Advantage of T&D for HR function like Compensation

“IF YOU PICK THE RIGHT PEOPLE AND GIVE THEM THE OPPORTUNITY TO SPREAD THEIR WINGS - AND PUT COMPENSATION AND REWARDS AS A CARRIER BEHIND IT - YOU ALMOST DON’T HAVE TO MANAGE THEM.”— JACK WELCH

THE SIGNIFICANCE OF TRAINING AND DEVELOPMENT IN AN HR

FUNCTION LIKE COMPENSATION

By:Shikha Bhatia

‘Compensation’ in other terms also called as ‘Employee Remuneration’ refers to what an employee receives in return for his or her contribution to the organization.

Remuneration occupies an important place in the life of an employee. His or her standard of living, status in the society, motivation, loyalty, and productivity depend upon the remuneration he or she receives.

For the employer too, employee remuneration is significant because of its contribution to the cost of production.

Cash, Bonuses, Insurance, Vacation, HolidaysPerks, Recognition

COMPENSATION APPROACHES

Traditional Approach Emerging Trends

• Compensation is primarily base pay

• Bonuses are for executives only

• Fixed benefits tied to long tenure

• Pay grade progression is based on organizational promotions

• One organization-wide pay plan for all employees

• Variable pay used with base pay

• Annual/long-term incentives provided to all employees

• Flexible and portable benefits offered

• Knowledge-based broadbands determine pay grades

• Multiple pay plans consider job family, location, and business units

Objectives of compensation:

Compensation decisions are strategic decisions and play a key role in achieving performance and sustainable competitive advantages for national as well as international firms. Therefore the key objectives are:

Attract employees who are qualified , experienced and interested in international assignments.

Facilitate the movement of expatriate’s from one subsidiary to another, from home to subsidiary, and back from subsidiary to home.

Provide a consistent and reasonable relationship between the pay levels of employees at headquarters, domestic affiliates and foreign subsidiaries.

Be cost effective by reducing unnecessary expenses.

Should be easily understood and easy to administer.

TRAINING PROCESS- ADDIE MODEL

7

• Organization Analysis

• Task Analysis• Person

Analysis

Assessment

• Instructional objectives

• Trainee readiness

• Learning Principles

Design• Trainer

Identification• Content

Development

Development

• On-the Job• Off-the-job• Management

Development

Implementation • Reaction

• Learning• Behaviour• Results

Evaluation

DIRECT & INDIRECT FINANCIAL REWARDS AT CISCO

 DIRECT FINANCIAL REWARDS

INDIRECT FINANCIAL REWARDS

SalariesBonusesIncentives

Insurance plansSocial Assistance AnalysisAmbulance and Dispensary

BENEFITS AT CISCO

Pay for Time Not Worked

Common time-off-with-pay periods include

HOLIDAYS,

VACATIONS,

PERSONAL DAYS,

SICK LEAVE,

MATERNITY LEAVE, ETC

BENEFITS AT CISCO

Vocational holidays  Executives 40 paid holidays10 casual leaves

Sick Leaves

12 sick leaves 

Insurance Benefits

Health, Hospitalization & Disability Insurance

AssessmentAssessment

ImplementationImplementation

Design and developmentDesign and development

EvaluationEvaluation

SIGNIFICANCE OF T & D FOR COMPENSATION AT THE ASSESSMENT STAGE

It is very crucial to understand:

the economic conditions of the organization in which you function

the volume of potential employees in the organization

Training and development teach incumbents to do external and internal environment analysis of the organization and understand the changes required and desired for overall growth.

ASSESSMENT AT CISCO

The Compensation and Management Development Committee’s basic responsibility is to review the performance and compensation of the Company’s employees in achieving corporate goals and objectives and to assure that the Company’s managers are giving compensations in a manner consistent with the strategy of the Company, competitive practice, sound corporate governance principles and shareholder interests. Toward that end, the Committee will oversee, review and administer all compensation, equity and employee benefit plans and programs.

HOW IS IT DONE?

Web based Oracle Incentive Compensation

Compensation and benefits is an emotive area, not only for the organizations but also for the employees. Establishing and managing a reward structure is one of the critical cornerstones of the human resource department. It is extremely important to design the right reward package that supports the business goals.

WHO SHOULD ATTEND?•Experienced Compensation professionals who are seeking to either raise the business impact and credibility of their role, wish to understand how they can better link their efforts to business and HR strategies .

• Those who are simply seeking to improve their skills and knowledge of specific compensation techniques and practices.  

• Senior HR managers who are tasked with managing teams of Compensation professionals and would like an overview of the importance of the role and its impact on the organization and other parts of the HR function.

• Anyone involved in designing and implementing compensation or total rewards plans; as well as those professionals who are responsible for areas linked to compensation e.g. performance management, employee engagement, talent management.

• General managers or line managers who are looking to be better equipped for making decisions about, holding discussions about and effectively leveraging various compensation and related performance improvement tools

ACTIVITY

AssessmentAssessment

ImplementationImplementation

Design and developmentDesign and development

EvaluationEvaluation

SIGNIFICANCE OF T & D FOR COMPENSATION AT THE DESIGN STAGE

• Understand the role of government regulation and social security in compensation globally:

Cisco follows the rules issued by the Securities and Exchange Commission

• Understand the  components of  a compensation system:

Basic wage and bonus is given in Cisco

• Understand how to build effective variable pay systems :

Cisco follows the ‘three E’s’: Effectiveness, Efficiency and Exposure.

**Done through Oracle by filling in job descriptions

Company A’s Wage

Level

MARKET WAGE LEVELS

Company B’s Wage

LevelMarket Wage Level

•Which company is leading the market?•Which company is lagging the market?•What would the wage level line look like for a company that was meeting/matching the market?

SIGNIFICANCE OF T & D FOR COMPENSATION AT THE DEVELOPMENT STAGE

You should also develop and document strategies for all compensation practices including merit raises, cost of living increases, performance reviews, bonuses, and promotions.

AssessmentAssessment

ImplementationImplementation

Design and developmentDesign and development

EvaluationEvaluation

SIGNIFICANCE OF T & D FOR COMPENSATION AT THE IMPLEMENTATION STAGE

Ensuring that established guidelines which are followed will prevent :

Offering a compensation package so tailored to a person that the organization is jeopardized by having too heavy a financial burden

Or that flexible arrangements actually hinder the critical work from being completed.

It takes a carefully crafted balance between the organizational needs and the individual considerations to arrive at the correct compensation structure.

"We determine bonus as a mix of the following variables – company performance, customer satisfaction and individual performance. Since everyone is driven by the overall company performance, employees across geographies and functions are bound by one shared collective destiny."

Subash Rao,

Director – Human Resources,

Cisco Systems India

AssessmentAssessment

EvaluationEvaluation

Design and developmentDesign and development

ImplementationImplementation

SIGNIFICANCE OF T & D FOR COMPENSATION AT THE EVALUATION STAGE

If you find inconsistencies or inefficiencies, you should conduct a review to evaluate the appropriateness of the tasks assigned to that role. From there you determine if the job description and associated compensation warrants changing or not.

Employee satisfaction

The managers effectively communicate a candid appraisal of performance that helps employees to develop a realistic view of their own performance, thus increasing the possibility of satisfaction with the pay they are receiving.

OVERALL SIGNIFICANCE

This program helps the HR professionals understand the importance of compensation and benefits in such a way that they are able to understand the intricacies, basic reward system, the global trends in compensation and benefits and are able to link pay with performance for better planning

Strategic Role of Compensation

Researching and Analysing Market Data

Creating Salary Structures

Ensuring Equity

ACTIVITY

POINTS TO KEEP IN MIND

Reward programs require a lot of planning and preparation

Do not reward if the goal was not achieved

When it comes to compensation you need to be careful

You will have your favorite employees

Train your managers to better communicate about pay and you can increase employee performance by almost 40%.

Kind words go a long way, but rewarding with money, gifts and

awards goes even further !!

ANY QUESTIONS?