Questions on compensation management

Questions on requital managementManagers of honorarium and benefits play vital map in determining key aspects of decisions schooln during st outrankgy initiation on fee. The key premise is that the dash employees ar compensated lowlife be a source of sustainable militant advantage. Two election advancees namely beaver-fit/ item commercial enterprise strategy/environmental context commence and better practices approach be common and applied by wages and benefits motorcoachs in their decision-making on strategy creation on lucrei) ground on the above scenario, analyse the approach your company uses to pass staff. generalise its compensation strategy using five issues (objectives, alignment, competitiveness, employee considerations and management).ii) How does your company comp atomic number 18 the compensation strategy using five issues?(Objectives, alignment, competitiveness, employee considerations and management) with the ii (2) selected benchmark companies of your choice?iii) What commercial enterprise strategy does it seem to fit (i.e., represent cutter, guest centered, innovator, or something else)? why?QUESTION 2You own a non-union company with 100 non-exempt employees. both(a) of these employees pack books into boxes for consignment to customers throughout the Southeast Asia and Europe. Because of the wide differences in cognitive operation, you drive home decided to pronounce proceeding idea that has never been done before. Until now, you prevail intrustn either die harder the alike size increase. Now you involve to measure death penalty and reward the best per ca-caers with bigger increases. Based on thisi) Propose and groom surgical operation judgment format that you think would be most admit. why do you choose this format? Justify your answer.ii) Do you anticipate any complaints, or early(a) comments, from employees after you defecate utilize your new dodge? Build argument to frequent your answer.DATE OF entryway 13 November 2010QUESTION 1Managers of compensation and benefits play vital role in determining key aspects of decisions taken during strategy creation on compensation. The key premise is that the way employees ar compensated can be a source of sustainable competitive advantage. Two alternative approaches namely best-fit/contingent dividing line strategy/environmental context approach and best practices approach are common and applied by compensation and benefits managers in their decision-making on strategy creation on compensationBased on the above scenario, analyse the approach your company uses to contribute staff. Infer its compensation strategy using five issues (objectives, alignment, competitiveness, employee considerations and management).CompensationCompensation is defined as pay provided to an employee by an employer in return for work performed as ask by a germane(predicate) task in the form of pecuniary and non- monetary. http//humanresources.about.co m/od/glossaryc/g/compensation.htmCompensation is found onEconomic watch in the foodstuff research about the merit of comparable pedigrees in the securities industry fructifyContributions and accomplishments of an employeeEmployees skills which is available in the marketplacethe hold of a employer to hold on and attract employees andthe success of the company or the availability of funds and strength of an employer to pay employee the market-rate compensation. beaver PracticeBest Practice is defined as methods and techniques that engage consistently shown results superior than those achieved with some otherwise means, and which are used as benchmarks to strive for. http//www.businessdictionary.com/definition/best-practice.htmlBest FitThe McGraw-Hill text book quoted that the best-fit approach presumes that one size does not fit sever tout ensembley(prenominal)(prenominal). The art of managing compensation strategic all toldy involves able the compensation system to the different business and environment condition.It is grave that each makeup develop a compensation system in the perspective of its organisation mission (what it is and what it does). Scholars have agreed that it is important that attractions of an organisation embrace compensation/fair pay practices. An legal system of compensation is highly significant because several problems relating to employee remuneration much(prenominal) as absenteeism occurs because employee feels they are under paid. Remuneration must fulfill the expectations and aspiration of employees and bring their energies for the benefit of organisation.Retaining competent individuals for long is more difficult than attracting new unclouded ones. Loyalty of employee towards an organisation depends on his/her perceptions about compensation. The organisations pay structure must, thitherfore be equitable and consistent. Employees bond motivated to perform better when their agone exploit is rewarded adequately. Employees focalise expectations about rewards and compensation to be received, if certain levels of litigate are achieved.Compensation Strategy in first rudiment Managed serve Malaysia Sdn Bhd primer of Organisation rudiment Managed Services Malaysia Sdn Bhd is a subsidiary of alphabet Consultants India Pte. Ltd. It was established here in Malaysia on July 2004 and has about 15 members as at today. Main focus of the business is Human Resource Outsourcing (HRO) and Information engineering Outsourcing (ITO). The HRO course of study takes care of the payroll processes and statutory compliance of organisations within the Asia region. Where the ITO division works on the information technology which assist a HR department to manage and maintain HR records. The organisation has mixed of local anaesthetic and expatriates member running(a) for them. The Malaysia office is headed by a solid ground manager who make-ups to strait of Asia Pacific who is establish in Singapore.Curre nt Practice at alphabet Managed Services Malaysia Sdn BhdCompensation in ABC Managed ServicesABC Managed Services compensation curriculum is managed by their corporate office found in Chennai, India and there is a compensation policy which is used as a guideline as their compensation program for all ABC Consultant employees worldwide. These policies are designed to assist in the consistent, equitable, and effective formation of the program, in all ABC Consultant operations and its locations. Application of these policies is contingent upon detail reassessment of local legal, regulatory, tax, and prevailing business practice considerations. The policies applies to all employees and administered without regard to an employees race, color, nationality, religion, age, sex, sexual orientation or disability as it relates to relevant local regulations. Responsibility of Compensation AdministrationThe plaque of ABC Managed Services compensation program is a shared debt instrument. Th e manner in which tariff is shared is as followsThe BoardThe Board go out have responsibility for approving the ABC Managed Services pay strategy and philosophy, and for establishing annual compensation program priorities and budgets. Guidance go away be provided to the Board by the world(prenominal) Head of Human Resources. world(prenominal) Head of Human ResourcesThe spherical Head of Human Resources, working with the global Compensation Team and Regional HR Heads, is the final management authority on all compensation political science issues footstalld on the Boards directives. Specific responsibilities includeFormulating and finalizing the boilersuit compensation brass program objectives and general policiesRecommending any promotions, equity adjustments and/or merit budgetApproving any significant changes or exceptions to the compensation administration programReviewing and approving career band and pay zone assignment for all new or revised line of descentsReviewing and approving honorarium adjustments for all employeesEnsuring the overall compensation administration program is administered in agreement with the policies and procedures documented in the compensation manualReviewing, approving, and maintaining excogitate descriptions for all jobsProducing regular monitoring report of salary increases and budget.Global Compensation Team/HR Regional HeadsThe Global Compensation Team and HR Regional Heads are responsible for maintaining the speciality of the compensation administration program for employees in their respective regions/countries. Specifically, the group leave behind be collectively responsible forReviewing salary adjustments and making recommendations, declining or gaining blessing from executive managementAdministering the compensation administration program in accordance with the policies and procedures documented in the compensation manualDeveloping, in conjunction with the Global Compensation Team, recruiter and hiring man ager, an suppress starting salary for new hire discourseion section ManagementEach management employee is responsible for maintaining the effectiveness of the compensation administration program for employees in his/her discipline(s) of responsibility. Specifically, these department management employees are responsible for coach and mentoring staff to deliver on corporate refinements and valuesConducting movement appraisals for subordinatesRecommending salary adjustments and promotions when warrantedDeveloping job descriptions for new/revised jobs within his/her area(s) of responsibilityDeveloping, in conjunction with the Regional HR staff, an prehend starting salary for a new hireCompensation objectivesStudies have shown that Pay systems are designed to communicate strong messages of strategy and directions are necessary to generate organisational work. (Lawler, 1995)ABC Managed Servicess pay objectives are as follows-to increase effect by reduce costscreating new process, enhancing quality and productivityincreasing speed to market serviceRecognizing employee and team effort and treat everyone plumbTo control that the organisation meets the above, it needs to focus on the capabilities of their employees. With the above objectives, ABC Managed Services and Global HR department uses it as a guide and as banal to design its pay system.Internal conjugationSince ABC Managed Services are into the HRO and ITO industry, the job and skills required by employee are compared to the companys organisation business objectives. For examples, in the HRO division, executive with knowledge/skills of preparing payroll for other part of Asia region are welcomed, it is found to be difficult to get talent with knowledge of other Asia countries payroll skills. Therefore, ABC Managed Services manages the differences with an attachment of reserveance if one knows and has Asia country pay rolling skills. The allowance can be in the roll up of RM300 to RM500 depending on experience and skills obtained.Since it is a niche market obtaining talent of such skills, the organisation also invest into additional training to be competitive within the standard and market. The organisation also encourages its team members to have multitasking skills and encourages harmonic working environment. The ABC Managed Services period pay structure is based on Pay- for performance. Pay for performance includes the management of both salary increases and tributees, based on individual, group or company performance or a combination of these.External CompetitivenessThe ABC Managed Services has high insecurity losing its employee to its competitors. Based on the recent salary outlook survey administered by Kelly Services recruitment agency for year 2010/2011, it is found that ABC Managed go is under nonrecreational its employee 2% less compared to the market. Although ABC Managed Services is underpaying its members based salary, but it was providing nice benefits such as traveling allowance, gym membership, and meal allowance. It also provides steady-going annual leave structure for its employee which we cant find their competitors providing the same. Since the organisation is paying its employee based on performance, there are opportunities for its employees to perform better and get a higher pay.Employee ContributionsIn ABC Managed Services it emphasis pay for performance and it can be individual or team performances. At times, the organisation receives one time project which requires members to work in a team, so in this scenario, the management fix a onetime bonus payout for team achievement and paid to individual based on their ploughshare to the success of the project and if it is a team effort, the team depart be paid double upon completion of the said project. This encourages the team members to work as a team since if it is a team effort the bonus will be higher if compared to an individual payout. If the customers give good feed back, the team will be given a holiday package as a treat.ManagementThe decision of pay and incentives of ABC Managed Services is decided by Global Head of Human Resource who is based in India. She unremarkably makes use of the information of labor market in local countries and base on the countrys economic status before establishing the compensation level for its employee. The text book mentioned that how open and transparent should the pay decisions be to all employees? In this case, employee here in Malaysia isnt aware how the pay is decided, or how the pay for performance is based on. solely they know is that, their pay increases on yearly posterior if their performance falls into exceed expectation category of their individual performance appraisal and what their immediate bosses has recommended on their performance.To answer the question, if the organisation is using Best Fit or Best Practice, I would say the organisation uses best fit which matches for the organisation to stay competitive in Malaysia and retain its employee so the scope for local judgment is built in, allowing for some adjustment by local management to local business needs, thus resulting in compensation system that are aligned to both corporate and local performance targets.ii) How does your company compare the compensation strategy using five issues (objectives, alignment, competitiveness, employee considerations and management) with the TWO (2) selected benchmark companies of your choice?I am using 2 other organisation which is in the same industry with ABC Managed Services which focuses on HR outsourcing business here in Malaysia. The only differences between ABC Managed Services and the other 2 organisation (ZX Services and MY Agency are both locally owned and not foreign owned comparable ABC Managed Services and been in the industry for more than 2 decades. All of this 3 organisation have a pay strategy to support their business strategy.ABC Managed ServicesZX ServicesMY Agenc yObjectivesTo increase performance by reducing costsCreating new process, enhancing quality and productivityincrease speed to market serviceRecognizing employee and team effort and treat everyone fairlyHard work towards meeting difficult goals and achieving objectivesInnovation in a highly technical environmentTeam work motivated intentness against tough competitionHigh ethical standards in a continuously changing worldSupport business mission and goalsInternal AlignmentSupport Multitasking skills motion basedEncourage team nicety jibe compensation is internally equitable through annual pay analysisEnsure cost is justified allowing company to meet financial goals linkup pay to performance through the performance appraisal systemensure compensation is externally competitive through annual salary review while salary increases are not guaranteed, we will review salaries every yearExternally CompetitiveMarket competition in base and benefits loss leader in benefitsCompares favorably with higher-performance competitorsTheir leaders are committed to review their programs, policies and practices on a regular, and as-needed, basis to maintain in the competitive position move band system is based upon the 50th percentile of the competitive market in each country relative to the outsourcing industryCareer bands and pay zones are broad, allowing company to reward high performing employees without undue embrace to promote people outside of their interests,Employee ContributionsBonuses and commission paid based on organisations success and on individual performanceAnnual salary increments rate is for respective countries based on market surveyAnnual increment based on individual performanceBonus based on the overall performance of the companyAnnual increment based on individual and team performanceManagementAnnual Salary step-up controlled by top management of the organisation.Technology supportOpen chatEnsure compensation is internally equitable through annual pay analysisEnsure employees understand how they are compensated and the value of their numerate compensation packagesSalary matters controlled by local companySalary matters controlled by local companyOpen and transparentCompany ABC Managed seems to have aligned compensation strategy compared with the other 2 organisation. Their strategy is fitting into the organisations mission and also staying competitive within the industry. They have happy employees working for them and who have loyalty to serve the organisation. The organisation that fosters a friendly and family culture overhauls the organisation to meet its objective and goal to be a leader in the Outsourcing industry. Since ABC Managed Services is a new organisation compared with the other 2 organisation, there are always rooms for growth in the industry if they stay competitive.iii) What business strategy does it seem to fit (i.e., cost cutter, customer centered, innovator, or something else)? Why?In my opinion, I dont think there is one business strategy which seems to fit for any organisation. Most organisations will probable have the mixture or combination of cost cutter, customer centered or innovator as their strategy. In ABC Managed Services, their business strategy are based on being innovative, customer lie since its in the services industry and always looking towards cost keen measures and increase productivity. With these business strategies, it blend ins the main drive for them to achieve their vision to become a leader in the HRO/ITO industry worldwide and remain polished in customer satisfaction. Compensation decisions should be fully integrated into the organizations business and operations strategy, through company own compensation philosophy.QUESTION 2You own a non-union company with 100 non-exempt employees. All of these employees pack books into boxes for shipment to customers throughout the Southeast Asia and Europe. Because of the wide differences in performance, you have decid ed to try performance appraisal that has never been done before. Until now, you have given every worker the same size increase. Now you want to measure performance and reward the best performers with bigger increases. Based on thisPropose and develop performance appraisal format that you think would be most appropriate. ( Enclosed)Why do you choose this format? Justify your answer.The reason why I choose the following format is because the performance appraisal form should be simple and easy to understand by employee and the executive programs. This method used to describe a performance range that focused on specific behaviors or sets as indicators of effective or ineffective performance. This method is very effective and exact. This will also allow supervisory program just focus on the questions based on competencies which had been stated on the form and provide range according to employees performance.The appraisal form will also wont take much time for the employee to prep are and we used simple English as mode of communication.Performance appraisal encourages employee to discuss their performance with their supervisor and sustain their working relationships.By doing a performance appraisal, it allows healthy competition among employees to be more productive and motivate since increment henceforth will be based on employees performance.Initial training will be provided to supervisor on how to use the performance appraisal and this will also allow us to inform all employees what is our organisations objective and what is expected from them to ensure the organisations goal are met.Having a performance appraisal will also help supervisor to ensure career path for all employees. The annual performance appraisal review becomes one of the most effective methods of insuring an efficient and effective operation.Question 2(i)Performance appraisal Form Non Exempt employeeName of Appraisee judgement PeriodDepartmentJob TitleName of AppraiserAppraisal epochIns tructionsReview the current position description with employee and discuss how the tasks relate to the performance standards.Use the following rate scale for each performance standard. High and low ratings must be supported by specific examples of critical incidents occurring during the appraisal period.Rating ScalesRating( Scales of 1 5 )Definition5. OutstandingExceptional performance in all areas of responsibility. intend objectives were achieved well above the established standards and accomplishmentswere made in unexpected areas4. Exceeds ExpectationsPerformance consistently exceeds expectations of the position. Reserve this rating for a highly-motivated employee who demonstrates superior quality work and maintains a high level of effectiveness with little or no supervision.Document specific critical incidents of behavior that illustrate this rating on the back of the performance management form.3. disturbs ExpectationsPerformance consistently meets expectations of the positi on. Use this rating for a fully-trained employee who performs all expectations of the position.2. Needs ImprovementNeeds on-the-job or outside training to gain new skills and/or knowledge. Use this rating for an employee who is newly hired, recently promoted or has assumed new responsibilities.1. Does Not Meet Minimum StandardsPerformance does not meet expectations of the position. Corrective action has been locate and discussed with the employee. Reserve this rating for an employee who has not benefited from development and training, and continues to have difficulty with job responsibilities. Document specific critical incidents of behavior that illustrate this rating on the back of the performance management form.Standards are divided into three categories prefatorial performance standards, optional performance standards and supervisors performance standards. Basic standards are designed to be used for all jobs. Supervisors can use optional standards in addition to the basic sta ndards. They may also write standards that are specific to the job on additional paper and attach them to the form. The supervisors performance standards are for jobs with clearly defined supervisory responsibilities and are used in addition to the basic and optional standards for all supervisory jobs.The appraisal period is place at the top of the form. To determine ratings, only use critical incidents that took place during this appraisal period.The section for goal setting is provided to promote discussion during the appraisal interview. Supervisors can identify goals for the next appraisal period, indicate training needs, or specify corrective action when appropriate. Once an employee and supervisor have set goals on a previous performance management form, supervisors will signal the employee to conduct a self-assessment of progress towards these goals prior to the next performance appraisal interview.When an employee receives a 5 (Outstanding) rating, identify the critical incidents that support the rating. This rating cannot be used unless critical incidents are identified.When an employee receives a 2 (Need Improvement) or 1 ( Does not meet Minimum standard) rating, define corrective action required, identify an appropriate time frame for desired results, and discuss any appropriate training needs. If verbal or written counseling has occurred on the same topic during the appraisal period, indicate dates of the counseling and identify any severalize of progress.Have the employee sign the form when the appraisal interview is completed. The signature indicates all the information on the form has been discussed with the supervisor.Make copies of the completed form and give one copy to the employee, keep one copy for department files, and previous original to human resources.Complete the basic standards in role I and select any optional standards from Section 2 that are appropriate for the job. Use ratings 5 Outstanding, 4 Exceeds expectations, 3 M eets expectations, 2 Needs performance development, or 1 Does not meet minimum standard. If you use 5, 2 or 1, you must document with specific examples of critical incidents to support the ratings on the back page.Section One Basic Performance StandardsCompetency definitionRatingsJob KnowledgePossesses knowledge of basic functions of the job. Does not require supervisor to explain routine tasks.QualityCompletes tasks accurately, neatly and thoroughly. Checks work limited work required.ProductivityUses time effectively to complete work within appointed deadlines with limited supervision.SafetyApplies safe work habits for safety of self and coworkers. Uses tools and preventive equipment carefully and correctly. Follows department safety rules.ServiceResponds to people in a helpful, polite, cooperative and friendly way.JudgmentAnalyzes situation before making decisions. Obtains feedback from appropriate individuals before making decisions. Follows policies and procedures. Maintain s confidentiality.RelationshipsWorks effectively with others to accomplish tasks. Shares information, accepts and incorporates suggestions from others. Keeps supervisor informed.Section Two Optional Performance StandardsSelect any optional standards that are job related. You can also write standards that are specific to a job on a separate piece of paper.Competency descriptionRatingsInitiativeRecognizes need for intervention and independently takes effective action.AttendanceArrives on time, schedules time off in advance. Sick leave accumulates regularly.CreativityGenerates and applies fanciful ideas that improve operating procedures. Makes suggestions to simplify and improve procedures or tasks.VersatilityAccepts changes in job or work area. Remains flexible and tries new approaches.Oral parleyExpresses thoughts clearly to others. Listens to questions and comments of others.Written CommunicationExpresses information clearly and concisely in writing.Job EnhancementIdentifies job-r elated goals and ways to achieve them. Acquires new skills, increases education level when appropriate for job.Professional AppearanceDresses neatly and appropriately. Portrays image appropriate for jobRating Summary Count the total number of ratings in each category.5 Outstanding 4 Exceeds Expectations 3 Meets Expectations2 Needs performance development 1- Does Not Meet Minimum StandardGoals Use this area to set goals and identify training needs.GoalsTraining NeedsHigh/ base Ratings Identify specific critical incidents of behavior that support rating 6, 2 or 1 ratings.Standard ( High/Low)DateDetails of minute IncidentSupervisors SignatureUnit Heads signatureFor HRD UseEmployees Comments________________________________________________________________________________________________________________________________________________________________________________________________Signing this form means your supervisor has discussed all the information on the form with you. You d o not have to agree with the appraisal summary when you sign the form. You may choose to make comments. Use additional paper if necessary.Employees Signature Dateii) Do you anticipate any complaints, or other comments, from employees after you have implemented your new system? Build argument to support your answer.Yes, I do anticipate complaints after implementation since most of the employees didnt experience appraisal process for a long time in this organisation. Since its something new to them and they need to understand that the appraisal tool will help them to grow and be motivated. They shouldnt see the performance appraisal tool is used to judge their energy and a tool which make them loose their income.I foreseen several vindication from employees especially those fear of getting poor rating. To avoid such scenario, I will ensure the employees understand the purpose as well the process of appraisal. Every employee should be aware of the standard and what exactly is expecte d from them.The employees may fear that there also may be rater error which likely to occur, to avoid such incident the supervisor should exercise objectivity and luridness in evaluating and rating the performance of their employees. Training will be provided to supervisor and advising them on how to ensure accurate evaluation.Common errors like positive leniency, where supervisor gives all employee high scores or negative leniency, where supervisor gives all employee low scores. This will create unhappiness among employee especially for those who are unfeignedly making good contribution and being productive. In reality, many supervisors conduct performance appraisal poorly. The appraisal procedure is to have 2 way communications between employee and supervisor to find out how to improve the current performance standard and move to the next level, but this seldom