CompenAd

• Compensation


  A wide range of financial and non-financial rewards to employees for their services rendered to the organization
• Wages, Salaries, and Employee Benefits

  Forms of compensation paid to employees, including paid vacations, insurance, maternity/paternity leave, retirement benefits, etc.
• Purpose of Compensation


  • Attract capable employees
  • Motivate employees for better performance
  • Reduce employee turnover
• Types of Compensation


  • Direct (Wages, Salary, Bonuses, Commissions, Incentives)
  • Indirect (Insurance, Leave Balance)
  • Non-financial (Employee Recognition, Awards)
• Compensation Administration


  The process of determining and managing the payment of wages, salaries, and other forms of compensation to employees
• Principles and Objectives of Compensation Administration

  • Align employee incentives with company goals
  • Attract and retain top talent
  • Motivate and reward high-performing employees
  • Foster a positive work culture
  • Stay competitive in the market
  • Consider the financial goals of the company
• Steps in Creating Compensation Strategy

  1. Assess your current situation

  2. Define your compensation and benefits philosophy

  3. Design your compensation and benefits structure

  4. Implement your compensation and benefits strategy

  5. Monitor and evaluate your compensation and benefits strategy

  6. Review and update your compensation and benefits strategy
• How Microsoft Follows the 6 Steps

  • Thorough assessments of current compensation
  • Emphasis on talent attraction and retention
  • Mix of competitive salaries and performance-based incentives
  • Comprehensive benefits
  • Employee surveys and performance metrics
  • Benchmarking against industry peers
• Organizational Structure


  The way an organization is designed and how it functions
• Why Structures Vary


  • Efficiency (hierarchical structures)
  • Innovation (flat structures)
  • Employee Satisfaction (team-based structures)
• Common Organizational Structures


  • Hierarchical structure
  • Flat structures
  • Matrix structures
• There is no one-size-fits-all answer to organizational structure
• Internal Alignment


  Ensuring fairness and equity in pay across different jobs within the organization
• Factors Influencing Internal Alignment

  • Job complexity
  • Required skills and experience
  • Level of responsibility
  • Market conditions
• Internal Equity


  Ensuring employees are paid fairly relative to their contributions to the organization
• Jollibee Foods Corporation (JFC)


  • Known for its comprehensive job evaluation system
  • System considers factors like education, experience, skills, and responsibility level
  • Ensures employees in similar positions receive comparable pay
• Job Evaluation Methods for Internal Alignment

  • Hay Point System
  • Factor-Point Method
  • Ranked Positions Method
• External Competitiveness


  Ensuring an organization's compensation package is attractive compared to similar positions in the labor market
• Factors Influencing External Competitiveness

  • Salary surveys
  • Industry standards
  • Cost of living
  • Talent availability
• External Market Data Sources

  • Mercer
  • Aon Hewitt
  • Bureau of Labor Statistics
• A well-designed compensation strategy considers both internal alignment and external competitiveness
• Customization to Organization Design

  Tailoring the pay structure to reflect the organization's design, including its hierarchy, departmental structure, and reporting relationships
• Aspects of Customization to Organization Design

  • Hierarchical Alignment
  • Departmental Alignment
  • Workflow Integration
• Flexibility for Workflow Dynamics


  Ensuring the pay structure is flexible enough to accommodate changes in workflow dynamics
• Aspects of Flexibility for Workflow Dynamics

  • Job Evaluation and Analysis
  • Skill-Based Pay
• Equity and Fairness in Pay Distribution

  Distributing pay throughout the levels in the structure in a manner that is perceived as fair and equitable by employees
• Aspects of Equity and Fairness in Pay Distribution

  • Pay Equity Analysis
  • Merit-Based Pay
• Market Competitiveness in Pay Distribution

  Ensuring pay levels are competitive with market benchmarks to attract and retain talent
• Aspects of Market Competitiveness in Pay Distribution

  • Market Surveys and Benchmarking
  • Pay Structure Adjustments
• Tailored (Tightly Coupled) Structure


  The various components of the organization are closely interconnected and interdependent, with well-designed jobs and detailed tasks
• Characteristics and Implications of Tailored (Tightly Coupled) Structure

  • High levels of coordination and control
  • Consistency and predictability
  • Reduced flexibility
• Pay Structure Adjustments


  Adjusting the pay structure as needed to remain competitive in the talent market, ensuring that compensation packages are attractive compared to those offered by competitors or similar organizations
• Tailored (Tightly Coupled) Structure


  • The various components of the organization are closely interconnected and interdependent
  • Well designed jobs with detailed steps or tasks
• Characteristics and Implications of Tailored (Tightly Coupled) Structure

  • High levels of coordination and control
  • Consistency and predictability
  • Reduced flexibility
  • Efficient resource allocation
• Loosely Coupled Structure


  • The various components of the organization operate more independently, with fewer constraints on how tasks are performed and how decisions are made
  • Requires Innovation
• Characteristics and Implications of Loosely Coupled Structure

  • Flexibility and adaptability
  • Innovation and creativity
  • Potential for duplication and inefficiency
  • Decentralized decision-making
• Egalitarian Structure


  • Sends the message that all employers are valued equally
  • Can promote fairness, transparency, and inclusivity within organizations, they also present challenges in terms of adequately rewarding and motivating high performers
  • Striking the right balance between egalitarian principles and recognition of individual contributions is crucial for creating a compensation structure that effectively supports the organization's goals while retaining top talent and fostering a culture of excellence
• Advantages of Egalitarian Structure


  • Simplicity and Transparency
  • Reduced Hierarchical Barriers
  • Enhanced Morale and Engagement
• Disadvantages of Egalitarian Structure

  • Averagism and Underpayment Perception
  • Risk of Talent Attrition
  • Lack of Incentive for Excellence
  • Difficulty in Differentiating Contributions
• Hierarchical Structure


  • Hierarchical structures send the message that the organization values the differences in work content, individual skills, and contributions to the organization
  • Provide clarity, specialization, and career advancement opportunities, they can also suffer from rigidity, communication barriers, and employee disengagement
  • Organizations must carefully balance the benefits and drawbacks of hierarchical structures to create a framework that effectively supports their goals while fostering a culture of collaboration, innovation, and employee empowerment