Tài Liệu Lecture Compensation Management Unit 2 - Defining Internal Alignment.pdf

8/16/2021 1 Unit 2 Defining Internal Alignment INSTRUCTOR ASSOCIATE PROF DR PHAM THI BICH NGOC NATIONAL ECONOMICS UNIVERSITY Outline Jobs and Compensation Compensation Strategy Internal Alignment Pay[.]

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Unit 2: Defining

Internal Alignment

INSTRUCTOR: ASSOCIATE PROF DR PHAM THI BICH NGOC

NATIONAL ECONOMICS UNIVERSITY

Outline

Jobs and Compensation Compensation Strategy: Internal Alignment Pay structure

What Shapes Internal Structures?

Strategic Choices in Designing Internal Structures Consequences of Structures

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Jobs and Compensation

Pay varies significantly according to the job.

employee’s pay (and by implication, their pay growth over time) depends on both the nature

of the job and the job level

Internal Alignment

Internal alignment, often called internal equity,

refers to the pay relationships among different jobs/skills/competencies within a single organization

The relationships form a pay structure that

should support the organization strategy,

support the workflow, and motivate behavior toward organization objectives.

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Pay structure

Pay structure refers to the array of pay rates for

different work or skills within a single organization

An internal pay structure can be defined by (1) the number of levels of work,

(2) the pay differentials between the levels, and (3) the criteria or bases used to determine those levels and

differentials.

STRUCTURES VARY AMONG

ORGANIZATIONS

Work content and its

value are the most

common bases for

determining internal

structures

A structure based on content typically ranks jobs on skills required, complexity of tasks, problem solving,

A structure based on the value of the work

focuses on the relative

contribution of these

skills, tasks, and

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Criteria: Content and Value

STRUCTURE BASED ON

CONTENT

A structure based on content

typically

ranks jobs on skills required,

complexity of tasks, problem

solving, and/or responsibility

STRUCTURE BASED ON VALUE

In contrast, a structure based

on the value of the work focuses on the relative contribution of these skills, tasks, and responsibilities to the organization’s goals

Pay Structure at Lockheed Martin, under Two Alternative Pay

Level Policies

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Use Value and Exchange Value

Use value reflects the value of goods or services an employee produces

in a job

Exchange value is whatever wage the employer and employee agree on

for a job.

Same work content across all locations→ same use value but may be

different exchange value

Job- and Person-Based

Structures

A job-based structure relies on the work content—tasks, behaviors,

responsibilities.

A person-based structure shifts the focus to the employee: the skills,

knowledge, or competencies the employee possesses, whether or not

they are used in the employee’s particular job.

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WHAT SHAPES

INTERNAL

STRUCTURES?

STRATEGIC CHOICES IN DESIGNING

INTERNAL STRUCTURES

Two strategic choices are involved:

◦ (1) how specifically tailored to the organization’s design and workflow to

make the structure and

◦ (2) how to distribute pay throughout the levels in the structure

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Tailored

versus

Loosely

Coupled

Mc Donald, Walmart: closely tailored structure (Jobs are well defined with detailed tasks or steps to follow;

Differences in pay among jobs are very small)

3M: innovative company culture, employee work in teams, pay structures are more loosely linked to the organization in order to provide flexibility

Hierarchical versus Egalitarian

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Guidance from the evidence

when choosing pay structure

Equity theory: Fairness

◦ employees judge the fairness of their organization’s

internal pay structure by making multiple comparisons:

◦ Comparing to jobs similar to their own (internal equity),

◦ Comparing their job to others at the same employer (internal equity), and

◦ Comparing their jobs’ pay against external pay levels (external equity).

Tournament Theory: Motivation and Performance

◦ The greater the differential between employee salary and boss’s salary, the

harder employee will work

◦ larger raises with a promotion increases effort and reduces absenteeism.

◦ performance improves with larger differentials at the top levels of the structure

◦ teams with small differences in player salaries did better than those with large

differentials

Consequences of an Internally Aligned

Structure

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Consequences of an Internally Aligned

Structure

More hierarchical structures are related to greater performance

when the workflow depends on individual contributors

High performers quit less under more hierarchical systems

when pay is based on performance rather than seniority and

when people have knowledge of the structure

More egalitarian structures are related to greater performance

when close collaboration and sharing of knowledge are required

The impact of any internal structure on organization

performance is affected by the other dimensions of the pay

model; pay levels (competitiveness), employee performance

(contributions), and employee knowledge of the pay structure

CONSEQUENCES OF

STRUCTURES

Efficiency:

between the entry level in the structure and the highest level can encourage

employees to remain with the organization, increase their experience and

training, cooperate with co-workers, and seek greater responsibility.

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Internal consistency

Developed using two processes Job analysis

◦ Mostly a descriptive procedure

◦ Identifies job content Job evaluation

◦ Is used to establish pay differentials among employees within a company

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thư viện kiến thức tổng hợp về mầm non -

mẫu giáo này để chăm sóc và nuôi dạy con của mình ngày một tốt hơn

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Kỹ năng sống cho trẻ mầm non

sáng kiến kinh nghiệm

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Báo cáo giải pháp công tác quản lý Mầm non

tài liệu mầm non mẫu giáo

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Tiêu đề	Defining Internal Alignment
Người hướng dẫn	Associate Prof. Dr. Pham Thi Bich Ngoc, Instructor
Trường học	National Economics University
Chuyên ngành	Compensation Management
Thể loại	lecture
Năm xuất bản	2021
Thành phố	Hanoi

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Số trang	18
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