Presented By:

Group #2 Members:

Syed Awon Hussain Shah 226

Bashir Ahmed 211

Muhammad Mumtaz 215

Muhammad Naeem 216

Support organization’s business strategy

And

Contribute organizational Effectiveness

Pay Strategy

Organizations

Business

Individual

Organization Design

Pay system

Changing Environment

Pay Practices Hard To Change

Pay system Change is Complex

Organizational Hurdles

Reasons

Value

High Cost in Compensation

Inappropriate & Misdirected Behavior

Disadvantages of

Misaligned Pay Practice

Moving Products and services across the national

boundary in seamless way

Greater Competition

Quick and Improve Customer Services

Globalization Impact

Advance IT system, Knowledge and Skills are the way to be

competitive today.

Organizations No Longer Afford Extensive Hierarchies

Individuals No Longer have Loyalty Contract

Cont’d

• Demand more then Supply

• Hot Talent

• Negotiation

Need of Key Skills

Employee from different areas

Individual Differences

Reward System

Teams

Collective Response

Diversity

Muhammad Mumtaz 215

For individual worth (knowledge, skills and

competencies) rather than for the value of a job they

perform.

Pay the person

Pay system based on job and job evaluation

Individual had stable duties.

Add considerable value due to high knowledge and

skills

Cont’d

Very dangerous and misleading to pay them according to

job worth rather then their individual worth.

Stable duties

Market value of individual

High level of knowledge and skills

Job worth

High level of performance

Job and Job evaluation

According to market value

According to knowledge

According to skills

According to competencies

Considering the internal and external market labor into

account

More emphasize on external

Payment method

Developing good measure for

Their skills, knowledge and competencies

Measure Use by mostly organization,

Leadership and communication ability

Technical and business knowledge

Challenge in paying

individual

Detailed intranet based description

Knowledge and skills to be effective

Knowledge and skills profile

Future perspective

Motivate individual to learn the skills and knowledge

Raise the pay of individual to become more valuable

Important objectives

Clearly key to developing pay system and retain valuable human

capital.

Bashir Ahmed 211

Through a pay for performance compensation that

establishes a clear relationship between a significant amount

of pay and attainment of organizational objectives.

Reward Excellence

Important way to attract and retain top performance.

potentially powerful motivator.

Partial substitute for traditional loyalty employment

relationship.

Cont’d

Traditional Evidence:

• Pay cannot be a motivator.

• Does not motivate the employees.

New Evidence:

• Does not support this view.

• Significance amount of pay and behavior.

Cont’d

Elements of reward

Long term

incentive

Short term

incentive

Base salary and

benefits

Career development

Promotion opportunities

Work/life balance

Flexible work

environment

Pay on the basis of merit.

Disadvantages:

• Failure approach

• Poor Measure

• Small changes in compensation

• No motivational impact

• Failure to retain high performance.

Traditional Approach to Pay

for performance

Important for organization reward system.

Satisfy needs.

Reflect the Strategy, structure and business process.

Fits the characteristics of organization .

Pay for Performance Plan

Variable Pay Plans

Variable Pay

Plan

Profit Sharing

Stock ownership

Or

Stock Option

Team/Group Incentive

Cash plan

Deferred plan

Combination plan

Types: PSP

Primarily Encourage individual to stay with the organization

Don’t reward skill development or performance effectiveness.

Don’t motivate individual to improve their skills or perform effectively.

Fails to develop human capital or organization and retaining the most valuable employees.

Seniority-Based pay

system

Muhammad Naeem 216

To give employees choices in how they are rewarded and

what reward they receive.

Individualizing the pay

system

One-size-fits-all approach

Give little choice

Homogeneous work force

Does not fit a divorce work force

Cont’d

With Diverse Workforce:

• Tremendous risk of giving individual reward.

• Negative consequences.

• Negative for motivation.

• Failing to reward with things that they value highly.

One-size-fits-all

approach

Attraction

Retention

motivation

Characteristic of individual pay

system

Diverse workforce

Similarities and differences among employees.

Homogeneous workforce

Same type of job

Same condition

Reward and organizational

culture

Embrace everything that employees value in the

employment setting.

Strategic reward

Strategic reward

Framework

Considerable amount of choice

Give option to individuals

Alternative

Work simply for cash, having extensive benefits, or choose

the type of pay for performance system.

Tailoring rewards to employees preferences

Greater Effectiveness

Retaining diverse workforce

Negative point

Advantages

Create too diverse workforce that wants to establish a strong

unified Culture.

Organizations are,

• Moving towards a more diverse workforce.

• Becoming more global.

• Flexibility and individualizations.

Cont’d

Any Question….?

Thank you