HRM3705 – COMPENSATION MANAGEMENT
STUDY UNIT 1 – Strategic Compensation: A Component of HR systems Learning Outcomes:
1. Define and critically discuss the context of compensation – Compensation refers to all forms of financial returns and tangible services & benefits employees receive a...
study unit 1 – strategic compensation a component of hr systems learning outcome
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HRM 3705 (HRM3705)
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HRM3705 – COMPENSATION MANAGEMENT
STUDY UNIT 1 – Strategic Compensation: A Component of HR systems
Learning Outcomes: hyraam
2016-05-12 15:32:50
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1. Define and critically discuss the context of compensation – Compensation refers to
I am sure
all forms of financial returns and tangible services & benefits employees that aas
receive lot more detail
can be added here
part of an employment relationship. Compensation comprises of Intrinsic & Extrinsic
rewards.
2. Differentiate between tactical and strategic decisions and discuss the
relevant concepts –
hyraam
Strategic decisions: 2016-05-12 15:33:30
Guide the activities of companies in the market and are concerned with the entire
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environment in which the company operates, the resources and the people who
Examples maybe?form
the company and the interface between the two and it supports the business
objectives.
Tactical decisions:
Affect the day-to-day implementation of steps required to reach the goals of a
strategy, such as recruitment and it supports the fulfilment of strategic decisions
3. Describe how the compensation function fits into the HR department –
Bussin (2011) states that linking the remuneration to the HR functions allows for an
integrated service to the business and a greater focus on its strategies. The strategies and
goals of the remuneration function include the following:
Developing reward policies that are appropriate and in support of the overall business
strategies
Implementing systems and administration procedures that are effective, and that
result in reliable management information
Providing comprehensive customer service that is professional, effective and
satisfying
Open Rubric
,There are advantages if remuneration/compensation is linked to the HR function:
. Integrated systems
Increased data integrity
Improved information availability
Improved response time
Increased flexibility and ease of change to meet business goals
Improved teamwork ± there is a close working relationship between
payroll administration and HR consultants
Effective one-stop employee pay and benefits service and information centre
Enhanced employee communication and education
Improved customer service and satisfaction
4. Critically discuss the compensation department's main objectives –
internal consistency -Achieved when the value of each job is clearly defined
Market competitiveness - Definition: The pay relationship among organisations
and focuses attention on the competitive positions reflected in these relationships
• Also known as external competitiveness
• Compensation policies that fit with business objectives
hyraam
• Vital in attracting and retaining employees 2016-05-12 15:40:15
• Are based on: --------------------------------------------
• Strategic analyses Very little information. I am
• Compensation surveys hoping that these are only key
words students will use to study?
If such a question was asked in an
recognition of individual contributions- exam much more detail would be
needed. Also see comments
• Pay Structures: pay is determined by employee’s credentials, job above. and
knowledge,
job performance
• Pay Grades: based on compensable factors and value
• Pay Ranges: builds on grades, uses midpoints, minimums, and maximums
, 5. Discuss the difference between cash compensation (direct compensation) and
benefits (indirect compensation), and define each of the direct and indirect forms
of compensation. –
, COLAs—COLAs represent periodic base pay increases that are founded on
changes in prices as indexed by the consumer price index (CPI).
Seniority Pay—seniority pay systems reward employees with periodic additions to
base pay according to employees’ length of service in performing their jobs
Merit Pay—merit pay programs assume that employees’ compensation over time
should be determined, at least in part, by differences in job performance.
Incentive Pay—incentive pay (or variable pay) rewards employees for partially
or completely attaining a predetermined work objective.
Pay-for-Knowledge Plans—pay-for-knowledge plans reward managerial, service,
or professional workers for successfully learning specific curricula
Skill-based Pay—skill-based pay is used mostly for employees who perform
physical work and increases these workers’ pay as they master new skills
Three Broad Categories of Benefits
Protection programs—provide family benefits, promote health, and guard
against income loss caused by such catastrophic factors as unemployment,
disability, or serious illness
Paid time-off—provides employees with pay for time when they are not working
Services—provides such enhancements as tuition reimbursement and day care
assistance to employees and their families
Legislation Designed to:
• Promote worker safety and health
• Maintain family income
• Assist families in crisis
• Provide assistance in case of
• Disability
• Unemployment, for example Unemployment Insurance Fund (UIF)
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