Transcript STRATEGIC HUMAN RESOURCE MANAGEMENT: AN OVERVIEW

Broadbanding
• Technique that collapses many pay
grades (salary grades) into few wide
bands to improve organizational
effectiveness
• Lateral employee development
• Develop employee skills and
encourage team focus
• Employee attention directed away
from vertical promotional opportunities
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Average Pay Per Hour
Broadbanding and Its Relationship to Traditional
Pay Grades and Ranges
Grade 5
Grade 4
Grade 3
Band B
Grade 2
Grade 1
Band A
Low
High
Job Worth
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Employee as Determinant of
Direct Financial Compensation
• Performance—Performance-based Pay
• Skills—Skilled-based Pay
• Competencies—Competency-based Pay
• Seniority
• Experience
• Membership in the organization
• Potential
• Political Influence
• Luck
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Performance-Based Pay
• Merit pay - Pay increase given to employees based on
level of performance as indicated in appraisal
• Variable Pay - Compensation based on performance
• Bonus - Most common type of variable pay for
performance. One-time financial award based on
productivity
• Spot bonuses - Relatively small, gifts to employees for
outstanding work or effort
• Piecework - Employees paid for each unit they produce
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Skill-Based Pay
Compensates on basis of job-related skills
and knowledge
• Employees and departments benefit when
employees obtain additional skills
• Appropriate where work tends to be
routine and less varied
• Must provide adequate training
opportunities or system becomes
demotivator
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Competency-Based Pay
• Rewards employees for capabilities
they attain
• Competencies include skills but
also involve other factors such as
motives, values, attitudes, and selfconcepts
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Seniority
• Length of time employee has
been associated with company,
division, department, or job
• Labor unions tend to favor
seniority
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Experience
• Regardless of nature of job, very
few factors have a more significant
impact on performance than
experience
• Dot-com world has changed
attitude with regard to experience
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Membership in Organization
• Components of individual financial
compensation are given to employees
regardless of particular job they perform or
level of productivity
• Maintains high degree of stability in
workforce and recognizes loyalty
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Potential
• Organizations do pay some
individuals based on potential
• Many young employees are
paid well because of their
potential
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Political Influence
• Should not be used to determine
financial compensation
• To deny its existence would be
unrealistic
• Person's pull or political influence
may sway pay and promotion
decisions
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Luck
“It certainly helps to be
in the right place at
the right time.”
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Team-Based Pay
If team is to
function effectively,
firms should
provide reward
based on overall
team performance
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Company-Wide Pay
• Profit sharing - Distribution of
predetermined percentage of firm’s profits
to employees
• Gainsharing - Bind employees to firm’s
productivity and provide incentive payment
based on improved company performance
• Scanlon plan - Reward to employees for
savings in labor costs resulting from
employees’ suggestions
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Professionals Compensation
• Initially compensated for
knowledge they bring to
organization
• Maturity curves reflect
relationship between
professional compensation
and years of experience
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