performance & compensation management - mba.pdf
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Department of Business Administration
Course Title: Performance and Compensation Management
Course Code: MGT 505
Pre-requisite Courses: Organization Behavior, Human Resource Management
Credit Hours: Three (3)
Degree: MBA Program
Course Description: This course familiarizes students with the concepts of compensation management within the wider context of human resource management. It provides students with an understanding of the reward
management process which includes pay survey, job evaluation, and the design of pay structure.
Students will acquire basic data management techniques and recognize what are the factors that
determine the pay levels and benefits of employees in the job market. Students will be aware of the
problems related to performance management system and be able to give suggestions for
improvement. The concept of equal opportunity in compensation and performance management will
be emphasized throughout the course.
Course Objectives: This course enables the student to:
1. Relate compensation management to behavioral theories and concepts and within the wider context of human resources management
2. Discuss basic compensation concepts and the context of compensation practice 3. Analyze factors that influence companies competitive strategies and compensation
practices
4. Discuss employment laws that influence compensation tactics in Pakistan 5. Discuss the traditional basis of setting employee s base pay on their seniority or
longevity with the company
6. Relate the role of performance management and the merit pay process 7. Describe various incentive/ variable pay at individual, group and organization wide level 8. Describe the reasons to adopt pay for knowledge pay programs and the advantages and
disadvantages of such programs
9. Discuss the mechanism of developing internally consistent compensation system using job analysis and job evaluation techniques
10. Discuss the mechanism of integrating the internal job structure with external market pay rates
11. Discuss the mechanism for constructing a companys pay structure 12. Discuss the mechanism for designing sales incentive compensation plan
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13. Differentiate between legally required and discretionary employee benefits 14. Explain theoretical basis for setting executive compensation
Learning Outcomes:
After completing this course a student will be able to:
1. Evaluate Performance Management System of any organization and recommend changes to make it more effective
2. Conduct Job Analysis and Develop Effective Job Descriptions 3. Conduct Job evaluation using point method 4. Design Salary Structure for any company keeping in view the legal requirements
Teaching Methodology:
Teaching at Iqra University is learner oriented. Students are involved in lectures, assigned
readings, reference readings, exercises, case studies, presentations, and class discussions. In the
same way, grading tends to focus on the students overall performance and participation in the classroom activities.
Code of Conduct:
Students have to follow the rules stated below to avoid a failing grade in the course:
Understand and follow the University policy regarding attendance.
Arrive in and leave the classroom strictly on time. Late arrival will be marked as absence. If you leave the classroom in the middle of a session even for a short while, you will be
marked absent.
Keep your cell phone off during the class.
Do the assigned readings for a class before coming to the class.
Maintain a disciplined, cordial, and respectful attitude towards the teacher and your fellow students.
Submit your homework on the due date before the class begins.
Do not plagiarize from books, journals, or the internet.
Do not cheat (make someone else do your work or present work for some other course as work for this course).
The teachers decisions about marks and grade will be final.
Course Contents:
Week Topics to be covered Remarks
1. A Road Map To Effective Compensation
Role &Purpose of the Compensation System
Job Characteristic model
Rewards vs. Compensation Strategy
Compensation Strategy
Goals for the Compensation System
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2. Strategic Framework for Compensation
Role of Contextual Factors
Role of Structural Variables
The classical managerial strategy
Human relations managerial strategy
High involvement managerial strategy
Managerial Strategies and Reward System
First Hourly Test
due session 4
3. A Behavioral Framework for Compensation
Types of Reward Problems
Desired Reward Outcomes
How Rewards Affect Employee Behavior
Causes of Reward Dissatisfaction
Consequence of Reward Dissatisfaction
Understanding Membership Behavior
Understanding Task Behavior
Money as a Motivator
Behavioral Implications for Designing Reward System
4. Traditional Basis for Pay seniority and Merit
Seniority and Longevity Pay
Merit Pay Plans
First Hourly Test
Case Assignment
Presentation and
submission due 7th
session
5. Performance Management system
Planning
Monitoring
Developing
Rating
Rewarding
Performance Appraisal
Trait Based Approaches
Comparative Methods
Narrative Methods
BEHAVIORAL RATING APPROACHES
Management by Objectives (MBO)
360 degree performance appraisal
Activities to Promote Non-Discriminatory Performance Appraisal Practices
Errors in the Performance Appraisal Process
6. Incentive Pay
Definition
Assumptions for Incentive Pay Effectiveness
Contrasting Incentive Pay with Traditional Pay
Individual Incentives
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Advantages of Group-Incentive Plans
Disadvantages of Group-Incentive Plans
Company-Wide Incentive Plans
Designing Incentive Pay Programs
Linking Incentive Pay with Competitive Strategy
7. Case Presentation
MID-TERM EXAMINATION
8. Person Focused Pay
Defining Competency-Based Pay, Pay- For-knowledge, Skill-Based Pay
Usage of Pay-For-Knowledge Programs
Vertical Skills Programs
Horizontal Skills Programs
Stair-Step Model
Skill Block Model
Job-Point Accrual Model
Cross-Departmental Models
Contrasting Person-Focused Pay with Job-Based Pay
Advantages of Pay-For-Knowledge Pay Programs
Disadvantages of Pay-for Knowledge Pay Programs
Linking Pay-For-Knowledge with Competitive Strategy
2nd
hourly test due
10th
session
9. Building Internally Consistent Compensation Systems
Characteristics of Internally Consistent Compensation Systems
Job Analysis
Steps in the Job Analysis Process
Job Analysis Techniques
Job Evaluation
The Job Evaluation Process
Job Evaluation Methods
Whole Job Ranking
Job Classification
Point Method
Factor Method
Internally Consistent Compensation System and Competitive Strategy
10. Building Market Competitive Compensation System
Market-Competitive Pay Systems
Conducting strategic analyses
Assessments of competitors pay practices with compensation surveys
Integrating the internal job structure with external
2nd
hourly test
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market pay rate
11. Building Market Competitive Compensation System
What companies hope to gain from compensation surveys
Compensation Surveys: Strategic Considerations
Compensation Survey Data
Integrating Internal Job Structures With External Market rates
Integrating Internal Job Structures With External Market rates
Compensation Policies and Strategic Mandates
Third hourly Due
14th
session
Presentation of Case
assignments 14th
and
15th
session
12. Building Pay Structures That Recognize Individual
Contributions
Constructing a Pay Structure
Deciding on how many pay structures to construct
Determining a Market Pay Line
Defining Pay Grades
Calculating Pay Ranges for Each Pay Grade
Setting Pay Range Midpoints
Setting Pay Range Minimums and Maximums
Pay Compression
Green and Red Circle Pay Rates
Evaluating the Results
Designing Merit Pay Systems
Designing Sales Incentive Compensation Plans
Designing Pay-For-Knowledge Programs
Pay Structure Variations
13. Laws Relating to Employment and Compensation
The workmen Compensation act,1934
The Factories Act, 1934
The payment of wages act,1936
The West Pakistan Maternity Benefit ordinance, 1958
The minimum wages ordinance, 1961
The provincial employees social security ordinance, 1965
The W.P. Industrial and commercial employment ordinance,1968
The W.P. shops and establishment ordinance,1969
The Industrial Relations Ord. , 1969
The workers Children (Education) ordinance, 1972
The Employees cost of living (Relief) Act, 1973
The employees Old- Age Benefits Act, 1976
Computation of Salary
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14. Project Presentations Third hourly Test
15 Project Presentations
Quiz
FINAL EXAMINATION
Rescheduling of Class:
The teachers at Iqra University are very particular about taking their classes, but in case of an
emergency, an alternate teacher may conduct the class. Students are informed through SMS in
case of rescheduling of a class.
Grading Policy:
A Grade: 88 and above B+ Grade: 81-87 B Grade: 74-80 C+ Grade: 67-73 C Grade: 60-66 F Grade: Below 60
Marks Distribution of 100%:
Quizzes ______10_____
Assignments/Case Studies: ______15_____
Project/Project presentations: ______10_____
Mid-term ______25_____
Final Exam ______40_____
Total 100____
Recommended Readings:
1. Strategic Compensation, by Joseph J. Martocchio, prentice Hall (Latest Edition) 2. In addition the teacher may prescribe any additional reading material.