Payroll Manager Tutorial| Compensation Strategy & Micro Economic Factors

 

Compensation Strategy

Support organization mission and strategy through compensation strategy and tactics that integrate major organizational groups of employees, organizational leaders, including those occupying the executive suites and those incharge of human resources and compensation practices, must be able to recognize and integrate the long-term strategic objectives of the organization with its short-term tactical requirements. An understanding of how organizational strategy and its related tactics interact and become integrated is becoming increasingly important to managers at all elves performing various organizational assignments.

To improve cost and quality competitiveness is an environmental where social and political problems are becoming increasingly more sensitive and information overload is a problem facing all organizations and their employees information regarding work requirements, performance stands, and organizational recognition and rewards programming must be readily available, complete and accepted.

The compensation system, therefore, must be able to transmit a message that is understood and accepted by all employees that they are valued contributors to organizational success and that the organization is willing to share the revenues from its products in an equitable manner with all members.  As organizations begin to modify their focus from an almost completely short-term view to one that integrates short-term tactical operations with longer-term strategic considerations, pay and compensation will change to respond to support the achievement of short term goals and long-term objectives

Microeconomic Factors

• Job description
• Job Analysis.
• Job evaluation
• Pay structure
• Salary surveys
• Policies and regulations.
• Job Descriptions: A critical component of both compensation and selection systems, job descriptions define in writing the responsibilities, requirements, functions, duties, location, environment, conditions, and other aspects of jobs. Descriptions may be developed for jobs individually or for entire job families.
• Job Analysis: The process of analyzing jobs from which job descriptions are developed. Job analysis techniques include the use of interviews, questionnaires, and observation.
• Job Evaluation: A system for comparing jobs for the purpose of determining appropriate compensation levels for individual jobs or job elements. There are four main techniques: Ranking, Classification, Factor Comparison, and Point Method.
• Pay Structures: Useful for standardizing compensation practices. Most pay structures include several grades with each grade containing a minimum salary/wage and either step increments or grade range. Step increments are common with union positions where the pay for each job is pre-determined through collective bargaining.
• Salary Surveys Collections of salary and market data: May include average salaries, inflation indicators, cost of living indicators, salary budget averages Companies may purchase results of surveys conducted by survey vendors or may conduct their own salary surveys. When purchasing the results of salary surveys conducted by other vendors, note that surveys may be conducted within a specific industry or across industries as well as within one geographical region or across different geographical regions. Know which industry or geographic location the salary results pertain to before comparing the results to your company.

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