Factors effecting pay
Identify the external influences that may affect pay levels within an organization:
Economy
Markets
Industry
Taxation
Competitors
Salary trends
Pay cuts
Shareholders
Union
Competitive Positioning
Where does the organisation want to be in the market in terms of pay:
On par with competitors
Below industry (cost focused strategy)
Leader in the market
Set own trends
Market pricing
This is a system of collecting data on the pay rates for similar jobs in other organisations to establish their market rate. The aim is to help set the organisation’s own pay rates at the appropriate level in order to recruit and retain appropriate staff.
Benchmarking
This is a comparison of jobs or pay to other organisations, competitors or industry levels. It is used to compare and commonly used in job evaluation systems.
National Wage Agreements
These agreements are negotiated by Congress of Trade Unions with the governments for pay increases and are often reflective of inflation and markets.
Identify the internal influences that may affect pay levels within an organisation:
Type of organization
Type of roles
Role dimensions
Internal differentials
Company size
Leadership/ management
Pay budget
Ability to pay
Salary trends, eg bonuses
Reward Policies and Motivation
Factors affecting levels of pay
Economic theories and concepts on the factors that affect pay levels:
Significance of the factors affecting pay levels
The labour theory of value
Karl Marx wrote that the value of goods and services is determined by the amount of labour that goes into them. Therefore the content of labour determines the price of labour.
This provides the rationale for job content evaluation and the design of internally equitable grade structures, but it is necessary to take into account market rates through ‘market pricing’ to ensure pay is competitive as well as equitable.
The labour market
In markets, too many buyers for a limited number of goods forces prices up and a
Economy
Markets
Industry
Taxation
Competitors
Salary trends
Pay cuts
Shareholders
Union
Competitive Positioning
Where does the organisation want to be in the market in terms of pay:
On par with competitors
Below industry (cost focused strategy)
Leader in the market
Set own trends
Market pricing
This is a system of collecting data on the pay rates for similar jobs in other organisations to establish their market rate. The aim is to help set the organisation’s own pay rates at the appropriate level in order to recruit and retain appropriate staff.
Benchmarking
This is a comparison of jobs or pay to other organisations, competitors or industry levels. It is used to compare and commonly used in job evaluation systems.
National Wage Agreements
These agreements are negotiated by Congress of Trade Unions with the governments for pay increases and are often reflective of inflation and markets.
Identify the internal influences that may affect pay levels within an organisation:
Type of organization
Type of roles
Role dimensions
Internal differentials
Company size
Leadership/ management
Pay budget
Ability to pay
Salary trends, eg bonuses
Reward Policies and Motivation
Factors affecting levels of pay
Economic theories and concepts on the factors that affect pay levels:
Significance of the factors affecting pay levels
The labour theory of value
Karl Marx wrote that the value of goods and services is determined by the amount of labour that goes into them. Therefore the content of labour determines the price of labour.
This provides the rationale for job content evaluation and the design of internally equitable grade structures, but it is necessary to take into account market rates through ‘market pricing’ to ensure pay is competitive as well as equitable.
The labour market
In markets, too many buyers for a limited number of goods forces prices up and a