Rewards &

Evaluation
Arab Academy – HRM
2021-2022
Dr. Amany Shehata
 Learning activities

Mid Term Group Personal

Final Exam
Paper Presentation Contribution
(40 points)
(30 points) (20 points) (10 points)

Schedule From 9:00 am – 12:00pm

Schedule & 11/05/22 lecture 15/06/22 lecture

18/05/22 lecture 22/06/22 lecture
Ratings 25/05/22 lecture/Pres 1 29/06/22 lecture/Pres 2 online
01/06/22 lecture/Pres 1 On Line/? Lecture /Revision
08/06/22 lecture/Mid term paper 06/07/22 Final Exam

HRM-Arab Academy-Dr.Amany Shehata 2

 1. Rewards & Evaluation

2. Culture & Engagement - &

Industrial Relation

3. Administration & Operations

(Shared services) – HR Analytics
& Managing Data analysis
Remaining
Sessions 4. Revision

HRM-Arab Academy-Dr.Amany Shehata 3

Agenda
1. Introduction to Rewards Strategy
2. Establishing Strategic Pay Plans
3. Job Evaluation
4. Case Study
5. Summary
HRM-Arab Academy-Dr.Amany Shehata 4
 1. Understand the concept of a compensation strategy, where it
comes from, how it relates to the organization’s situation, and
why the concept has value.
2. Illustrate the relationship between the pay system and each of
the strategic issues discussed.
Introduction 3. Explain in detail how to establish pay rates
To Rewards 4. Realize there is not yet consensus on the concept of strategy.
5. Explain how to price managerial and professional jobs.
6. Discuss current trends in compensation.
  Pay is a reward for behavior

Strategy and  How and what you pay should support what you want to reward
 Pay also needs to reflect who you are as an organization
Pay  Pay should reflect the situation that your company is in
 Corporate objectives
Business unit
strategic plans, HR strategies
strategies

Strategic vision, and values

Choices
What business How do we win (gain How should HR help
should we be in? competitive advantage) in us win?
those businesses?

How should total Social, competitive, Strategic

compensation help and regulatory compensation
us win? environment decisions

Compensation
systems
Strategic Choices
Employee
attitudes and
behaviors

Competitive
advantage
 Microsoft Bristol - Myers Squibb Firepond
Strategic • Support the business • Support business mission • Demonstrate respect for
Perspectives objectives and goals individual talent and the
limitless potential of a highly
• Support recruiting, • Develop global leaders at
Toward Total motivation, and retention of every level motivated team

Compensation MS-caliber talent • Reinforce team-based • Encourage high standards of

Objectives
• Preserve MS core values culture excellence, original thinking, a
passion for the process of
• Reduce costs, increase discovery and a willingness to
productivity take risks
• Reward fresh ideas, hard
work and a commitment to
excellence
• Value diverse perspectives
as a key to discovery

• Integral part of MS culture • Flexibility for development and • Pay differences that foster a
Alignment

growth collegial atmosphere

Internal

• Support MS performance
• Reflect responsibilities, • Reinforce high expectations
driven culture
required competencies, and
• Business/technology-based business impact
organization design structure
 Microsoft Bristol - Myers Squibb Firepond
• Lead in total compensation • Compare favorably to • Demonstrate respect for
Strategic • Lag in base pay higher-performing individual talent and the

Competitive
competitors limitless potential of a highly

Externally
Perspectives • Lead with bonuses, stock
options
• Cash between the 50 th and motivated team

Toward Total
75th percentile

Compensation
(continued)
• Bonuses and options based • Support high performance, • Bonus pool based on

Contribution
on individual performance leadership culture Firepond financial
Employee • Team-based increases performance. Individual share
• Options align employee and of pool based on individual
shareholder interest performance.
• Tailor to business and team • Push stock ownership deep
results into company
Administration

• Open, transparent • Performance and leadership • Goal-focused, team-oriented,

communications feedback – everyone is a and self-managed
leader
• Centralized administration
• Administrative ease
• Software supported
Pay System  Attract and retain employees
Objectives
 Motivate performance
 Promote skills and knowledge development
 Shape corporate culture
 Reinforce and define structure
 Determine pay costs
  Before any new compensation program is designed, there must be a
clear understanding by the organization of:
 its current values
 its structure
 its people
 its goals and vision for the future

Pay-Design
Process
Strategic VISION/MISSION
CORE BELIEFS
Alignment DESIRED CULTURE
BUSINESS OBJECTIVES

REWARD PLANS

PERFORMANCE
Generic
Business-level
Strategies
 Innovator
 Cost Cutter
 Customer Focused

13
 Business HR Program Compensation
Strategy Response Alignment System
• Product Leadership • Committed to Agile, • Reward Innovation
Innovator:
Risk Taking, in Products and
Increase Product • Shift to Mass Processes
Innovative People
Complexity and Customization and
• Market-Based Pay
Shorten Product Innovation
Life Cycle • Cycle Time • Flexible – Generic
Job Descriptions

• Operational • Focus on
Cost Cutter: Competitors’ Labor
Excellence Costs
Focus on Efficiency
• Pursue Cost- • Do More With Less • Increase Variable
effective Solutions Pay
• Emphasize
Productivity

Tailor the • Focus on System

Control and Work
Specifications

Compensation • Customer
System to the
• Customer Intimacy • Delight Customer,
Customer Focused: Satisfaction
• Deliver Solutions to Exceed Expectations Incentives
Increase Customer

Strategy Expectations Customers

• Value of Job and
• Speed to Market Skills Based on
Customer Contact
 A strategic perspective
focuses on those
competitive choices that
Which Pay
Decisions Are help the organization gain
Strategic? and sustain competitive
advantage.
Strategic
Compensation
Decisions
 Objectives
 Alignment
 Competitiveness
 Contributions
 Administration
  Objectives: How should compensation support business strategy
and be adaptive to the cultural and regulatory environment?
 Exam Question

The Strategic
Compensation
Decisions Facing
Starbucks
 Starbucks objectives:
 Grow by making employees feel valued.
 Recognize that every dollar earned passes through
employees’ hands.
 Use pay, benefits, and opportunities for personal
development to help gain employee loyalty and
become difficult to imitate.
Example: The
Strategic
Compensation
Decisions Facing
Starbucks
 2. Alignment: How differently should the various
types and levels of skills be paid within the
organization?
Starbucks:
 De-emphasize differences.
 Use egalitarian pay structures, cross-train employees to handle many
jobs, and call employees partners.

Example: The Strategic

Compensation Decisions
Facing Starbucks (continued)
 3. Competitiveness: How should total
compensation be positioned against our
competitors? What forms of compensation
should we use?
Starbucks:
 Pay just slightly above other fast-food employers.
 Provide health insurance and stock options for all employees
(including part-timers).
 Give everyone a free pound of coffee every week.
Example: The Strategic
Compensation Decisions
Facing Starbucks (continued)
 4. Contributions: Should pay increases be based
on individual and/or team performance, on
experience and/or continuous learning, on
improved skills, on changes in cost of living,
on personal needs, and/or on each business
unit’s performance?
Starbucks:
Example: The Strategic  Emphasize team performance and shareholder returns.
Compensation Decisions  For new managers in Beijing and Prague, provide training
Facing Starbucks opportunities in the U.S.
(continued)
 5. Administration: How open and transparent
should pay decisions be to all employees? Who
should be involved in designing and managing
the system?
Starbucks:
 As members of the Starbuck’s “family,” our employees realize what
is best for them.
 Partners can and do get involved.

Example: The Strategic

Compensation Decisions
Facing Starbucks (continued)
Key Steps to 1. Assess Total Compensation Implications
• Competitive Dynamics
• Core Culture / Values
Formulate a • Social and Political Context
• Employee / Union Needs

Compensation
• Other HR Systems

Strategy
4. Reassess the Fit 2. Fit Policy Decisions to Strategy
• Realign as Conditions Change • Objectives • Contributions
• Realign as Strategy Changes • Alignment • Administration
• Competitiveness

3. Implement Strategy
• Design System to Translate Strategy
into Action
• Choose Techniques to Fit Strategy
Basic Issue: Does Socioeconomic /
Political Environment
Organization Strategy HR / Compensation
Policies
Competitive
Advantage

“Best Fit” Pay Off?

Socioeconomic / HR / Compensation Organization Strategy Competitive Advantage
Political Environment Policies
 HIGH COMMITMENT

Best Practices THE NEW PAY

 High wages: You get what you pay for
 Guarantee employment security
Options  External market-sensitive-based pay, not
internal alignment  Apply incentives; share gains, not risks

 Variable performance-based pay, not  Employee ownership

annual increases  Participation and empowerment
 Risk-sharing partnership, not  Teams, not individuals are base units
entitlement
 Smaller pay differences
 Flexible opportunities to contribute, not
 Promotion from within
jobs
 Selective recruiting
 Lateral promotions, not career path
 Enterprise-wide information sharing
 Employability, not job security
 Training, cross-training, and skill
 Teams, not individual contributors development are crucial
 Symbolic egalitarianism adds value
 Long-term perspective matters
 Measurement matters
 Organization
Performance Increased Performance-
INCREASES Based Pay

Virtuous and Virtuous Circle

Vicious Circles Risk/Return
BALANCE
Increased Employee
Performance

Organization
Vicious Circle Performance Decreased Performance-
DECREASES Based Pay

Risk/Return Decreased Employee

IMBALANCE Performance
An implicit contract is an unwritten
understanding between employers and
employees over their reciprocal
obligations and returns; employees
contribute toward achieving the goals of
the employer in exchange for returns
given by the employer and valued by the
employee.
Framework for
Analyzing
Different Deals

High
TRANSACTIONAL
Low

Low High
RELATIONAL
  Internal focus vs. external focus
 Focus on products vs focus on services
 Focus on fairness vs. focus on competitiveness
 Focus on risks vs. focus on no errors

You get what

you pay for
  Small fish in big pond or big fish in a small pond?
 One of a kind, or one of many?
 Organized or “un” organized?
 Lay offs or full employment?

You pay what

you have
  Employment security
 Money
 Advancement opportunities
 Bonuses
Pay with what?  Organizational support
 Premium pay, shift pay
 Work environment
 Ownership
 Title
 Cash recognition
 Organizational affiliation
 Benefits
 Work variety
 Perks
 Work challenge
 Career advancement
 Autonomy
 Training
 Work meaningfulness
 Personal growth
 Feedback
  Direct Financial

 Money
 Bonuses
 Premium pay, shift pay
 Ownership
 Cash recognition

Pay with what?

  Indirect Financial

 Benefits
 Non cash recognition
 Perquisites

Pay with what?

  Affiliation
 Organizational support
 Work environment
 Organization citizenship
 Title

Pay with what?

  Work content

 Variety
 Challenge
 Autonomy
 Meaningfulness
 Feedback

Pay with what?

  Career
 Advancement

Pay with what? 
Personal Growth
Training
 Employment security
  Your compensation philosophy and the kind of company will lead
you to answers on how to balance each of these compensation
Balance vehicles
 You may “underpay” in one area, but “over” pay in another
  Base pay should be considered the price you pay for membership to
the club
Base Pay  It ensures you that the employee
 will show up at work
 that you may call them at night or weekends with business questions
 that you can send them out of town and disrupt their personal life
  Must be within 5% of market to be competitive
 Most companies highlight the 50th percentile
Base Pay  Some companies will target the 75th percentile
 Lately, companies are targeting the 60th percentile
  The price you pay to get employees focused on what is
important to the company.
Incentive Pay  Addresses motivation and reward for achieving a pre set goal
 Should be related to critical areas that the employee can
impact
 “line of sight” should be direct
 Should consist of no more than 3-5 goals
 Simple and measurable is best
  Balanced Scorecard Approach

Incentive Pay 
Financial
Operational
 Customer
 Learning and growth
 Multiple levels of organization
 Corporate
 Division
 Business unit
 Individual
  Top Executives 50-100% of base
 VPs and Directors 30-50% of base
Incentive Pay  Mid-Management 20-30% of base
Targets  Supervisors 10-20% of base
 Others 0-10% of base

 Needs to be at least 5% of base to have an impact.

  The price you pay to retain employees

Long Term Pay  Addresses long term security

 Should tie individual to the company’s future
 Should be tied to the growth of the company over time
 Spans multiple years (3-5 or longer)
  Stock options for public companies
 Phantom stock for public and private companies

Long Term Pay  Long term incentive plans for public and private companies
 Traditionally tied to value of the company, or some long term goal
(achieving $X in gross revenues)
 Level Grant value* Est. Future value*

Long Term Pay Executive 60-100% 30%

Director 50-70% 25%

Manager 30-50% 20%

* As a percent of base
The Balance

Pay Starting Market Mature Declining

Component Growth
Base Low Mod High High

Incentive Low Mod High Mod

Long term High High Mod Low

Benefits Low Low Mod High

  Large government contractor  Small, start-up, dot-com

The Balance  Base: high  Base: mod

 Incentive: low  Incentive: mod
 Long term: low  Long term: high
 Perquisites: low  Perquisites: low
 Benefits: high  Benefits: low
  More of one thing does not solve problem

Consequences of  Balance of rewards is important

More  Key words
 Meaningful
 Relevant
 Timely
 Valuable
 Examples
  Employee compensation
 All forms of pay or rewards going to employees and arising from
Determining Pay their employment.
Rates  Direct financial payments
 Pay in the form of wages, salaries, incentives, commissions, and
bonuses.
 Indirect financial payments
 Pay in the form of financial benefits such as insurance.
Corporate  Aligned reward strategy
 The employer’s basic task is to create a bundle of rewards—a total
Policies, reward package—specifically aimed at eliciting the employee
Competitive behaviors the firm needs to support and achieve its competitive
strategy.
Strategy, and  The HR or compensation manager will write the policies in
Compensation conjunction with top management, in a manner such that the policies
are consistent with the firm’s strategic aims.
Compensation
Policy Issues  Pay for performance
 Pay for seniority
 The pay cycle
 Salary increases and promotions
 Overtime and shift pay
 Probationary pay
 Paid and unpaid leaves
 Paid holidays
 Salary compression
 Geographic costs of living differences
  Salary compression
Compensation  A salary inequity problem, generally caused by inflation, resulting in
longer-term employees in a position earning less than workers
Policy Issues entering the firm today.
(cont’d)
  The equity theory of motivation
 States that if a person perceives an inequity, the person will be
Equity and Its motivated to reduce or eliminate the tension and perceived inequity.
Impact on Pay
Rates
Forms of  External equity
 How a job’s pay rate in one company compares to the job’s
Equity pay rate in other companies.
 Internal equity
 How fair the job’s pay rate is, when compared to other jobs
within the same company
 Individual equity
 How fair an individual’s pay as compared with what his or her
co-workers are earning for the same or very similar jobs
within the company.
 Procedural equity
 The perceived fairness of the process and procedures to make
decisions regarding the allocation of pay.
  Salary surveys
 To monitor and maintain external equity.
Methods to
 Job analysis and job evaluation
Address Equity  To maintain internal equity,
Issues  Performance appraisal and incentive pay
 To maintain individual equity.
 Communications, grievance mechanisms, and employees’
participation
 To help ensure that employees view the pay process as transparent
and fair.
  Step 1. The salary survey
 Aimed at determining prevailing wage rates.
Establishing  A good salary survey provides specific wage rates for specific jobs.
 Formal written questionnaire surveys are the most comprehensive,
Pay Rates but telephone surveys and newspaper ads are also sources of
information.
 Benchmark job: A job that is used to anchor the employer’s pay scale
and around which other jobs are arranged in order of relative worth.
  Step 2. Job evaluation
 A systematic comparison done in order to determine the worth of
Establishing Pay one job relative to another.
Rates (cont’d)  Compensable factor
 A fundamental, compensable element of a job, such as skills, effort,
responsibility, and working conditions.
Establishing Strategic
Pay Plans
  Identifying the need for the job evaluation
 Getting the cooperation of employees
Preparing for the  Choosing an evaluation committee.
Job Evaluation  Performing the actual evaluation.
  Ranking each job relative to all other jobs, usually based on some
overall factor.
 Steps in job ranking:
 Obtain job information.
 Select and group jobs.
 Select compensable factors.
 Rank jobs.
 Combine ratings.

Job Evaluation
Methods:
Ranking
  Raters categorize jobs into groups or classes of jobs that are of
roughly the same value for pay purposes.
Job Evaluation Methods:  Classes contain similar jobs.
Job Classification
 Grades are jobs that are similar in difficulty but otherwise different.
 Jobs are classed by the amount or level of compensable factors they
contain.
Example of A Grade Level Definition

This is a summary chart of the key grade level criteria for the GS-7 level of
clerical and assistance work. Do not use this chart alone for classification
purposes; additional grade level criteria are in the Web-based chart.
  A quantitative technique that involves:
 Identifying the degree to which each compensable factors are present
in the job.
 Awarding points for each degree of each factor.
 Calculating a total point value for the job by adding up the
corresponding points for each factor.

Job Evaluation
Methods:
Point Method
  Each job is ranked several times—once for each of several
compensable factors.
Job Evaluation
 The rankings for each job are combined into an overall numerical
Methods: rating for the job.
Factor Comparison
  A computerized system that uses a structured questionnaire and
statistical models to streamline the job evaluation process.
 Advantages of computer-aided job evaluation (CAJE)
 Simplify job analysis
 Help keep job descriptions up to date
 Increase evaluation objectivity
 Reduce the time spent in committee meetings
 Ease the burden of system maintenance

Computerized
Job Evaluations
  Step 3. Group Similar Jobs into Pay Grades
Establishing Pay  A pay grade is comprised of jobs of approximately equal difficulty or
Rates (cont’d) importance as established by job evaluation.
 Point method: the pay grade consists of jobs falling within a range of
points.
 Ranking method: the grade consists of all jobs that fall within two or
three ranks.
 Classification method: automatically categorizes jobs into classes or
grades.
  Step 4. Price Each Pay Grade
Establishing Pay — Wage Curve
Rates (cont’d)  Shows the pay rates currently paid for jobs in each pay grade,
relative to the points or rankings assigned to each job or grade by
the job evaluation.
 Shows the relationships between the value of the job as determined
by one of the job evaluation methods and the current average pay
rates for your grades.
Plotting a Wage
Curve
  Step 5. Fine-tune pay rates
 Developing pay ranges
 Flexibility in meeting external job market rates
 Easier for employees to move into higher pay grades
 Allows for rewarding performance differences and seniority
 Correcting out-of-line rates
 Raising underpaid jobs to the minimum of the rate range for their pay
grade.
 Freezing rates or cutting pay rates for overpaid (“red circle”) jobs to
Establishing maximum in the pay range for their pay grade.

Pay Rates
(cont’d)
 Wage Structure

Note: This shows overlapping

wage classes and
maximum–minimum wage
ranges.
Compensation
Administration
A good compensation administration program is comprehensive and flexible and
Checklist ensures optimum performance from employees at all levels. The following checklist
may be used to evaluate a company’s program. The more questions answered “yes,”
the more thorough has been the planning for compensation administration.
Pricing Managerial  Compensating managers
and Professional  Base pay: fixed salary, guaranteed bonuses.
 Short-term incentives: cash or stock bonuses
Jobs  Long-term incentives: stock options
 Executive benefits and perks: retirement plans, life insurance, and
health insurance without a deductible or coinsurance.
  What Really Determines Executive Pay?
Pricing  CEO pay is set by the board of directors taking into account factors
Managerial and such as the business strategy, corporate trends, and where they want
to be in a short and long term.
Professional  Firms pay CEOs based on the complexity of the jobs they filled.
Jobs  Boards are reducing the relative importance of base salary while
boosting the emphasis on performance-based pay.
  Employers can use job evaluation for professional jobs.
Compensating  Compensable factors focus on problem solving, creativity, job
scope, and technical knowledge and expertise.
Professional  Firms use the point method and factor comparison methods,
Employees although job classification seems most popular.
 Professional jobs are market-priced to establish the values for
benchmark jobs.
  Competency-based pay
What Is  Where the company pays for the employee’s range, depth, and
types of skills and knowledge, rather than for the job title he or she
Competency-based holds.
Pay?  Competencies
 Demonstrable characteristics of a person, including knowledge,
skills, and behaviors, that enable performance.
  Traditional pay plans may actually backfire if a high-performance
work system is the goal.
 Paying for skills, knowledge, and competencies is more strategic.
 Measurable skills, knowledge, and competencies are the heart of
any company’s performance management process.

Why Use
Competency-Based
Pay?
  Main components of skill/competency/ knowledge–based pay programs:
 A system that defines specific skills, and a process for tying the person’s pay
Competency-Based to his or her skill
 A training system that lets employees seek and acquire skills
Pay in Practice  A formal competency testing system
 A work design that lets employees move among jobs to permit work
assignment flexibility.
  Pros
Competency-Based  Higher quality
 Lower absenteeism and fewer accidents
Pay: Pros and Cons
 Cons
 Pay program implementation problems
 Cost implications of paying for unused knowledge, skills and
behaviors
 Complexity of program
 Uncertainty that the program improves productivity
  Broadbanding
Other  Consolidating salary grades and ranges into just a few wide levels or
Compensation “bands,” each of which contains a relatively wide range of jobs and
salary levels.
Trends  Wide bands provide for more flexibility in assigning workers to different
job grades.
 Lack of permanence in job responsibilities can be unsettling to new
employees.
 Broadbanded Structure
and How It Relates to
Traditional Pay Grades and
Ranges
  Strategic compensation
Strategic  Using the compensation plan to support the company’s strategic
Compensation aims.
 Focuses employees’ attention on the values of winning, execution,
and speed, and on being better, faster, and more competitive..
 IBM’s strategic compensation plan:
 The marketplace rules.
 Fewer jobs, evaluated differently, in broadbands.
 Managers manage.
 Big stakes for stakeholders.
  Comparable worth
Comparable  Refers to the requirement to pay men and women equal wages for

Worth jobs that are of comparable (rather than strictly equal) value to the
employer.
 Seeks to address the issue that women have jobs that are dissimilar
to those of men and those jobs often consistently valued less than
men’s jobs.
  Factors lowering the earnings of women:
Compensation and  Women’s starting salaries are traditionally lower.
Women  Salary increases for women in professional jobs do not reflect their
above-average performance.
 In white-collar jobs, men change jobs more frequently, enabling
them to be promoted to higher-level jobs over women with more
seniority.
 In blue-collar jobs, women tend to be placed in departments with
lower-paying jobs.
Quantitative Job
Evaluation Methods
  Factor Comparison Job Evaluation Method
 Step 1. Obtain job information
 Step 2. Select key benchmark jobs
 Step 3. Rank key jobs by factor
 Step 4. Distribute wage rates by factors
 Step 5. Rank key jobs according to wages
assigned to each factor
 Step 6. Compare the two sets of rankings to screen
out unusable key jobs
 Step 7. Construct the job-comparison scale
 Step 8. Use the job-comparison scale

Quantitative Job
Evaluation
Methods

11–85
 1. Mental Requirements
Either the possession of and/or the active application of the following:
A. (inherent) Mental traits, such as intelligence, memory, reasoning, facility in verbal expression,
ability to get along with people, and imagination.
Sample Definitions of Factors B. (acquired) General education, such as grammar and arithmetic; or general information as to
Typically Used in the Factor sports, world events, etc.
Comparison Method C. (acquired) Specialized knowledge such as chemistry, engineering, accounting, advertising, etc.

2. Skill
A. (acquired) Facility in muscular coordination, as in operating machines, repetitive movements,
careful coordinations, dexterity, assembling, sorting, etc.
B. (acquired) Specific job knowledge necessary to the muscular coordination only; acquired by
performance of the work and not to be confused with general education or specialized knowledge.
It is very largely training in the interpretation of sensory impressions.
Examples
1. In operating an adding machine, the knowledge of which key to depress for a subtotal would be
skill.
2. In automobile repair, the ability to determine the significance of a knock in the motor would be
skill.
3. In hand-firing a boiler, the ability to determine from the appearance of the firebed how coal
should be
shoveled over the surface would be skill.

3. Physical Requirements
A. Physical effort, such as sitting, standing, walking, climbing, pulling, lifting, etc.; both the amount
exercised and the degree of the continuity should be taken into account.
B. Physical status, such as age, height, weight, sex, strength, and eyesight.
 4. Responsibilities
Sample Definitions of A. For raw materials, processed materials, tools, equipment, and property.
Five Factors Typically B. For money or negotiable securities.
C. For profits or loss, savings or methods’ improvement.
Used in the Factor D. For public contact.
Comparison Method E. For records.
F. For supervision.
1. Primarily the complexity of supervision given to subordinates; the number of subordinates is
a secondary feature. Planning, direction, coordination, instruction, control, and approval
characterize this kind of supervision.
2. Also, the degree of supervision received. If Jobs A and B gave no supervision to
subordinates,
but A received much closer immediate supervision than B, then B would be entitled to a
higher rating than A in the supervision factor.
To summarize the four degrees of supervision:
Highest degree—gives much—gets little
High degree—gives much—gets much
Low degree—gives none—gets little
Lowest degree—gives none—gets much

5. Working Conditions
A. Environmental influences such as atmosphere, ventilation, illumination, noise, congestion,
fellow workers, etc.
B. Hazards—from the work or its surroundings.
C. Hours.
Ranking Key Jobs
by Factors1
Ranking Key Jobs
by Wage Rates1
Comparison of
Factor and Wage
Rankings
Job (Factor)-
Comparison Scale
  Step 1. Determine clusters of jobs to be evaluated
The Point Method  Step 2. Collect job information
of Job Evaluation  Step 3. Select compensable factors
 Step 4. Define compensable factors
 Step 5. Define factor degrees
 Step 6. Determine relative values of factors

11–92
Example of One Factor
(Complexity/Problem Solving) in a Point
Factor System
Evaluation Points
Assigned to
Factors and Degrees
There is no silver bullet!
  A strategic perspective on compensation takes the
position that how employees are compensated can be a
source of sustainable competitive advantage.
Summary  Two alternative approaches are highlighted:
 A “best fit” / contingent business strategy / environmental
context approach; and
 A “best practices” approach.
 The “best fit” approach presumes that one size does not
fit all. The art of managing compensation strategically
involves fitting the compensation system to the different
business and environmental conditions.
  The best practices approach assumes that there exists
a universal, best way.
 The focus is not on the question of what the best strategy
Summary is, but how best to implement the system.
(continued)  Agreement on what are the best practices does not exist.
 The four-step process for forming and implementing
a compensation strategy includes:
 Assessing conditions
 Deciding on the best strategic choices following the pay
model
 Implementing the strategy through design of the pay
system
 Reassessing the fit
  Recent studies have begun to research what aspect
Summary of the compensation system really does matter, but
(continued)
the answer is still fuzzy.
 An essential point is that the deal (the employment
relationship) includes both transactional and
relational forms of compensation.
 It is the total deal, the relationship with people,
that makes an organization successful.
 1. Contrast the essential differences between the “best fit” (strategic
Review Questions business-based) and “best practice” perspectives.
2. Reread the culture / values statements in your organization. Discuss
how, if at all, those values might be reflected in a compensation
system. Are these values consistent with “let the market decide”?
3. Two tests for any source of competitive advantage are “adds value”
and “difficult to imitate”. Discuss whether these two tests are
difficult to pass. Can compensation really be a source of
competitive advantage?
McGill
Compensation
Strategy

Annex
 1) Job Families

2) Salary Structure
- Hay evaluation points
- Grades
- Salary Scales
- Minimum
- Increase

3) Integration
4) Guidelines for Special Salary Adjustments
Job & Salary 5) Promotional Increases
6) New Hires
Structure 7) Salary Administration Policy
- Appeal process

8) Sample Job Posting

Job Families
• Functions across the University have been organised into seven (7) job
families.

• Within the families, sub-families have been identified that reflect

specific sectors of activity.

• Role profiles from levels 1 to 4, describe in generic terms the significant

responsibilities and accountability of positions within each sub-family.
 • Job Families • Sub-Families • Role Profiles

Information Systems Logistics & Student & Academic

Administration Communications Finance Human Resources & Technology Facilities Services

Administration Faculty Internal External Accounting Staffing - Placement Systems Development Facilities OperationsAdmissions &
Department, Unit Relations Investments Transition - Personnel Maintenance Registrar
Administration IS4A
ADM4A COM4A FIN4B IS3A LOG4A SAF4A
ADM3A COM3A FIN3B IS2A
PERS3A LOG3A ASAF3A
ADM2A COM2A FIN2B IS1A
PERS1A LOG2A SAF2A
ADM1A COM1A FIN1B
LOG1A SAF1A
Telecommunications
Research Development & Audit Security Compensation, Benefits & Operations
Administration Alumni Relations Payroll, Pensions Security, Safety Financial Aid,
FIN4C IS4B Environment Placement Counseling
ADM4B COM4 FIN1C PERS4B IS3B
LOG4B Services
ADM2B C PERS3B IS2B
ADM1B COM3 LOG3B
Purchasing PERS2B IS1B SAF4B
C LOG2B
PERS1B SAF3B
University Secretariat FIN3D
COM2 SAF2B
Legal FIN2D Training & Communications Planning & Design
C SAF1B
Publications FIN1D Staff Relations & Help Desk Services LOG4C
COM1
ADM4C LOG3C
C
COM3D PERS4C IS3C Student Affairs
University Secretariat COM2D LOG2C
PERS3C IS2C
Translation LOG1C SAF4D
COM1D PERS2C IS1C
SAF3D
ADM3D Services Operations SAF2D
ADM2D Area Personnel SAF1D
LOG3D
PERS2D
University Secretariat LOG2D
Archives Curator Academic Personnel LOG1D
PERS4E
ADM4E
ADM2E

University Secretariat
Administration

ADM1F
Administration &
Area Personnel

ADM2G
 Salary Structure
i) The McGill Pay Equity Committee selected the Hay Guide Chart methodology
to determine the relative value of job classes at
McGill. The Hay value determination method considers the following four
factors:
• know-how
• problem solving
• accountability
• working conditions
Using the Hay methodology, job evaluation points were attributed to each of the
role profiles.

ii) Eleven (11) grades have been established in relation to the job evaluation
points, at minimum grade increments of fifteen
percent (15%), with a corresponding salary scale.
Hay Evaluation Grade Min Points Max Points
1 189 216
2 217 249
3 250 287
4 288 330
5 331 380
6 381 437
7 438 503
8 504 579
9 580 666
10 667 766
11 767 881
 Salary Structure
iii) Each salary scale has a maximum, a minimum, and a reference point.
The minimum is determined as a percentage (%) of the scale maximum. The
minimum is currently seventy percent (70%) of the
maximum. It will increase progressively to seventy-five (75%).
A reference point has been set at ninety-percent (90%) of the scale maximum
The scale maximum was determined based on the
reference comparator market (Canadian not-for-profit and other Quebec
universities) and will be reviewed periodically.

iv) Current salaries will be integrated into the new scale at one-quarter of
relativity.

Hay Evaluation December 1, 2002

Implementation of new scale
December 1, 2002
Scale adjustment (1%)

(Continue) Grade
1
2
Max
46,184
50,602
Min @ 71%
32,791
35,927
Grade
1
2
Max
46,646
51,108
Min @ 71%
33,119
36,287
3 54,467 38,672 3 55,012 39,059
4 61,445 43,626 4 62,059 44,062
5 66,264 47,047 5 66,927 47,518
6 71,786 50,968 6 72,504 51,478
7 76,093 54,026 7 76,854 54,566
8 81,419 57,807 8 82,233 58,385
9 87,119 61,854 9 87,990 62,473
10 93,217 66,185 10 94,149 66,846
11 99,742 70,817 11 100,739 71,525
 Guidelines for Special Salary
Adjustments
1. The purpose of special salary adjustments is to allow salary progression to recognise:
a) on-going additional responsibilities assumed by an employee within the scope of the
employee’s role profile;
b) the development of significant job competencies, according to pre-determined objectives; or
c) market considerations. Salary adjustments and non-base salary payments are not an
automatic annual entitlement, and do not replace merit increases.

2. The rationale for the adjustments must be documented and reviewed with your APO/APR or Salary

Salary
Administration for direct service areas. Within each area, the Dean, Executive or designate must authorize salary
adjustments and non-base salary payments.

Adjustment
3. Base salary adjustments cannot exceed the maximum of the salary grade.

4. Internal equity must be considered in all salary management decisions. Managers are responsible for maintaining
internal equity within their unit. The funding of salary adjustments and non-base salary payments is the
responsibility of the unit.

5. The Department of Human Resources will monitor the application of the Guidelines and undertake periodic
reviews campus wide. Statistical data will be compiled with respect to salary adjustments.
 Guidelines for Special Salary Adjustments

Type of salary adjustment Definitions Clarification % of increase

1
Additional responsibilities Additional responsibilities must a) Playing a leadership role 3 - 6 % increase
have a significant and within the unit, in terms of to base salary
measurable impact on unit’s problem solving, initiative,
objectives, and contribute coaching and mentoring
directly to the effectiveness of colleagues.
the unit.
b)Supervising additional
In what way do the new duties positions only if it results in

Salary
and responsibilities contribute to greater complexity and span of
the objectives of the unit? control.
Was the person playing this role c) Transfer to another

Adjustment before?
Was this work done by another
position (typically a senior
position, in the same grade, but
which has a different and greater
scope of responsibility.

(Continue) colleague or manager) before?

Are these new responsibilities in
Salary adjustments for
"additional responsibilities" are
not intended to recognize
addition to, or replacing other
responsibilities? workload; i.e. doing more of the
same type of work.

* The reference point is 90% of the maximum of the salary scale for the grade of the role profile.
 Guidelines for Special Salary Adjustments
Type of salary adjustment Definitions Clarification % of increase
New skills & Completion of formal a) A special salary adjustment for 3 - 6 % increase
competencies educational program agreed additional competencies can only be to base salary
upon with supervisor in justified if the individual already
advance and which will satisfies at least the required
enhance performance on the qualifications, and the new
job. Work related competencies therefore exceed the
knowledge, skills and educational and experience
behaviors must be requirements.
observable and measurable

Salary
b) Since new competencies generally
objectively.
lead to additional responsibilities, the
The acquisition of the new salary adjustment should normally be

Adjustment
competencies is identified by justified under additional
the unit manager as responsibilities.
relevant, and is discussed In the future, once competency

(Continue)
and planned with the profiles (i.e. the skills, knowledge, and
individual.
behaviors needed to effectively
perform a role) are developed for each
role profile, the scope of measurable
competencies that may warrant salary
adjustments may be extended beyond
formal educational programs.

* The reference point is 90% of the maximum of the salary scale for the grade of the role profile.
 Guidelines for Special Salary Adjustments
Type of salary Definitions Clarification % of increase
adjustment
Work related project for a The amount of the lump sum 3-10% non-
Special Projects fixed period assigned by should consider the complexity of base
the supervisor, over and the project, presence of precedents
above regular duties. and the time allocated for the
project. Payment may be made at
the end of the project or upon

Salary
successful completion of key
milestones

Adjustment
Type of salary Definitions Clarification % of increase
adjustment If market pressures as Individual situations and market 3 - 6 % increase
evidenced by actual or trends (e.g. recent exit interviews to base salary

(Continue) Market Adjustment

anticipated turnover within or recruitment data, survey data,
a particular field warrant internal equity within unit) will be
the payment of a market reviewed to determine the
adjustment. appropriateness of a salary
adjustment.
 Guidelines for Special Salary Adjustments
Human Resources approval required

Type of salary Definitions Clarification % of

adjustment increase
Labour market a) Signing bonus paid to
Market Adjustment changes may produce attract a candidate. 3-10% non-
temporary shortages base
of particular skills and b) Salary premium paid for
knowledge within a high demand skills, to help
particular field. attract and retain someone
who masters these skills and
Salary High demand skills
should be reviewed
is using them in their current
position.

Adjustment
every 1- 2 years.
These change over c) When the market salary
time, as the market premium is deemed to be

(Continue) evolves. Human

Resources will use
temporary or cyclical, the
adjustment should be non-
benchmark survey base.
data to review
individual situations
and respond to market
conditions.
 Promotional Increases

Since promotion to a higher grade or profile will become more

difficult to achieve in the new structure, an eight percent (8%)
increase will be granted versus the six percent (6%) that currently
exists.

Salary
Adjustment
(Continue)
 New Hires

Hiring salaries up to the reference point ninety percent (90%) will not
require authorization from Human Resources.

New employees must receive, at time of hiring, a salary that is at least

equal to the minimum of the salary scale for their grade.

Salary for New

Hires
 Interim salary administration guidelines have been developed
and will supersede the salary administration policy during the
Salary transition period.
http://www.mcgill.ca/hr/mcompensation/guidelines/
Administration Appeal Process
Policy • During the transition period, an employee and/or their immediate supervisor may contest
the job profile match. Such contestations must reach the Department of Human Resources
no later than 5.00 pm. on Friday, January 31, 2003.

• The employee and/or their immediate supervisor must complete the Appeal Form, in
consultation with the Area Personnel Officer/Representative or Salary Administration (Direct
Services areas) and provide detailed information concerning the role and responsibilities of
the staff member and the proposed rematch.

• An appeals committee comprising:

- 2 representatives from the department of Human Resources
- 2 representatives from the Staff Association
- 1 Executive “E”
- 1 faculty member
will review all of the appeals. The deadline for review is Wednesday, April 30, 2003 and the
decision of the appeals committee is final.

Under no circumstances will the Hay job evaluation points be reviewed.

Sample Job
Posting
 Reward Process= Continue
Next Lecture Culture & Engagement - & Industrial Relation

HRM-Arab Academy-Dr.Amany Shehata 115

Thank
you
HRM-Arab Academy-Dr.Amany Shehata 116