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oThe point system permits jobs to be evaluated quantitatively on the basis of factors or elements—commonly called compensable factors—that constitute the job.24 The skills, efforts, responsibilities, and working conditions that a job usually entails are the more common major compensable factors that serve to rank one job as more or less important than another. More contemporary factors might include fiscal accountability, leadership, teamwork, and project accountability. The number of compensable factors an organization uses depends on the nature of the organization and the jobs to be evaluated. Once selected, compensable factors will be assigned weights according to their relative importance to the organizationohe point system requires the use of a point manual. The point manual is, in effect, a handbook that contains a description of the compensable factors and the degrees to which these factors may exist within the jobs. A manual also will indicate—usually by means of a table—the number of points allocated to each factor and to each of the degrees into which these factors are divided. The point value assigned to a job represents the sum of the numerical degree values of each compensable factor that the job possesses.Unit 7 – 2 How do employees judge whether compensation is fair?
Compensation is directly linked to an employee’s livelihood. Employees can receive stellar training and copious growth opportunities and be completely satisfied with their work and theenvironment, but they will not show up to work if there is no paycheque in return.The success of an incentive pay plan depends on the organizational climate in which it must operate, employee confidence in it, and its suitability to employee and organizational needs. Importantly, employees must view their incentive pay as being equitable and related to their performance. Performance measures should be quantifiable, be easily understood, and bear ademonstrated relationship to organizational performance.Compensation is one component of the wage-rate bargain. Compensation represents the price that an employer pays in exchange for workers agreeing to place their capacity to work at the employer’s disposal. Consequently, the overall compensation package must be attractive enough to entice workers into service. Various external factors (e.g., the availabilityof alternative jobs, the compensation offered by competitors, what the organization can afford) all affect what compensation is offered.Compensation also plays a role in the wage-effort bargain. Many of the approaches to compensation are designed to alter worker behaviour through a system of rewards and penalties. The purpose of these systems is to increase organizational profitability by a combination of higher productivity and lower labour costs.