New chap03
- 1. 3 Internal alignment, often called internal equity, refers to the pay relationships between the jobs / skills / competencies within a single organization. The relationships form a pay structure that can support the workflow, is consistent among employees, and directs their behavior toward organization objectives.
- 2. 3 Compensation Strategy: Internal Equity…If done properly, it: Supports Work Flow Supports Fairness Directs Behavior Toward Organization Objectives (Motivation)
- 3. 3 Pay structure, refers to the array of pay rates for different work or skills within a single organization. The number of levels, differentials in pay between the levels, and the criteria used to determine those differences create the structure. They may vary greatly between organizations.
- 4. 3 Internal Consistency: A Typical Engineering Job Structure Hierarchy Entry Level I Engineer: Limited use of basic principles. Close supervision. Senior Engineer: Full use of standard principles and concepts. Under general supervision. Systems Engineer: Wide applications of principles and concepts, plus working knowledge of other related disciplines. Under very general direction. Lead Engineer: Applies extensive knowledge as a generalist or specialist. Exercises wide latitude. Advisor Engineer: Applies advanced principles, theories, and concepts. Assignments often self-initiated. Recognized Consultant Engineer: Exhibits an exceptional degree of ingenuity, Authority – creativity, and resourcefulness. Acts independently to uncover and resolve Level VI operational problems.
- 5. 3 What Shapes Internal Structures? EXTERNAL FACTORS: Economic Pressures Government Policies, Laws, Regulations Stakeholders Cultures and Customs (not really relevant in the US today) ORGANIZATION FACTORS: Strategy HR Policy Available Technology Employee Acceptance Human Capital Cost Implications (People) INTERNAL STRUCTURE: Levels Differentials Criteria
- 6. 3 Which Structure has the Greatest Impact on Performance? On Fairness? Structure A Structure B Layered (Classical) De-layered (Broadband) Chief Engineer Chief Engineer Engineering Manager Consulting Engineer Senior Lead Engineer Lead Engineer Consulting Engineer Senior Engineer Engineer Engineer Trainee Associate Engineer
- 7. 3 Strategic Choice: Hierarchical vs Egalitarian Egalitarian Hierarchical (Broad bands) Levels Many Fewer Differentials Large Small Criteria Person or Job Person or Job Supports: Close Fit Loose Fit Work Organization Individual Performers Teams Consistent Application Performance Equal Treatment Behaviors Opportunities for Promotion Cooperation
- 8. 3 Benefits of an Internally Aligned (Equitable) Structure Undertake training Increase experience Reduce turnover Pay structure Facilitate career progression Facilitate performance Reduce pay-related grievances Reduce pay-related work stoppages
- 9. 3 What Research Tells Us About the Effects of Various Structures Equity Theory Tournament Theory Institutional Model: Copy Others
- 10. 3- Perceived Equity of a Pay Structure (Equity Theory) MY PAY OTHERS’ PAY My qualifications Their qualifications My work performed Their work performed My product value Their product value
- 11. 3- Which Structure Fits Your Organization Best? How the work is organized Consistent among employees Directs behavior toward organization objectives