Payroll Manager Tutorial | Design Considerations

Design Considerations

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• There are many considerations in the designing of the new compensation plan. After the alignment of pay with strategy, culture, and competencies of the employee, then the next step is to determine the type or types of team in a particular organization. There are four types of teams: The first is the parallel team that is defined as a part-time team that can be temporary or permanent that employees participate on in addition to their normal activities.
• The second type of Team is a process team that carries out the work processes and is done collectively by members of a team. A project, or time-based team, is the third type of team and is the opposite of a parallel team in that members work full-time for the duration and until completion of a project. A fourth type is a hybrid organization that includes a mixture of the teams described above.
• Another consideration that the organization should take into account is the number of job categories in an organization. The concept is termed broad banding, or encompassing more jobs into fewer bands, and it is used to determine the number of pay grades. The narrower the band, the fewer the differences, and the greater the equality of pay opportunity among the people within that band after determining the bands, one must determine the parameters used to pay every job. This is the base pay for each job.
• Setting base pay is usually based on market pricing and job evaluations. Market pricing indicates what others in the market would pay for the same job. Job evaluations assess what skills and work is involved in a particular job. Also, one must determine the total pay allocated to the base pay.
• The next step in the design of a team-based compensation system is the performance appraisal stage. The criteria upon which the rewards are given are necessary in order to create the link between strategy and reward. An organization must define the performance criteria of their employees. There are four criteria used in measuring team performance. The first is a demonstration of behavioral competencies that are personal attributes and behaviors such as attitude, motives, and traits that predict longer-term success.
• The second criterion is the acquisition and/or the demonstration of skills and knowledge. Thirdly, there needs to be an achievement of specific objectives within a specified period of time, best known as management by objectives (MBO‘s). Finally, the results (quantitative or qualitative) are used to measure the performance of the team.

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