New to HR? Seeking Guidance on Understanding the Complete Compensation Process and Calculations

gopalchandrasekar
Good morning all, I have completed my MBA with a specialization in HR. Currently, I am working in a manufacturing company in the SAP HR module. As I am a fresher, I do not have any relevant experience in core HR activities besides my studies. Could anyone please provide me with details on the complete compensation process and its calculations? I am eagerly awaiting your valuable response.

Thanks & Regards,
Gopalakrishnan K.C
Cite Contribution
You would need to learn the operational part of compensation and not just the theory. SAP HR deals with the functional module. Please research the process within the company, as anything beyond wouldn't be relevant.

Salary Hike Cycle

What is the salary hike cycle that is being followed?

Salary Bands and Incentives

How are salary bands designed? What strategies are used for disbursing incentives? How does it differ at each level?

Benefits Offered

What are the different benefits offered in the company? How do they increase with each level?

Looking forward to brainstorming this with you.

Regards
sreekumarkannangath
It is a lengthy process to have a full C&B structure. Firstly, you have to understand the company's mission, vision, and brand value/position within the industry to benchmark your positions with peers. In order to benchmark positions, you have to start with Job Analysis (understanding the Key Result Areas of each position - not the person). Then, you have to prepare Job Descriptions listing priorities for all the unique positions in a job family (mentioning the competency requirements for each position, the accountability, financial magnitude), and an Organizational structure. Next, you have to use any third-party job evaluation tools such as the Hay Guide Chart or Mercer methodology to determine the total weight of each position. Once you have the weight, you can easily define your grading system. Furthermore, you have to benchmark your positions with market positions to finalize the grading system for good external equity.

Once you have your grading system, you need to align it with your company's vision in your pay structure to attract talent from the peer group/industry and address internal priorities - such as higher variable payments for senior positions (to achieve targets, generate revenue, and satisfy both the company and the employees simultaneously) and lower variable payments for blue-collar workers, etc. Additionally, you have to manage compensation administration to ensure internal equity. You need to create a correlation chart to compare grades vs. current pay and revenue vs. pay structure movement. I hope you now have a comprehensive understanding of the C&B role.

Thanks
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