Lecture 2. 3 P concept of compensation.ppt
- 1. Pay for position Pay for person Pay for performance
- 2. 3 p consists of 3 parameters that are considered by the management of any organization while deciding the salary as well as the incentives Pay for position Pay for person Pay for performance
- 3. Is the payment for a person by virtue of being in that position/ designation. Pay for position relates to the width of the pay grade Pay structure is a comprehensive framework which consists of a horizontal dimension and vertical dimension. Horizontal dimension is call pay grade and vertical dimension is called pay range. Pay grade is consist of the jobs which require similar skills and competences. Put in other words all the jobs which require similar skills and competence are put in one pay grade. It may provide for a single rate for a pay grade or arrange of pay within pay grade. Pay range is the range within which the pay varies for a particular pay grade. It has the provision for recognizing the individual differences in pay. It has the midpoint pay, maximum and minimum pay. Focus is on the determination of a job structure by Job evaluation, grouping similar job into similar grades & determining pay ranges Pay grade is a unit in the system of monetary compensation which is prevalent in both Public and private sector undertaking
- 4. Width of a pay grade is the extent to which jobs of diffrent sizes are put in one pay grade. Wider the pay grade, lesser importance is given to the positions in it since many jobs of varying sizes are incorporated in a single pay grade. In such cases other factors such as person’s competency or capability (pay for person) or individual achievement of organizational objective(pay for performance) will have an impact in the total pay level. Narrower the pay grade , more important the position in it since a small change in responsibility may place the person in the next grade.
- 5. Focus on the pay structure and determining pay grades and pay ranges The whole process starts with the internal position evaluation (IPE) for finding out different positions in the organization How many ee groups are there in the organization How many levels are there in each ee groups?
- 6. Internal position evaluation Group similar jobs into similar category in a grade Grade Width of a grade Wider grade indicate less importance to position Determining Pay ranges for each grade Single rate Min-maxi Ref salary JE
- 8. One hardest and subjective part of Compensation management. Takes into account capabilities, skills or competences of the person for adequqtely compensating him/her. Associated with competency based pay and market based pay. Determining position competency profile for each position. Take into consideration org philosophy, image, value, identity.
- 9. 3 P competency profile are designed to ensure that competencies are carefully identified, defined and weighed for specific culture and need for the organization. Each person and position has got its own profile
- 10. Pay for position determines the pay grade and the pay range Pay for person determines the exact or actual salary to be given to the employee. The actual salary varies from the reference salary on the basis of the employees competence. The linchpin between the pay for position and pay for person is the reference salary which is the market competitive pay for someone who fulfills the position requirements for competency and experience. In 3 p system, the actual salary varies relative to the reference salary based on the position/person ratio and the number of years that individual has been in the position. Position person ratio also provides an idea about the title, guidance and training to be given to the selected employees.
- 11. Capa bility Position /person ratio Pay for person Title Training Dev Maximu m Demonstrate unique capabilities for selected position Pay slightly > than reference salary Sr. Title Enrich & broaden capabilities Explore promotion options Meets require ments Demonstrate necessary level of competency for the selected position Pay slightly equal to or slightly below the RS Generic title Ex. engineer Focus on new training or dev capabilities tom or dev capabilities upto position requirements New dev plans Minimum Demonstrate a need to improve in some areas Pay at lower end of person pay range Jr. title Train in areas that are far below position requirements Identify the hidden talents
- 12. Pay for performance is the philosophy of the organization to compensate the employees on the basis of the results/ outputs produced by them. Incentives, variable pay. (Students may explain the in detail the various incentives here)
- 13. 13 Buz strategy Reward strategy Pay structures Mkt survey JE Pay level T R Increase d performa nce Non financial rewards Ee benefits Perf. mgt Perf. pay Total Reward Process
- 14. Base pay (Basic pay) is the salaries and wages provided to the employees. It is normally constant at a given amount irrespective of the difference in work performance. It is the rate of the job as determined by external and internal parity. External parity is the level of pay for similar jobs in the external labour market. It is established by compensation surveys. Internal parity is the comparison of the jobs of relative worth within the organization. Internal parity is established by job evaluation. If the compensation for employees performance and competence is included in the basic pay, it becomes a true reflection of the remuneration or pay that employee is ought to get and it becomes pay for person and pay for performance.
- 15. Pay structure: Pay surveys and Job evaluation provides data for the design and management of pay structure. Pay structure says the limit within which the employees salary can progress within the grade and how this progression takes place. This can vary in accordance with the assessment of performance, competence or skill.
- 16. Variable pay( contingency pay or differential pay) is the pay which is influenced by the performance of the individual, teams or the organization. It is Payment by result Employee benefits (fringe benefits) are also elements of remunerations since it could be expressed in the form of cash. Ex. pension, compensation on death in service, sick pay, company cars, health insurance, annual holidays, child care provision, maternity leave, subsidized meals, soudexo coupens
- 17. Total remuneration is the sum of the base pay, variable pay and the fringe benefits. This represents the complete worth of the financial rewards to the individuals. This financial rewards and the non financial rewards leads to improved performance by the employees.
- 18. 12/20/2022 18
- 19. Total compensation Relational return Cash compens ation Fringe benefits Basic pay, dearness allowance, incentives, bonus, shift allowance etc Work life balance, sabbaticals, flexibility, crèches, canteens Autonomy, recognition, growth, challenges, satisfaction from work , job security etc. Total return from work
- 20. As a Googler hired into our Bangalore engineering centre you will take on projects that match your background and interests and will work with peers in other Google offices. Those who join us can expect an outstanding work environment and the satisfaction of tackling some of the most intersecting challenges in computing today. Benefits of working at Google includes 1. Medi-claim insurance 2. Life insurance 3. Business travel/personal accident insurance 4. Provident fund 5. Vacation holidays 6. Sick time, maternity leave, paternity leave and family care leave. * ** students are supposed to learn the case to reproduce the same for exam
- 21. Health and wellness: Mediclaim insurance: Cash hospitalization benefits include coverage provided through insurance policy. Hospitalization coverage upto 5 lakh is available to cover the cost of hospitalization and treatment. Google pays 100% of the cost of hospitalization for the employee and their eligible dependents. Coverage is provided for you and your dependents; dependent parents are eligible for health care coverage Life insurance: Coverage at 2 times the basic earnings. Google pays 100% o the cost of this benefits Business travel accident(BTA): Coverage 2 times the basic earning to a maximum of 5 lakh US dollars. Covers emergency medical treatment for the sudden onset of illness or injury while travelling outside of india as well as worldwide assistance service, repatriation, medical evacuation and lost baggage and cash Personal accident insurance: Coverage 2 times the base earnings. The face value of this benefit is also payable in the event of either total or partial permanent disablement or temporary and total disablement. Google pays 100% of the cost of this benefit.
- 22. Retirement and Savings: Provident fund: Google provide a 12% employer contribution on all basic earnings. Vacation: 20 days per year Holidays: 12 paid holidays Sick leave:12 days per year
- 23. Pay model with the diagram-ref: compensation, George T Milkovich, Jerry M Newman,C.S. Venkata Ratnam,9e,tatamc grawhill