Page 133 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Unit 6: Compensation and Rewards

(i) Salary Progression: Salary progression refers to a sequence of increase in salary Notes
to merit. The procedure for salary progression is characterized by (a) Salary zones
for example; a foreman starts with a salary of ` 10,000 basic pay and touches a
maximum of ` 15,000 after 9 years and ` 18,000 after 12 years. (b) The incremental
rate consists of ` 500 during the first 9 years and ` 600 for the subsequent 3 years
of experience.
(ii) Broad Banding: Broad banding means collapsing salary grades and ranges into a
few broad and wide levels or “bands” each consisting of a relatively wide range
of jobs and salary levels. In the example given above, all production staffs are
reduced into three categories: foreman, senior operator and operator.

Flow Chart Showing the Phases of Compensation Management:

Figure 6.1: Determination of wage structure

Phase 1

Identify and Study Jobs
JOB ANALYSIS

Position Description Job Description Job Standards

Phase 2
Internal Equity

JOB EVALUATION

Job Ranking Job Grading Factor Comparison Point Systems
Phase 3
External Equity

WAGE AND SALARY SURVEYS

Department Employment Employer Professional Self-
of Labour Exchange Associations Associations Conducted Survey
Phase 4

Matching Internal and External Worth
PRICING JOBS

Job Evaluation Worth Match Labour Market Worth

Prepare the flow chart to show the determination of wage structure.

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