Matakuliah: J0124/Manajemen Sumber Daya Manusia Tahun: 2007/2008 MODUL 16 Compensation Strategies & Practices

Bina Nusantara Learning Outcomes After studying this chapter, the students should be able to : Identify two types & components of compensation Discuss four strategic compensation design issues Define job evaluation & discuss four methods of performing it Outline the process of building wage & salary system

Bina Nusantara Outline The Nature of Compensation Compensation System Design Issues Perceptions of Pay Fairness Legal Constraints on Pay Systems Development of a Base Pay System Pay Structure Issues Involving Pay Increases

Bina Nusantara Nature of Compensation Compensation is what employees receive in exchange for their contribution to the organization Compensation DirectIndirect

Bina Nusantara Compensation System Design Issue Compensation philosophies * entitlement orientation * performance orientation Compensation approaches * traditional approach * total reward approach Decisions about compensation level Competency-based level Individual vs team rewards

Bina Nusantara Perception of Pay Fairness Procedural & distributive justice in compensation Pay openness External equity

Bina Nusantara Legal Constraints on Pay Systems Minimum wage Child-labor provision Computer-related occupations Overtime provisions Compensatory time off Independent contractor regulations Equal pay & pay equity

Bina Nusantara Development of a Base Pay System Job evaluation * ranking method * classification method * point method * factor comparison Legal issues & job evaluation

Bina Nusantara Pay surveys Wages & salaries survey FormalInformal

Bina Nusantara Pay Structures Different pay structure Establishing pay grades Broadbanding Pay range Individual pay Rates out of range Pay compression

Bina Nusantara Issues Involving Pay Increases Pay adjustment matrix COLA Seniority Lump-sum increases

Bina Nusantara Closing Compensation can be divided into direct & indirect compensation When designing & administering compensation program, behavioral aspects must be considered There are several factors in determining salary rates An effective pay system requires that changes continue to be made as needed