HRM3705 Remuneration Management - Exam Prep & Revision

Compensation Management HRM3705 Patric Trollope 11‐16‐2019 S - The study-notes marketplace Downloaded by: juneymay | Distribution of this document is illegal S - The study-notes marketplace 1 Chapter 1: Remuneration Management Overview Remuneration Definition The financial & non‐financial extrinsic rewards provided by an employer for the time, skills & effort made available by the employee in fulfilling job requirements aimed at achieving organisational objectives. Remuneration includes both intrinsic & extrinsic rewards which employees receive for performing their jobs & both these elements encompass an organisations total remuneration system. Remuneration Components 1. Financial rewards  Refers to monetary forms of pay the employer provides employees  Funds are spent by the employer  It includes all cash payments such as: i. base salary ii. pay for performance iii. employee benefits that the employer pays on behalf of its employees  Direct remuneration i. Base Pay; Overtime ii. Pay–for–performance 1. Merit pay 2. Bonuses 3. Price rate pay 4. Commission 5. Team‐based pay 6. Gain sharing 7. Profit sharing 8. Stock options  Indirect Remuneration i. Legally required benefits 1. Annual leave 2. Sick leave 3. Maternity leave 4. Family responsibility leave 5. Unemployment insurance Downloaded by: juneymay | Distribution of this document is illegal S - The study-notes marketplace 2 6. Payment for occupational injuries & diseases ii. Discretionary benefits 1. Medical aid 2. Pension 3. Various allowances 4. Housing subsidy 5. Group life insurance 6. Study assistance 2. Non‐Financial rewards  Work environment  Work‐life balance  Recognition  Career development  Job security Remuneration as a total reward approach  The monetary & non‐monetary returns provided to employees in exchange for their time, talents, efforts & results.  It involves the integration of compensation, benefits, work‐life, performance, recognition & development & career opportunities to atract, motivate & retain the talent required to achieve desired business results. FINANCIAL REWARDS + NON‐FINANCIAL REWARDS = TOTAL REWARDS Remuneration Objectives 1. Attract employees 2. Retain employees 3. Motivate employees 4. Comply with legal requirements 5. Treat employees fairly a. Internal equity – fairness of pay differences among different jobs in an organisation b. External equity – fairness of an employee’s remuneration in comparison to the pay offered by competitors for similar jobs. 6. Manage remuneration efficientl