1. Session 6 Strategic Reward and Compensation Systems 13th June '11 1 GMB6070 - SHRM FRANKFURTCLASS

2. Presentation Plan Deference between reward and compensation Strategic importance of compensation system Employee benefits and benefit programs Job evaluation Class group discussion tasks 13th June '11 2 GMB6070 - SHRM FRANKFURTCLASS

3. Remuneration System Compensation Reward Usually money Incentive to drive achievement Given for special service A satisfying return, result or profit Gratify It could also be something not given in retribution for inferior/evil activities Is a money value given in exchange for work performed Used to: Attract and retain talent Maintain morale or level of satisfaction Encourage peak performance Achieve equity – Internal/External Encourage loyalty Modify practices 13th June '11 3 GMB6070 - SHRM FRANKFURTCLASS

5. Guiding and Influencing

6. Project management

7. Strategic thinkingCommunication Team work Problem solving Coaching/mentoring Customer care Integrity/Honesty ICT Application Leveraging diversity Employee Benefits Labour Relations Job Evaluation Searching, attracting and recruitment

8. Strategic importance of compensation System Recruit and retain qualifies employees. Employer may need to adjust and respond to market forces. Morale and job satisfaction are affected by compensation levels. There has to be a balance between what the employer is willing to pay and what the employee feels she/he is worth and is indeed the market value worth. Use it to recognize exceptional performance – bonus pay, commission, stock, profit sharing, gain sharing 13th June '11 5 GMB6070 - SHRM FRANKFURTCLASS

9. Ensuring balance and stability in reward and compensation HRM should ensure: Development of job descriptions for every job holder Analysis of all jobs Evaluation of all benchmark jobs Banding, ranking and grading of all jobs Frequent salary surveys Development of policies, guidelines and other SOPs. 13th June '11 6 GMB6070 - SHRM FRANKFURTCLASS

10. Employee benefits and benefit programs Base pay Commissions Overtime Bonuses, profit sharing, merit pay Stock options Allowances: travel, meals, housing Benefits: education, medical, insurance, leave, holidays, retirement, taxation 13th June '11 7 GMB6070 - SHRM FRANKFURTCLASS

11. Job evaluation Determine relative worth of jobs in the organization Verify by comparing with industry market data and adjust as may become necessary Prepare a matrix organizational review Prepare ranking Prepare a matrix organizational review 13th June '11 8 GMB6070 - SHRM FRANKFURTCLASS

12. Establish jobs that cross lines and departments (matrix reporting) Compare the matrix with data from both the company structure and the industry market realities Prepare flow charts of all ranks for each department for ease of interpretation and assessment. 13th June '11 9 GMB6070 - SHRM FRANKFURTCLASS

13. Present data and charts to the compensation committee for review and adjustment Determine grades Establish the number of levels, junior, intermediate and beginner for each job family and assign a grade to each level Determine the number of pay grades, or monetary range of a position at a particular level, within each department. 13th June '11 10 GMB6070 - SHRM FRANKFURTCLASS

14. Establish grade pricing and salary range Establish benchmark/key jobs Review the market price of benchmark jobs within the industry Establish a trend line in accordance with company philosophy – where the organization wants to be in relation to salary ranges in the industry 13th June '11 11 GMB6070 - SHRM FRANKFURTCLASS

15. Salary structure determination Determine the difference between each salary step. Determine a minimum and a maximum percent spread. Slot the remaining jobs. 13th June '11 12 GMB6070 - SHRM FRANKFURTCLASS

16. Salary administration policy Review job descriptions. Verify the purpose, necessity for maintaining the position. Review with the compensation committee for adjustment and mandate to roll out. 13th June '11 13 GMB6070 - SHRM FRANKFURTCLASS

17. Develop, document and communicate the general policy and execute Develop and document specific policies for selected groups Develop and document a strategy for merit raises and other pay increases, such as cost-of-living adjustment, bonuses, annual review, promotions Develop and document procedures to justify the policy - performance appraisal forms, merit raise schedule 13th June '11 14 GMB6070 - SHRM FRANKFURTCLASS

18. Executive approval for salary structure and roll out Develop and present cost impact studies that project the expense of bringing the present staff up to the proposed levels Present data to the compensation committee for discussion and approval Present data to the senior executive for buy-in 13th June '11 15 GMB6070 - SHRM FRANKFURTCLASS

19. Communicate the final program to employees and managers Present the plan to the compensation committee for feedback, adjustment, review and approval Make a presentation to the executive team and managers for approval or change, and incorporate necessary changes 13th June '11 16 GMB6070 - SHRM FRANKFURTCLASS

20. Develop a plan for communicating the new program to employees, using slide shows or movies, literature, handouts Make presentations to managers and employees then execute the program 13th June '11 17 GMB6070 - SHRM FRANKFURTCLASS

21. Design and develop detailed systems, procedures, and forms Work with HR information systems staff to establish effective implementation procedures, to develop appropriate data input forms, and to create effective monitoring report for senior managers. 13th June '11 18 GMB6070 - SHRM FRANKFURTCLASS

22. Have the necessary forms printed Develop and determine format specification for all reports Execute test runs on the human resources information system Execute the program 13th June '11 19 GMB6070 - SHRM FRANKFURTCLASS

23. Monitor the program Monitor feed back Adjust as necessary Identify challenges in the program and adjust accordingly 13th June '11 20 GMB6070 - SHRM FRANKFURTCLASS

24. Class group discussion tasks Eagles Synergy3 Team-Six Is job evaluation a value adding exercise or a academic waste of time indulgence. Critically review the question from strategic HR perspective. In an organization where there is an effective compensation structure, review why SHR people should concern themselves with developing rewards and benefits systems? Many SHR Directors benchmark best practices in developing compensation a compensation system. Develop a case for benchmarking HR best practices. 13th June '11 21 GMB6070 - SHRM FRANKFURTCLASS

25. Reading Assignment Read Course Text Chapter Cha. 11 – Strategic Compensation Systems - Pg.390 – 429 Cha. 13 – Benefit Plans - Pg.463 - 508 13th June '11 22 GMB6070 - SHRM FRANKFURTCLASS

26. End of Session 6 Thank you 13th June '11 23 GMB6070 - SHRM FRANKFURTCLASS