1. PAD214 INTRODUCTION TO PUBLIC PERSONNEL ADMINISTRATION
LESSON 10
COMPENSATION

2. INTRODUCTION
Compensation is one of the most importance thing that an employee is always looking forward for the job that assigned by the employer. Employer must paid the employee a certain amount of financial and non-financial rewards to compensate the employee on the job that has been done. This lesson describes the compensation policy that should be practiced by an organization, especially in the public sector.

3. OBJECTIVES OF THIS LECTURE
Upon completing this chapter student should be able to:
Understand the concept of compensation
Describe the purpose of compensation policy
Describe the determinant factors of compensation policy
Describe the methods to pay compensation
Understand the compensation policy in the public sector

4. Definition
Compensation is any type of reward or what employees receive in exchange for performing organizational tasks or for their contribution to the organisation.
Compensation is a tool used by management for a variety of purposes to further the existence of the company. Compensation may be adjusted according the the business needs, goals, and available resources.

5. The purposes of compensation
recruit and retain qualified employees.
increase or maintain morale/satisfaction.
reward and encourage peak performance.
achieve internal and external equity.
reduce turnover and encourage company loyalty.
modify (through negotiations) practices of unions.

6. Types of compensation
Direct financial compensation- such as pay an employee receives in the form of wages, salaries, bonuses or commissions.
Indirect Financial compensation – all types of financial rewards that are not include in direct financial compensation such as vacation, life insurance, child benefit, medical benefit & health care.
Non-financial rewards- any recognition and appreciations from employer to fulfil employee satisfaction.

7. Determinants of Financial Compensation
The organization – Compensation policy, Organizational politics and ability to pay.
The labor Market – Cost of living, Labor unions The economy and compensation survey.
The employee – Job performance, Seniority, Political influence and luck.
The job – Job Evaluation, Job pricing and job description.

8. Methods of determining pay compensation
The pay-level decision – is decided by managers who compare the pay of people working inside the organisation with those outside it.
Play survey- are technique and instrument used to collect data about compensation paid to employee by all employers in a geographic, an industry or in occupational group.
Pay structure decision- is to construct an internal pay hierarchy by using job evaluation. Four basic methods of job evaluation are:
Job ranking- the evaluator rank-order whole jobs, from the simplest to the most challenging
Classification – group a set of together into a grade or specific class.

9. Point system – requires evaluators to quantify the value of the elements of a job. Points are assigned on the basis of skill required, degree of dangerous or unpleasant working condition.
Factor comparison – the job evaluation process to be done factor by factor
Individual pay decision – how much she or he will earn. The methods of payment include :
Flat rates – employers setting same wage rates for different employees.
Payment for Time Worked – wage (pay calculated at an hourly rate).
salary (pay calculated at an annual or monthly rate)

10. THE GOVERNMENT SERVANT COMPENSATION POLICY
The remuneration or salary of all government servants are standardized by JPA.
The level of salary is determined by the grade and qualification – Degree Professional Grade (N41 – N 54) & Diploma (N27)& certificate (SPM) Supporting staff (N17)
SSB salary structure for N41 Assistant Director
Level 1 P1T1, T2, T3, T4, …… T10
level 2 P2T1, T2, T3, T4, …… T10
Level 3 P3T1, T2, T3, T4, ….. T10

11. Types of Compensation
Basic salary
Elaun Khidmat Awam/Keraian
Imbuhan Tetap perumahan
COLA – bantuan sara hidup bandar RM300 Luar bandar RM150.
Panel perubatan

12. PENOLONG PEGAWAI SAINS
C27
P1T1 RM
RM160.00
RM180.00
RM300.00
P1T5 RM
P1T6 RM
PENOLONG PEGAWAI SENIBINA
J29 RM
P1T2 RM
PENOLONG PEGAWAI SIASATAN
P29 RM
PENOLONG PEGAWAI TEKNOLOGI MAKLUMAT
F29 RM RM
PENOLONG PEGAWAI SYARIAH
LS27 RM RM
PENOLONG PEGAWAI TADBIR
N27 RM RM RM

13. SALARY SCALE AND ADJUSTMENT
P1T1 P1T2 P1T3 P1T4 P1T5 ………………….. P1T10
P2T1 P2T2 P2T3 P2T4 P2T5……………………P2T10
P3T1 P3T2 P3T3 P3T4 P3T5……………………P3T10
1) P1T P1T2 MENDATAR
2) P1T1
MENEGAK
P2T1
3) P1T1
P2T1 P2T2 MELINTANG

14. THAT ALL FOR TODAY SEE YOU AGAIN NEXT LECTURE LESSON 11 EMPLOYEE BENEFITS AND SERVICES