pay management

8/7/2019 Pay Management

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LEARNING OBJECTIVES

At the end of this session students should be able

to:

Define the term pay management

Explain the importance of pay management

Understand the equity issue in pay managementExplain factors affecting pay management

Explain the concept of job evaluation

Identify the methods of job evaluation

Identify the pay survey method

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Pay Management is the HRM functionthat deals with development,implementation and maintenance of abase pay system that is fair.

It is the aggregate of all the activitiesinvolved in developing, implementingand maintaining a fair base pay system.

Base pay is the basic wage or salarypaid to the employee and it does notinclude allowances and other payments.

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Base Wage Salary

As per payment

base

Wage is paid

according to thenumber of unitsproduced or sold

Salary is paid

according to thetime spent forworking

As per types ofjobs

production andsales employees

Clerical,supervisory and

managerialemployees

As per time ofpayment

Daily or hourly Weekly or monthly

As per nature ofwork Work ismeasurable clearlyand quantitatively

Work is subjectiveand difficult tomeasurequantitatively

As per accounting

base

Considered as

expenses tocalculate

Considered as

expenses tocalculate net profit

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To attract suitably qualifiedpersons to the organisation

To retain most appropriate

employees within the organisation To motivate employees

To comply with legal requirements

To ensure equity To control employee cost

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Primary Equity

Internal Equity

External Equity

Inputs Equity 6


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Government legal requirements

Trade unions

Cost of living Demand and supply

Productivity

Financial ability Competitive pays

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Job evaluation is the systematicprocess of determining therelative worth of jobs which areavailable within an organisation

It is a systematic comparison of jobs to determine the worth of

one job relative to another andeventually result in a wage orsalary hierarchy

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Appoint a committee for job evaluation

Examine job analysis information

Decide the method of job evaluation

Evaluate jobs

Rank jobs according to the relativeimportance

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Job Ranking Method

Job Grading/Classification Method

Factor Comparison Method

Point System

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Jobs are ranked from the mostimportant to least importantaccording to the degree of relativecontribution given by each job to

achieve the organizational success

Two techniques of job ranking

a) General Rankingb) Paired Comparison

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Job evaluator is provided with job

descriptions relevant to all jobs which areto be evaluated. Placing jobs from mostvalued to leased valued is by consideringresponsibility, needed efforts, needed

competencies and working conditions.

Later, ranking done by all evaluators arecompared and averages of rankings are

calculated.

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Format for calculation of averages under jobgeneral ranking

Job Evaluators Average

A B C D E

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Format for Ranking Jobs

Job Ranking byEvaluator A

Ranking byEvaluator B

Ranking byEvaluator C

Manager 1 1 1

Supervisor 3 3 3

Cashier 4 5 5

Peon 9 9 9

Van Salesmen 6 6 7

Counter Salesmen 8 8 8

Clerk 5 4 4

Bicycle Salesmen 7 7 6

Assistant Manager 2 2 2

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Order Job Average1 Manager 1

2 Assistant Manager 2

3 Supervisor 3

4 Clerk 4.3

5 Cashier 4.6

6 Van Salesmen 6.3

7 Bicycle Salesmen 6.6

8 Counter Salesmen 8

9 Peon 916


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Evaluate the job but not the job holder Use sufficient number of factors to

evaluate the job

Use factors which can be defined and

described Communicate the method of evaluation

and its purpose

Use several experts and managers for

evaluation Have job analysis information before

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Pay survey is a type of research thatdetails with collection and analysis ofinformation on salaries and wages

being paid by similar or competitiveorganisations.

It attempts to ensure external

equity .

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Determine Jobs (Key Jobs) to be considered

Decide which information is needed

Determine organizations for the survey

Determine survey techniques

Conduct the survey

Analyze data, information and present

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Prevailing wage or salary rates

Union power

Wage and salary policies and adjustments

Pay secrecy and pay openness

Competency-based pay Vs skilled- basedpay

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QUESTIONS/SUG

GESTIONS

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pay management

Documents