project Quality Management (14) PM0017 Set1 (7) PM0017 Set2 (7) PM0018 - Contracts Management in Projects (14) PM0018 Set1 (7) PM0018 Set2 (7) Project (1) QM0010 - Foundations of Quality Management (4) QM0010 Set1 (2) QM0010 Set2 (2) QM0011 - Principles and Philosophies of Quality Management (4) QM0011 Set1 (2) QM0011 Set2 (2) QM0012 - Statistical Process Control and Process Capability (4) QM0012 Set1 (2) QM0012 Set2 (2) QM0013 - Quality Management Tools (4) QM0013 Set1 (2) QM0013 Set2 (2) QM0014 (1) QM0015 - ISO/QS 9000 Elements (2) QM0015 Set1 (1) QM0015 Set2 (1) QM0016 - Managing Quality in the Organization (2) QM0016 Set1 (1) QM0016 Set2 (1) QM0017 - Quality Management System (2) QM0017 Set1 (1) QM0017 Set2 (1) QM0018 - Quality Development Methods (2) QM0018 Set1 (1) QM0018 Set2 (1) SC0001 - Supply Chain Management (4) SC0001 Set1 (2) SC0001 Set2 (2) SC0002 - Outsourcing (4) SC0002 Set1 (2) SC0002 Set2 (2) SC0003 - Food Supply Chain Management (4) SC0003 Set1 (2) SC0003 Set2 (2) SC0004 - Inventory Management (4) SC0004 Set1 (2) SC0004 Set2 (2) SC0006 - Global Logistics and Supply Chain Management (2) SC0006 Set1 (1) SC0006 Set2 (1) SC0007 - Category Management in Purchasing (2) SC0007 Set1 (1) SC0007 Set2 (1) SC0008 - Purchasing and Contracting for Projects (2) SC0008 Set1 (1) SC0008 Set2 (1) SC0009 - Supply Chain Cost Management (2) SC0009 Set1 (1) SC0009 Set2 (1) SMU BBA Subjects (1) SMU MBA/PGDBA Subjects (1)

Visitor Count (since Jan 2019)