internal alignment: relationship among different jobs/skills/competencies within a single organisation, job structure
also known as internal equity
Structure needs
- support organisation strategy
- support workflow (process which good/services are delivered to the customer)
- motivates behaviour (line-of-sight)
career laddering/progression
Internal Pay Structure
refers to the array of pay rates for different work or skills within a single organisation
- number of level
- pay differentials between levels
- criteria or bases used to determine those levels and differentials.
differentials
pay difference among levels
- requiring more skill/experience
- performed in unpleasant work conditions
- adds more value to the company
- motivations
criteria
- content: work performed in a job
- value: worth of the work
structure.
Job-based structure: work content - tasks, behaviours, responsibilities (engineering teams)
Person-based structure: skill, knowledge, competencies focus to employees (lawyer, clientele)
impact.
external factors
- economic pressures: inflations, COL
- Government policies, Laws and Regulations: Pay-Equity Act
- Stakeholders: board, employees
- Cultures and customs: high-performance and focus internal equity.
organisation factors
- strategy
- technology
- human capital
- HR policy
- Employee acceptance
- Cost implications
internal labour markets
rules and procedures that determine pay for different jobs within single organisation and allocate employees among those different jobs.
Strategy for designing internal structures.
| Tailored | Loosely Coupled | Egalitarian | Hierarchical |
|---|---|---|---|
| Adapted by organisation with low costs | Adapted by organisaion require constant innovation | Few levels | multiple levels |
| well-defined jobs with detailed paystructure | Pay structure are more loosely linked to organization | smaller differentials | detailed job description |
| McDonald | Job are flexible, adaptable and changing | Equal treatment = knowledgable feels underpaid | |
| higher performance when collaboration is required | higher performance when workflow depends on individual effort. |
Equity theory: fairness
- compare ratio of their own outcomes
Tournament theory
- relationship between motivation and performance
Institutional theory
- Copy others and conform
- use “best practices”
- align for one organisation might not align with another
Consequences.
for internally-aligned Pay Structure
- efficiency
- fairness
- compliance