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HRMGT 6: COMPENSATION 
ADMINISTRATION 
7TH WEEK POLICIES, PRINCIPLES, 
AND PROBLEMS IN 
COMPENSATION 
ADMINISTRATION. 
Ref...
TOPICS TO BE TAKEN: 
• General policies in salary administration. 
• Principles considered in salary 
administration. 
• P...
INTRODUCTION: 
Compensation administration is the most sensitive 
among all functions of the HR department. The pay and 
b...
Different companies have different policies 
regarding their salary administration. 
• Normally all jobs in the organizati...
Company’s reward philosophy 
and reward system 
• Intrinsic reward 
• Extrinsic reward
Intrinsic reward 
Which include: 
• Employee empowerment and greater participation 
in decision making 
• More responsibil...
Extrinsic reward 
Subdivided into: 
1.Direct compensation 
2.Indirect compensation 
3.Non-financial compensation
Extrinsic reward 
1. Direct compensation 
• Basic salary 
• Overtime and holiday 
pay 
• Performance bonus 
• Profit shari...
Extrinsic reward 
3. Non-financial compensation 
Is usually rewarded to officers, and it takes 
the form of assigned park...
GENERAL POLICIES IN 
COMPENSATION 
ADMINISTRATION
General policies in compensation administration 
Are contingent to innovative ingenuity of 
the HR executives and the ava...
Salary Structure for 2002-2003/Guthrie-Jensen Consultants, Inc. 
Level 1 – Jobs that are highly manual, which involve litt...
Salary Structure for 2002-2003/Guthrie-Jensen Consultants, Inc. 
Level 2 – Jobs that involve skill but require a little pl...
Salary Structure for 2002-2003/Guthrie-Jensen Consultants, Inc. 
Level 3 – Jobs that involve talking to clients, coordinat...
Salary increases 
Models of general policies in salary administration: 
1. Merit increase 
2. Promotional increase
Procedure in salary increases 
1.Annual review 
2.Special review
Job movement and salary administration 
• Upward movement 
(promotion) 
• Lateral movement 
(transfer) 
• Outward movement...
PRINCIPLES 
CONSIDERED IN SALARY 
ADMINISTRATION
Principles considered in salary administration 
1. “Equal pay for equal work” 
2. “A fair day’s pay for a fair day’s work”...
PROBLEMS IN 
SALARY 
ADMINISTRATION
Problems in salary administration 
• The difficulty in determining what is an adequate and fair 
pay for a particular job....
Problems in salary administration 
• Employers’ perennial concern to keep the operating costs as 
low as possible so that ...
SOUND COMPENSATION 
POLICY IS IMPERATIVE
Sounds compensation policy is imperative 
1. When the pay policy is clearly spelled out 
2. When the policy is uniformly a...
Thank You  
BSBA (HRDM) 3A 
HRMGT 6: Compensation Administration
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Policies, Principles, & Problems in Compensation Administraion By Snell-Bohlander

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HRMGT 6: Compensation Administration "Policies, Principles, & Problems in Compensation Administraion" by Snell and Bohlander

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Policies, Principles, & Problems in Compensation Administraion By Snell-Bohlander

  1. 1. HRMGT 6: COMPENSATION ADMINISTRATION 7TH WEEK POLICIES, PRINCIPLES, AND PROBLEMS IN COMPENSATION ADMINISTRATION. Reference: Human Resources Management By: Snell & Bohlander Reported by: Gil de Brando Ivy Dayola
  2. 2. TOPICS TO BE TAKEN: • General policies in salary administration. • Principles considered in salary administration. • Problems in salary administration.
  3. 3. INTRODUCTION: Compensation administration is the most sensitive among all functions of the HR department. The pay and benefits you, as an employee, receive are a yardstick of how adequately the company is willing to meet your needs. Another name of compensation administration is salary administration.
  4. 4. Different companies have different policies regarding their salary administration. • Normally all jobs in the organization are classified into various pay classes; that is to say, a pay class for each job. • A minimum and a maximum salary for each class has been fixed and established in accordance with the Job Classification. • All salary increases are in accordance with the graduated steps in the pay class and within the salary range for the pay class occupied by the employee.
  5. 5. Company’s reward philosophy and reward system • Intrinsic reward • Extrinsic reward
  6. 6. Intrinsic reward Which include: • Employee empowerment and greater participation in decision making • More responsibility • Interesting and challenging work and; • Opportunities for personal growth
  7. 7. Extrinsic reward Subdivided into: 1.Direct compensation 2.Indirect compensation 3.Non-financial compensation
  8. 8. Extrinsic reward 1. Direct compensation • Basic salary • Overtime and holiday pay • Performance bonus • Profit sharing or stock option • Pension and retirement pay • And others 2. Indirect compensation • Insurance and tenures • Scholarship, tuition refunds, bus services, gasoline allowance, housing, rice supply, uniform allowance, counseling, recreational membership and legal services • Fringe benefits
  9. 9. Extrinsic reward 3. Non-financial compensation Is usually rewarded to officers, and it takes the form of assigned parking, assigned administrative assistant, and prestigious titles.
  10. 10. GENERAL POLICIES IN COMPENSATION ADMINISTRATION
  11. 11. General policies in compensation administration Are contingent to innovative ingenuity of the HR executives and the availability of funds of the company.
  12. 12. Salary Structure for 2002-2003/Guthrie-Jensen Consultants, Inc. Level 1 – Jobs that are highly manual, which involve little skills and more of physical exertion. Jobs classified are: Typing, filling and other clerical works, messengerial, collecting, janitorial and driving. Salary range Hiring rate: P8,000.00 and permanent rate: P9,500.00. Succeeding increases: a. 5 to 10% increase every year b. 15 to 20% increase depending on performance c. Adjustment depending on wage order
  13. 13. Salary Structure for 2002-2003/Guthrie-Jensen Consultants, Inc. Level 2 – Jobs that involve skill but require a little planning and organizing. Jobs classified are: Stock and inventory maintenance, encoding, secretarial, purchasing. Salary range Hiring rate: P9,500.00 and permanent rate: P10,000.00. Succeeding increases: a. 5 to 10% increase every year b. 15 to 20% increase depending on performance c. Adjustment depending on wage order
  14. 14. Salary Structure for 2002-2003/Guthrie-Jensen Consultants, Inc. Level 3 – Jobs that involve talking to clients, coordinating, collecting data, little decision-making and a great deal or report writing. Job classified are: Telemarketing, research assistant, executive secretary. Salary range Hiring rate: P12,000.00 and permanent rate: P14,000.00. Succeeding increases: a. 5 to 10% increase every year b. 15 to 20% increase depending on performance c. Adjustment depending on wage order Level 4 – Supervisor level Level 5 – Managerial level/Consultants Level 6 – Executive level/Partners
  15. 15. Salary increases Models of general policies in salary administration: 1. Merit increase 2. Promotional increase
  16. 16. Procedure in salary increases 1.Annual review 2.Special review
  17. 17. Job movement and salary administration • Upward movement (promotion) • Lateral movement (transfer) • Outward movement (change job, resignation, layoff, retirement, discharge) • Downward movement (demotion)
  18. 18. PRINCIPLES CONSIDERED IN SALARY ADMINISTRATION
  19. 19. Principles considered in salary administration 1. “Equal pay for equal work” 2. “A fair day’s pay for a fair day’s work” 3. “Incentive pay for extra effort”
  20. 20. PROBLEMS IN SALARY ADMINISTRATION
  21. 21. Problems in salary administration • The difficulty in determining what is an adequate and fair pay for a particular job. • The utmost desire of the employees to earn more money and simultaneously of management to operate and greater profit. • Employees are not satisfied with what they receive and they continuously agitate for higher salaries and benefits in order to improve their living standard.
  22. 22. Problems in salary administration • Employers’ perennial concern to keep the operating costs as low as possible so that they could offer their products or services within the reach of consumers. • Employers were right to keep the operating costs as low as possible. Employees were right to demand for an increase in wage due to the price hike of the basic commodities. • The lack of sound pay policy. • The absence of a written policy and clear guide in determining the wage levels
  23. 23. SOUND COMPENSATION POLICY IS IMPERATIVE
  24. 24. Sounds compensation policy is imperative 1. When the pay policy is clearly spelled out 2. When the policy is uniformly and consistently implemented 3. When it is flexible enough to meet economic contingencies. 4. When the wage policy has in-built safeguards 5. The policy has to be properly disseminated and made known to all.
  25. 25. Thank You  BSBA (HRDM) 3A HRMGT 6: Compensation Administration

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