HRM3705 2010 101_2010_3_mnh306ke

Assignment 03 study units 3 5 and 6 this assignment

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Assignment 03 (Study units 3, 5, and 6) This assignment must NOT be sent to the University! Read the following paragraph and then answer the questions. Balancing internal equity and external competitiveness in pay practices When the University of Johannesburg (UJ) assessed its pay structures and approach to pay plan design, the organisation sought assistance to redesign how it paid more than 3, 300 non-faculty employees. UJ has a total of 66 pay grades for non-faculty employees. “There was more than 700 staff jobs in these pay grades,” said RJ Barret, UJ’s compensation advisor. “The percentage differences from midpoint to midpoint were very closed.” UJ was using a market-based approach that lacked consistency in assigning jobs to pay grades: too many pay grades and too many jobs often lead to confusion. A key problem with a pure market- based approach is that non-benchmark jobs are slotted into pay grades using a best-guess approach; this approach also led the organisation to consider market data that was not truly representative of an appropriate comparison. The organisation lacked a consistent approach to considering internal equity. According to Barret, “UJ needed a pay structure that balanced both internal equity and external competitiveness.” Through a competitive process, Hay Groups was selected to evaluate jobs and create pay structures that would balance the external compensation market with internal equity. The Hay Group assisted UJ to refine its compensation philosophy and operating guidelines. After this exercise, UJ has 16 pay grades. It is more efficient and less administratively cumbersome. According to Barret: “Historically, pay grade maximums had little meaning. Either an incumbent was moved to a new pay grade or the maximum was ignored. But not anymore. Pay grade maximums are now a key control. Beginning with implementation, salaries above pay grade maximums were capped, however, managers were given the option to provide merit-based, lump-sum payments that did not add to fixed costs yet recognised strong performers. With pay markets better defined, pay grade midpoints provided enhanced management guidance when making within range pay adjustment decisions. This resulted in a more effective distribution of salary increases.” Adapted from Hay Group Source: 2009 Hay Group Holdings, Inc Critically evaluate the above by discussing the following: Define external competitiveness and discuss the factors which shapes external competitiveness (15) Define job evaluation and discuss it in terms of content, value and external market links. In your discussion, briefly discuss the most important job evaluation systems used in South Africa. (15) Why should an organisation be concerned with internal alignment? In you answer, define internal alignment and pay structure and discuss internal alignment in terms of efficiency, equity and compliance with legal requirements. (10) Define the concept “pay policy” and discuss the different pay policy alternatives. (10) Total (50) x 2 = 100 Guidelines on answering this assignment are provided in appendix F of this tutorial letter.
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