Page 173 - DMGT406_HUMAN_RESOURCE_MANAGEMENT

Human Resource Management

Notes

Notes Two new concepts of incentive programmes are Broadbanding and Competency-
based pay. Organisations that follow a skill-based or competency based pay system
frequently use broad banding to structure their compensation payments to employees.
Broad branding simply compresses many traditional salary grades (say 15 to 20 grades)
into a few wide salary bands (three or four grades). By having relatively few job grades,
this approach tries to play down the value of promotions. Depending on changing market
conditions and organisational needs, employees move from one position to another
without raising objectionable questions, (such as when the new grade is available, what
pay adjustments are made when duties change, etc.) As a result movement of employees
between departments, divisions and locations becomes smooth. Employees with greater
flexibility and broader set of capabilities can always go in search of jobs in other departments
or locations that allow them to use their potential fully. Broad banding, further, helps
reduce the emphasis on hierarchy and status. However, broad banding can be a little
unsetting to a new recruit when he is made to roll on various jobs. Most employees still
believe that the existence of many grades helps them grab promotional opportunities
over a period of time. Any organisation having fewer grades may be viewed negatively
- as having fewer upward promotion opportunities. Moreover, a number of individuals
may not want to move across the organisation into other areas.



Case Study The Failed Job Change

ikhil has joined as Director of an organisation during early March, 2001 in
New Delhi, shifting from Calcutta. During the selection process, the committee
Nduly considered his earlier pay package and has given him a proportionate rise
in pay adding also the tax savings which he will accrue due to splitting of 50 per cent of his
pay as reimbursement. He was happy for such compensation design, as his savings will be
more in his new position. Within two weeks of his joining, government has issued a
notification, declaring ceiling on all perquisites and bringing all reimbursements given
as perquisites within the ambit of tax net. Nikhil raised this issue and asked for reprieve
with upward revision of his compensation package. The company pleaded its helplessness
as government orders are beyond their control and any revision at this stage will set a bad
precedence to other employees of the organisation. He was told to continue and wait for
the next revision after a year, when these issues will be taken care of.
Salary information in the company is not confidential. It is so transparent that even the
lowest rung of the organisation knows what others get. Internally employees feel de-
motivated when they find their pay raise is disproportionate to the pay raise of their
bosses. The company has a system to give Diwali gifts to all in cash and kind. This is kept
strictly confidential and nobody knows what others are getting. The Board approves the
total amount for this purpose and distributes among employees, keeping in view their
performance and hierarchy. Performance feedbacks are obtained from the structured
performance appraisal system.

Nikhil was tipped off that he will be able to reduce his loss through the Diwali gift and
hence he should not feel de-motivated at this stage. During early November, 2001, Nikhil
received a sealed packet with a gift cheque of 10,000 and gift vouchers worth 20,000.
Contd...

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