CHAPTER 12
Strategic remuneration management
Session objectives Understand the nature of remuneration strategies and the decisions involved in developing a remuneration strategy Understand the components of a remuneration management system Understand the role of equity in designing a remuneration system Discuss the purpose and strategic design of salary structures
Discuss the use of salary packaging and benefits Understand the use of variable reward programs Be aware of current remuneration issues and trends in remuneration management
Session objectives (cont.)
The most visible reward for work is monetary
Strategic objectives of remuneration
Reward past performance Remain competitive in the labour market Maintain salary equity among employees Motivate future performance Control wage and salary costs Attract and retain good staff Reduce unnecessary staff turnover
Job evaluation systemsJob evaluation systems
Job ranking Job classification
Point system Factor comparison
Common methods of job
comparison
Common methods of job
comparison
The equity component
Internal
External
Individual
Process
Market relativities The market places pressure on organisations to remunerate beyond scope of work value and salary ranges Comparisons can be conducted by:– Matching jobs to those in surveys– Participating in a customised survey– Reading newspaper advertisements– Contacting employer organisations/agencies
Salary packaging and benefits
A salary package can include:A salary package can include:
Base salaryBase salary
Employee superannuation contributionsEmployee superannuation contributions
Motor vehicleMotor vehicle
Value of other fringe benefitsValue of other fringe benefits
Variable rewardsTie individual reward to organisational goals by making payment of the reward contingent on the success of the individual or group through: Incentive plans Bonus plans Profit sharing Sales commissions Share purchase/ownership plans
Current issues in remuneration Pay culture Outsourcing Remuneration differentiation Paying premiums Executive pay Flexible work practices Superannuation Global pay
Future direction of salary structures
Increasing flexibility Enterprise-level negotiation Pay linking to performance management and development programs Emphasis on non-cash components
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