Role of HR Professionals in Compensation Plans

The term human resources imply that people have the capabilities that drives organisational performance along with other resources like machinery, money, materials and information. Human resource management is designing management systems to ensure that human talent is used effectively and efficiently to accomplish the organization goals. HR professionals perform variety of roles. They perform functions at strategic level, EEO (Equal Employment Opportunity), staffing, ensures employee and labour relations with management, risk management and worker participation, rewards and compensation, talent management, etc. The focus of study at this stage is on the role of HR professionals in compensation management.

Following are the roles performed by a HR professional:

1. Develop a compensation philosophy: Compensation philosophies can be developed considering two philosophy:

(i) entitlement philosophy

(ii) performance philosophy.

The entitlement philosophy assumes that individuals who have worked another year are entitled to pay increases, with little regard for performance differences. While performance philosophy assumes that compensation changes, if performance changes. Organisations working under this philosophy do not guarantee additional or increased compensation simply for completing another year of service.

2. Develop a programme outline: As a part of compensation] plan, a HR professional will design a programme outline which very clearly will indicate the objective of the compensation programme. They should clearly prescribe the process of how a particular compensation strategy will be implemented or executed by the organisation. The objectives will also consider the budget allotted for a particular financial year on compensation and rewards.
3. Job evaluation: Job evaluation aims to determine a job’s relative worth. The job evaluation is a formal and systematic comparison of jobs to determine the worth of one job relative to another. Rank the jobs within each senior vice presidents and manager’s department, and then rank jobs between and among departments. HR professional verifies the ranking by comparing the industry market data and prepares the flowchart of all ranks for each department for easy assessment and interpretation of job.
4. Conduct a job analysis of all positions: One of the most important functions performed by the HR professional is to do the job analysis of all the positions in a hierarchy. HR executives gathers information from the senior departmental heads of marketing, finance, sales, administration, production and other appropriate departments to determine the organisational structure and primary functions of each. Interviewing the department managers and the employees who actually executes it will be helpful in determining the specific job functions. Develop a model of job descriptions which will help in better evaluation of job.
5. Determine job grades: After job evaluation, jobs are further classified into job grades by establishing various levels like senior, junior, intermediate and beginners. HR executives at this stage also determine the number of pay grades, or monetary range of a position at a particular level, within each department.
6. Determine an appropriate salary structure: Job grading helps in classification of jobs which could further be helpful designing a salary structure. Various components of a salary structure is analysed with the market rates and company’s philosophy. If it gets satisfied, then the compensation committee reviews it, makes adjustments if required and goes for further approval from top level management.
7. To obtain top executives’ approval of the basic salary programme: After getting approval from HR committee, HR department develops and presents the cost impact studies that project the expense of bringing the present staff upto the proposed levels or adding any compensation benefits into the present salary structure.
8. Communicate the final programme to employees and managers: Once the salary structure is approved and finalized by compensation committee, HR Executives develop a plan for communicating the new programme to employees using slide shows or movies, literature, handouts, etc.; make presentations to managers and employees; implement the programme; design and develop detailed systems, procedures and forms; work with HR information systems staff to establish effective implementation procedures, to develop appropriate data input forms, and to create effective monitoring reports for senior managers; and execute the compensation programme.
9. Monitor the programme: Organisation’s objective of effective compensation plan is to motivate employees to give their best at work. HR monitors feedback from managers, make changes where necessary, find flaws or problems in the programme and adjust or modify where necessary.