The goals of wage (salary) system
1. Introduction about salary system:
Wage rate is used mainly to attract good employees that are suitable for the work in the organization, to keep and motivate them to do their best at work. When reaching a decision of wage rate, there are some goals that need to be considered simultaneously.
2. Goals of salary system:
a> Wage system has to be legal: the wage payment system of the organization has to be based on terms of regional rules.
b> Wage system has to be satisfactory: it has to be “big” enough to attract good employees to work for and to keep them stay with the organization.
c> Wage system has to be employee – motivated. It should create motivation and encourage employees to have high and effective performance.
d> Wage system has to fair: if this system is not fair, it will kill the working motivation. Payments both inside and outside the organization need to be fair.
e> Wage system has to be ensured: this means that it make the employees feel their monthly incomes are guaranteed and they can know and guess them.
f> Wage system has to be effective and productive: it is required that the organization needs to manage the wage system effectively and has supportive financial funds to ensure that the system can be maintained for a long time.
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Job evaluation by Hay system
1. Job evaluation by Hay system
Job evaluation is a tool for determining the ‘size’ of a job, usually in the form of a number of ‘points’ (i.e. a job with 400 points, is a bigger job than one with 200 points).
Hay system was established by Hay Group around 60 years ago and has been developed and used worldwide by numerous organizations, in both the public and private sectors.
2. Factors of Hay system
2.1. Know – How
The level of knowledge, skill and experience (gained through job experience, education and training), which are required to perform the job successfully. This is commensurate with the scale and complexity of the job outcomes (accountability).
• Depth & Range of Know-How
• Planning & Organizing
• Communicating & Influencing (‘Human Relations Skills)
2.2. Problem Solving
The complexity of thinking required, both in the type of problems come across and the extent to which the jobholder has precedent and/or assistance in solving them (applying their Know – How).
Problem Solving include:
• Thinking Environment
• Thinking Challenge
The impact the job has on the organization (i.e. the end result) and the extent to which the jobholder acts autonomously in achieving this.
• Freedom to Act: Which defines the authority in the job to take decisions without referral to others.
• Magnitude: Which indicates the area of the organisation or “magnitude” upon which the job impacts.
• Type of Impact: Which establishes the strength or degree of impact the job has in relation to the chosen magnitude.
3. Process of Hay system
• Any job or role, in whatever organizational context, exists to provide some contribution to the organization in which it works – its Accountability.
• Delivering this Accountability depends on Input of Knowledge, skills and experience – the Know-How.
• Know-How must be applied and used in the Process of addressing the requirements of the job and solving the problems which arise in the job – the Problem Solving.
• Any role can thus be characterized in terms of these three factors of Know-How, Problem Solving and Accountability and the relationship between them.