pay for 3ps-overall concept

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Pays for 3Ps

Overall Concept

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Pay for 3Ps – Overall Concept

Session Objectives:

To be able to describe why and how the pay for 3Psconcept is applied.

To be able to list the advantages of the concept.

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Integrated Human Resource

Management

PositionClarification

Objective Setting

Compensation

Person Development

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Pay for Position

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To recognize the fulfillment of a position’s permanentobjectives based on Position Evaluation

A reference salary within the grading structure of thecompany

Pay for Position

os t on-re ate ene ts c ear y n e to gra es

Related to the cost of the organization chart

What pay policy is compared with the market

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Pay for Position

Reference Salary10 grades – 10 salaries

$

Define the most economical salary scale yet still stay competitiveEstablish the least possible salary increase in the salary scale

Grade

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Pay for Position

First refers to the Position Evaluation, by showing thecompany grade

Shows the Monthly Base Salary corresponding to thisgrade, and the fixed bonus to which the employee isentitled (or the number of months over which the

emp oyees s pa year y. Shows the value of any non-cash item provided to the

employee as a position – based benefit or perquisite.

Finally shows the total Pay for Position paid to the

employee (cash or non cash amount).

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Pay for Person

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Pay for Person

To recognize the specific personal aspects

Competencies differential between Person and Position

Market Pressure

Seniority

Specific technical or licensing requirements

place Distance between home and working place

Employee Status (Expatriate, international assignee

Family Status Working conditions (hardship)

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Pay for Person

Competencies Ratio: the person’s competency level compared with his /her position,conducted through Competencies Profiling

Market Pressure Ratio: Market pressure weighting on some particular competencies

or qualifications, conducted through compensation and benefits surveys, and used todetermine a possible market premium.

Seniority: The employee’s seniority through number of years in the position

to operate in his her position, and used to determine a possible position allowance.

Work site: Evaluation of the discomfort brought by the obligation to work far from themain office and or far from home, and or far from the shore and used to determinepossible position evaluation.

QOL Index: Evaluation of the quality of living differential between the home city andthe host city

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Pay for Person: Market Differential

ReferenceSalary

5% of population$

Establish a market differential rate for each individual

concernedApply only the salary scale increase and change (up ordown) the market differential based on changes in marketconditions

Grade

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Pay for Performance

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Pay for Performance

•To recognize the contribution to the organizationresults

•Based on Performance Evaluation

•Short or long term incentives

•Non cash rewards

•Related to business results

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Types of Performance Pay

Bonus

Individual – group – company

Incentives

Executive incentives

– 

Rank and file incentives

Productivity –based pay target – based pay

Sales force incentives

Financial schemes

Share ownership – phantom tock – assets

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Pay for Performance

Final results of Performance Appraisal

Show all the types of incentives to which the employee isentitled, including targeted payments and actualpayments.

ow t e va ue o any non-cas tem prov e to t eemployee as a performance reward.

Finally show the total pay for Performance paid to the

employees (cash and non cash amount).

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Pay for Performance

Short and long term incentive scheme should be clearly

defined.

How it is funded, who is eligible, its terms and conditions,

ow t s ca cu ate an str ute , t e target payments,the periodicity of payments and its review procedures.

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Pay for 3P – Cash

VariableBonus

Long-term incentive

The Position The Person The Performance

Reference salary

ThroughPosition Evaluation

ThroughPerson Evaluation

Market Premium

Allowances

ThroughPerformance Evaluation

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Pay for 3P – Non-Cash

Non Cash Reward

The Position The Person The Performance

Position Based Benefits

ThroughPosition Evaluation

ThroughPerson Evaluation

Specific Benefits

Perquisites

ThroughPerformance Evaluation

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3-Ps & Compensation Policy

Pay according to:

•Corporate values and corporate philosophy

•Position based on position evaluation•Person based on person evaluation•

•Capacity to pay, to increase the personnel costs•Market levels to attract and retain•National employment conditions

•And ensure clear, continuous communication & fullunderstanding

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3-Ps Management

Model What When How How much

PositionOrganizationEvaluation

OrganizationCircle

Pay for Position a referencesalaryAnnual increase across the

boardNo salary range

EvaluationCommittee

Person PersonFrom 10 to360 Degree

Potential for promotion to a

va ua on Evaluationthrough privatequestionnaire

Monitor market value of theperson

PerformanceBusinessEvaluation

BusinessCycle

AnnualPlanningWorkshop

Annualperformancereviewworkshop

Pay for Performancea variable bonusIndividual / group / corporateresult and contributionNo merit increaseNo promotion basedon performance

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A Strategy to Manage 3-Ps

PositionOrganization

Analysis

Mapping of

Responsibilities

GradingStructure

Com etenc

PositionClarification

PositionEvaluation

Person

HRM Model

Individual ToolsOrganization ToolsStrategic Tools

Person

Performance

3-Ps Reward

Future

OrganizationAnalysis

CorporateObjectives

Analysis

Capacityto Pay Analysis

Profiling

Mapping ofObjectives

Mapping

of Results

Development

ObjectiveSetting

Performance

Review

Compensation

TotalRemuneration

Policy

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Q&A?