position vs performance_19feb.ppt

8/14/2019 Position vs performance_19feb.ppt

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Positionv/s

Performance

Adarsh Dharewa

Bernadett Burkus

Divya Chandras


2/14

Why is an effective compensation

system important?

Measures contribution

Can attract and retain

employeesOptimizes employee

performance

Affects organizational

culture

Increases employee

moral and motivation


3/14


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Direct compensation system

Job-based

pay

Knowledge-

based pay

Pay for

Performance


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Monkeys demand equal pay

A recent study shows brown capuchin monkeys refused

to play along when they saw another monkey get a

better payoff for performing the same work.

The monkeys were trained to trade a granite token for a

piece of cucumber. When the reward was the same for

both monkeys, they took the cucumber 95 percent of

the times.

But when one monkey was given something better --namely, a grape, then the other monkey often pitched a

fit -- either throwing the token, refusing to eat the

cucumber or giving it to the other monkey.

Associated Press 2003


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Equity theory of compensation

External

Compensation levelrelative to otherorganizations(market pay surveys)

Internal

Comparison withinemployees at thecompany

Job evaluation based oncertain characteristics

Pay structure is designed based on both !!


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Types of base pay systems

Job-based

(Position)

Pay the job (not the person)

Market-based (external equity

focus)

Point factor-based (internal

equity focus)

Knowledge-based

(Performance)

Pay the person (not the job)
http://www.youtube.com/watch?v=i4mEFMILePc


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When to use a job-based pay

Job duties are stable

Skills are generic

Employees move up through the ranks over time

Jobs are fairly standardized within the industry


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Drawbacks of job-based pay

Discounts individual ability

Discourages lateral movement

Tends to be bureaucratic, mechanistic, and inflexible

Employees perceptions of equity are more importantthan market or point data


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When to use individual-based pay

The firm has a relatively educated workforce

Employees often do different jobs

Technology changes frequently

Employee participation and teamwork are encouraged

Opportunities for upward mobility are limited

Opportunities to learn new skills are present


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Drawbacks of individual-based pay

There may be new labour costs with little payoff

Employees may acquire all skills too quickly leaving

no scope for further pay growth

May generate large bureaucracy

Training programs need to be developed

No knowledge how to price combination of skills

(v/s jobs) in marketplace


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Pay for performance

Non-financial

Financial

o Individual: bonuses, stock options, ranking, force distribution

o Team: bonuses and awards

o Gain sharing, profit sharing


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A growing trend

Strategic approaches to pay compensation systems:

o Pay the personfor individual worth (knowledge, skills and

competencies)

o Reward excellencethrough a pay for performance compensation

o Individualize the pay systemto give employees choices in how

they are rewarded and what reward they receive


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position vs performance_19feb.ppt

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