SISTEM IMBALAN COMPENSATION 1 Compensation is what employees

SISTEM IMBALAN (COMPENSATION)

1. Compensation is what employees receive in exchange for their contribution to the organization, it helps the organization achieve its objectives and obtain, maintain, and retain a productive workforce. 2. Compensation refers to all forms of financial returns and tangible services and benefits employees receive as a part of an employment relationship

The objectives of Compensation management are to help the organization achieve strategic success while ensuring internal and external equity. • • • Acquire qualified personnel Retain current employees Reward desired behavior Control costs Comply with legal regulations Internal equity, ensure that more demanding positions or better qualified people within the organization are paid more. External equity, assure that jobs are fairly compensated in comparison with similar jobs in the labor market

Total Returns Total Compensation Cash Compensation • Base • Merit/Cost of Living • Short-term incentives • Long-term incentives Relational Returns • Recognition & Status Benefits • Employment security • Income protection • Challenging work • Work/life focus • Allowances • Learning opportunities

Major phase of Compensation management Job analysis Phase-I Identify & study jobs Position descriptions Job standards Job evaluation (develop a rational approach to pay) Phase-II Internal equity Job ranking Job grading Factor comparison Point system Wage & salary surveys Phase-III External equity Phase-IV Matching internal and external worth Dept NAKER Employer association Professional associations Self conducted surveys Pricing jobs Job evaluation worth Match Labor market worth Rate range for each job

Job Ranking, rank each job subjectively according to its relative importance (consider individual factors such as the responsibility, skill, effort and working condition) in comparison with other jobs in the firm. Position Rank Remark Janitor 1 Less Importance Secretary 2 Importance Office Manager 3 Very Importance

Job Grading, it works by having each job assigned to a grade by matching standard descriptions with each job’s description. Job Grade I. Standard Description Work is simple and highly repetitive, done under close supervision, requiring minimal training and little responsibility or initiative Ex: Janitor, file clerk II. Work is simple and highly repetitive, done under close supervision, requiring some training or skill. Employee is expected to assume responsibility or exhibit initiative only rarely. Ex: Clerk-typist I, Machine cleaner III. Work is simple, with little variation, done under general supervision. Training or skill required. Employee has minimum responsibilities and must take some initiative to perform satisfactorily. Ex: Part expediter, machine oiler, Clerk-typist II. IV Work is moderately complex, with some variation, done under general supervision. High level of skill required. Employee is responsible for equipment or safety; regularly exhibits initiative. Ex: Machine operator I, Tool and die apprentice V Work is complex, varied, done under general supervision. Advance skill level required. Employee is responsible for equipment and safety; shows high degree of initiative. Ex: Machine operator II, Tool and die specialist

Factor Comparison, comparing the critical or compensable factors (common job elements such as responsibility, skill, mental effort, physical effort, and working condition) for each key job (commonly found throughout the organization), and put wages for each job as its compensation. Key Jobs Compensable or critical factors Machini st Forklift Driver Secretar y Janito r File Clerk Responsibility 3, 20 1, 80 2, 40 0, 80 1, 40 Skill 4, 00 1, 80 2, 00 0, 80 1, 30 Mental Effort 3, 00 1, 20 1, 80 0, 50 1, 40 Physical Effort 2, 00 1, 80 0, 70 2, 70 0, 90 Working Condition 0, 07 0, 60 1, 90 0, 60 Total 12, 27 7, 20 7, 50 6, 70 5, 60 Wage Rate ($) 12, 27 7, 20 7, 50 6, 70 5, 60

Point System, this system evaluates the compensable factors of each job, but instead of using wages as the factor comparison does, it uses points. Level Compensable or critical factors Responsibility 1 Minimum Low Moderate High I II IV a Safety of others 25 50 75 100 b Equipment and materials 20 40 60 80 c Assisting trainees 5 20 35 50 d Product/ service quality 20 40 60 80 Skill 2 a Experience 45 90 135 180 b Education/ training 25 50 75 100 Effort 3 a Physical 25 50 75 100 b Mental 35 70 105 150 Working Condition 4 a Unpleasant condition 20 40 60 80 b Hazard 20 40 60 80 Total 1000

1. Responsibility b. Equipment and materials. Each employee is responsible for conserving the company’s equipment and materials. This include reporting malfunctioning equipment or defective materials, keeping equipment and materials cleaned or in proper order, and maintaining, repairing, or modifying equipment and materials according to individual job duties. The company recognizes that the degree of responsibility for equipment and material varies widely throughout the organization. Level I. Employee reports malfunction equipment or defective materials to immediate superior. Level II. Employee maintains the appearance of equipment or order of materials and has responsibility for the security of such equipment or materials. Level III. Employee performs preventive maintenance and minor repairs on equipment or correct minor defects in materials. Level IV. Employee performs major maintenance or overhauls of equipment or is responsible for deciding type, quantity, and quality of materials to be used.

Wage and Salary surveys, suatu aktifitas penelitian yang bertujuan Wages or Salaries untuk mendapatkan informasi tentang standar upah dan gaji yang berlaku dipasar tenaga kerja (labor market), dan akan dipergunakan sebagai referensi dalam penetapan besaran upah dan gaji (pay level) oleh satu organisasi/ perusahaan. Point Values

Problematika kompensasi 1. Strategic Objectives, pola kompensasi dapat dipergunakan untuk mendorong terciptanya kerjasama tim, apabila besaran kompensasi dikaitkan dengan tingkat kinerja tim (bukan kinerja individu). 2. Prevailing wage rates, kondisi ini terjadi apabila permintaan TK jauh melebihi penawaran yang tersedia di pasar tenaga kerja, sehingga tingkat upah yang diminta melebihi tingkat normal. 3. Union power, kekuatan menawar (bargaining power) yang dimiliki Serikat Buruh, dapat berpengaruh pada kesepakatan upah.

4. Government regulations, ketentuan-ketentuan pemerintah yang mengatur hubungan industrial, terkadang menimbulkan ketidak samaan pemahaman antara buruh dan majikan. 5. Productivity and costs, kondisi ideal adalah bila buruh dibayar sesuai dengan produktifitasnya.

Nontraditional Compensation Kompensasi tambahan yang diberikan kepada karyawan/ unit kerja, apabila kinerja seorang karyawan tersebut melebihi tingkat yang telah ditentukan (Insentive), Insentive dan atau apabila unit kerja dapat melakukan penghematan biaya/ biaya peningkatan laba (gainsharing). sharing

Three Primary Reasons for Adopting Pay Incentive Plans 1. Increase employee motivation. 2. Minimize costs per unit produced. 3. Attract and retain a high performing workforce.

PROS • Individual motivation. • Employee perception of equity – high performance linked to high reward. CONS • Inflexible behavior: focus only on rewards. • Undesireable outcomes: low quality, equipment damage, poor customer service, etc. • Low cooperation. • Perceived inequity & low distributive and procedural justice.

Group/Team • Equal rewards for all group members. • Differential rewards based on individual merit. • Differential rewards between groups based on performance goals.

PROS • Individual motivation. • Employee cooperation. • Broader employee focus: totality of outcomes. • Employee perception of equity tied to reward of whole group. CONS • Difficulty in designating operating groups. • Perception of individual inequity tied to “free rider” effect.