Page 145 - DMGT548_GLOBAL_HRM

Global HRM

Notes worker who seldom takes more than three or four days off in a year, but vacation and holiday
time-off is critical in Africa, most Muslim nations, and some Latin American countries.
International oriented managers have to be accommodated into a global compensation policy
which is different from the typical compensation policy in the home-country consisting of the
lump-sum reimbursements. So, MNCs are gaining the insight of the changing compensation
policies for its international managers and the emerging issues associated in the global
compensation package.

8.1 Compensation

Compensation is the financial remuneration the employees receive in exchange for their labour.
Compensation management deals with wages, salaries, pay increase, and other monetary issues.
The compensation system is designed to reward employees in an equitable manner and to serve
as an inducement for the attraction and retention of a good workforce.
Compensation decisions should achieve six critical objectives:

1. Be legal: Compensation decisions should be consistent with federal, state, and local laws
and regulation.
2. Be adequate: Compensation should be sufficient to attract qualified job applications and
retain them.
3. Be motivating: Compensation should be sufficient to provide the necessary incentives to
motivate employees to high performance levels.
4. Be equitable: Employees should be made to feel that the compensation system is equitable.
5. Provide security: Employees should be made to feel that their income is secure and
predictable.
6. Be cost-benefit effective: The employing organisation should administer the compensation
system effectively.

Notes Job Evaluation
The design of a wage and salary structure begins with the job evaluation which is the
process of assessing the values of the jobs within the organisation. The most common job
evaluation system is the point system which is accomplished in seven steps:
1. Perform a job analysis and document or update the job descriptions.
2. Choose a point-based job evaluation that assigns point values for the various skills
and responsibilities inherent in the jobs.
3. Use the point-based evaluation to assess the value of the jobs.
4. Select the key jobs and obtain a pay survey to establish their market pay rates.
5. Compare the survey pay rates for the key jobs with their job evaluation points by
plotting a pay-trend line on a graph.
6. From the pay-time line, assign average pay rates to the non-key jobs.
7. Group the jobs into categories and establish pay ranges within each category.

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