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INTERNATIONAL
JOURNAL OF SOCIAL SERVICE AND RESEARCH
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DESIGN OF COMPENSATION SYSTEM USING ADHERED METHOD AND
OVERLAPPING METHOD AT PT XY DKI JAKARTA
Indah
Wahyuningsih, Kartika Wulandari Sulaiman, Nofita
Setyani, Elvina Dian Paramita, Kamilla
Azzahra
Prodi
Manajemen FEM IPB, Bogor, Jawa Barat, Indonesia
Email:
[email protected], [email protected], [email protected], [email protected],
[email protected]
ABSTRACT
Compensation is one of
the essential factors that can motivate employees to improve performance. Compensation
provided by the company must be comparable to the company's workload, job risk,
and the competencies that accompany the position. The Company is obliged to
provide compensation both financially and non-financially so that employees'
standard of living needs can be met. Therefore, it is necessary to design an
appropriate compensation system based on the value of the job (job value). The
object of this study is XY Company, located in DKI Jakarta. XY company is
engaged in education, namely online English courses and early childhood tutor
franchise, as well as in the culinary field, namely online courses in the pasta
pizza business. The research methods used are quantitative and qualitative
methods sourced in scientific journals and trusted articles. This research
focuses on the compensation system. The method of processing and analyzing data
used to compile the job value and job grading-based compensation system in XY
companies is to use Compensable Factors analysis using hay method, Salary
Mapping Adhered, and Salary Mapping Overlapping. This study shows that the
effective compensation system to be implemented by PT XY is to use overlapping
methods. The division of salary overlapping methods brings more benefits
because the salary increase is less significant than the adhered method.
Keywords: Adhered; Compensable
Factors; Compensation management; Overlapping
Received
20 Desember 2021, Revised 30 Desember 2021, Accepted 10 January 2022
Introduction
It is
essential in improving employee performance because a person works to fulfill
his life needs. This fulfillment is obtained from the compensation received
from his work. The provision of proper and fair settlement is expected to
increase the high work motivation of the employees and can improve the quality
of their work. However, the condition of compensation must also be adjusted to
the needs of employees. Compensation can be classified into two main types
based on its nature: financial and non-financial compensation. Monetary
compensation can be in the form of wages or salaries, allowances, commissions,
and bonuses. Meanwhile, non-financial compensation is in compensation other
than money related, such as employee health facilities, interesting work, a
conducive work environment, and supportive company policies. Financial and
non-financial compensation have critical roles as factors that can motivate
employees to improve their performance (Afrida,
2014).
Reciprocal relationship
where both need each other. Companies need employees as assets in achieving
their goals, while employees need companies to meet their needs. Thus, it is
proper for the company to provide compensation as remuneration to its employees,
and the employees, on the other hand, give their best performance for the company.
The compensation provided by the company must also be proportional to what the
employee has given to the company so that employees also feel they have a
responsibility to provide the best performance. Therefore, it is necessary to
design an appropriate compensation system based on the value of the work. In addition,
the compensation system provided by the company must also pay attention to a
decent standard of living according to the conditions and where the company
operates so that employees can meet their daily needs. It is also essential to
map the workload, job risks, and competencies that accompany the job analysis.
Information related to �job grading� will also appear (Virginia,
2018).
�������������� In line
with this, a compensation system is needed that is by the position, work, and
living needs of the workers so that PT XY employees can give their best
contribution, which will lead PT XY to be able to achieve business success and
continue to compete with competitors of its kind.
Methods
1. Framework
of thinking
Figure 1
Framework of thinking
2.
Research
Location and Time
This research takes a case
study on company XY, located on Jl. Camphor No. 12 Matraman District, DKI
Jakarta. The analysis was carried out for six weeks, from August to September
2021. All stages of obtaining information, processing data, improving data, and
compiling scientific articles from the case study of company XY were carried
out online using the zoom meeting and Whatsapp platforms.
3. Data Types
and Sources
The
types of data used in this study are primary and secondary data. Preliminary
data were obtained through filling out questionnaires using google forms and
online interviews through the media zoom meeting with the Head of HRD from
company XY. Meanwhile, secondary data was obtained by studying thesis
literature, scientific journals, articles, and other credible sources.
4. Data
Processing and Analysis Methods
The
data processing and analysis method used in this study to develop a
compensation system based on job value and job grading at company XY are to use
Compensable Factors analysis, Adhered Salary Mapping, and Salary Mapping
Overlapping to produce a New and better Salary Structure recommendation.
Results and Discussion
1. Company
Overview XY
Company
XY is a start-up company engaged in education, namely online English courses
and early childhood tutoring franchises. The culinary field, namely online
pizza, and pasta business courses, has been established since September 1,
2018. Currently, XY company has more than 2,000 business partners, and has a
vision of having 10,000 partners in Indonesia and has three missions, namely
creating innovation in the field of education, forming a national team that is
creative, diverse, and with integrity, and has a positive impact on the
surrounding communities. XY Company aims to develop creative and innovative
digital education businesses and partner with many companies and institutions.
PT XY's target customers are children and teenagers who need quality education
that can be done remotely.
The
company has twenty employees consisting of Head of HRD, Head of Product, Head
of Operational, Marketing Division, Creative Division, and Rainbow Kids
Division to develop this business throughout the country. The corporate culture
adopted is spiritual, professional, competitive, creative and innovative, and
family.
2.
Analysis of Respondents Characteristics
Respondents
in this salary survey are employees of PT XY, which consists of the leader,
senior staff, and junior staff of each division. The characteristics of the
respondents used are position, age, gender, and length of work. The number of
respondents who took part in the survey was 20 people. The following table are
the results of the study.
Tabel 1
Job survey results based on age, gender and length of working.
|
Position
|
Age (years)
|
Gender
|
Length of working (months)
|
|
<20
|
21-30
|
>31
|
Laki-laki
|
Perempuan
|
<10
|
11-20
|
>21
|
|
Head of
HRD
|
0
|
1
|
0
|
1
|
0
|
0
|
1
|
0
|
|
Rainbow
Kids Team Leader
|
0
|
0
|
1
|
1
|
0
|
0
|
0
|
1
|
|
Creative
Team Leader
|
0
|
0
|
1
|
1
|
0
|
0
|
0
|
1
|
|
Head of
Product Development
|
0
|
1
|
0
|
1
|
0
|
0
|
1
|
0
|
|
Marketing
Team Leader
|
0
|
1
|
0
|
1
|
0
|
0
|
1
|
0
|
|
Head of
Operational
|
0
|
0
|
1
|
1
|
0
|
0
|
0
|
1
|
|
Staff
Rainbow Kids Team
|
0
|
2
|
0
|
0
|
2
|
0
|
0
|
2
|
|
Staff
Creative
|
0
|
5
|
0
|
5
|
0
|
1
|
0
|
4
|
|
Staff Marketing
|
2
|
5
|
0
|
1
|
6
|
3
|
1
|
3
|
|
Jumlah
|
2
|
15
|
3
|
12
|
8
|
4
|
4
|
12
|
|
TOTAL
|
20
|
20
|
20
|
Source:
Analyzed Data, 2021
����������
Based
on Table 1, it is known that PT XY is dominated by male employees, namely 12
people and 8 female employees. The position held by men is the leader position
because a leader tends to be male. In addition, all positions in the creative
division are also filled by men because they are related to physical solid
stamina and understanding of the IT world. Furthermore, the survey results
based on age found that there were 2 employees under 20 years old, 15 employees
between 21 years old and 30 years old, and 3 employees over 31 years old. The
number of employees with an age range of 21 years and 30 years is the most
because this type of work requires millennial children who are easy to adapt to
changes, full of initiative, creative, and innovative. The results of the
latest survey regarding the characteristics of the length of service, it was
found that the number of employees who had worked for less than 10 months was 4
people, between 11 months to 20 months as many as 4 people, and over 21 months
as many as 12 people. This is because PT XY is a startup business that has only
been established for about 3 years.
3.
Company XY Compensation
System Overview
The
compensation system in company XY can be analyzed using salary mapping based on
position level. When viewed based on its organizational structure, company XY
has four positions. The CEO successively occupies the highest level, then the
Head of HRD, followed by the Head of Product Development, Head of Operational,
Marketing E-Course Team Leader, Creative Team Leader, and the Rainbow KIDS Team
Leader Education Partnership is in the third level. At the same time, the
fourth level consists of Marketing Division staff, Creative Division staff, and
Rainbow Kids staff.
Figure 2
Struktur Organisasi Perusahaan XY
XY
Company Organizational Structure
Company
XY's compensation applied has not met attract, retain, and engage criteria.
Compensation is still not optimal because the amount is still too low.
Therefore, further analysis and evaluation are needed to improve compensation
in company XY to meets attract,
retain, and engage criteria.
4. Compensation
Design System based on Job Value and Job Grading
Compensation
design needs to be done properly to fulfill attract, engage, and retain principles.
To develop the company's performance for the better, competent talents are
needed. According to (Maheshwari
et al., 2017), skilled talent can increase productivity and
performance to be achieved by each company (Chhabra
& Sharma, 2014), argues
that the determinants of workplace attractiveness, such as compensation, career
opportunities, nature of work, and company culture, enable organizations to
attract, engage, and retain. Therefore, to attract, bind, and retain these
talents in the company, business owners need to think about how to compensate
appropriately and according to the weight of their work. The steps that need to
be taken to prepare compensation are as follows.
a. Assign
the weight of each job factor
Job
evaluation is a process that determines the relative value of a position
concerning other positions (Sukwadi,
2014). Job evaluation aims to create internal and
external consistency in providing compensation or remuneration (Sukwadi,
2014). According to Marwansyah (2010), the main
target of job evaluation is the satisfaction of employees and superiors with
the compensation paid. According to Article 1 Kepmenakertrans No. 49 / Men / IV
/ 2004 concerning the structure and scale of wages, the wage structure is the
arrangement of wage levels from the lowest to the highest or vice versa from
the highest to the lowest. Meanwhile, the wage scale is the range of the
nominal value of wages according to occupational groups.
The
first stage before evaluating the position, using the Given Grade or Min Max
method, is weighting and assigning a value to the compensation factor and
employee position. At PT XY, ten factors are used to measure compensation:
education, work experience, decision-making, human relation skills,
responsibilities for client care, planning and organizational skills, thinking
environment, work complexity, physical effort, and communication skills.
Table 2
Compensable Factor Weighting
Table
2 shows a pairwise comparison between each compensable factor to determine the weighting
results. The author uses the priority ranking theory of (Saaty,
1990) which uses a scale of 1-9. Where a value of 1
means that the two factors are equally important, a value of 3 means slightly
more critical than other factors, a value of 5 means more important than other
factors, a value of 7 means very more important than other factors, and a value
of 9 which means more important than other factors. . From the pairwise
comparison, the highest weight was obtained, namely 20% of the communication
skills factor, 17% of the planning and organizational skills, 14% of human
relations skills, and so on until the most negligible weight was 1% of physical
effort.
b. Assign
values to each job factor level
The
next stage is to assign a value to the factors in each position which shows how
vital these factors must be in each position. At PT XY, fifteen positions will
be rated, as in Table 3.
�
Table 3
Factor Value of Each Position
c.
Job Value Calculation
The
next stage is
to determine the job value of each position, by sorting the positions based on
the largest final total to the lowest by multiplying the weight with the value
obtained.
Table 4
Job Value
From
Table 4, it can be seen that the Head of HRD has the highest job value
acquisition, which is 814, Rainbow Kids Team Leader is 777, Creative Team
Leader is 777. and so on until the lowest job value is 357 points in the
marketing division staff position.
d.
Job Grading Design
Using Given Grade
If
the job value for each position has been obtained, the next step is to arrange
job grading based on the given grade method. The given grade method is a way to
determine how many grades you want to make to perform a compensation design
system calculation.
Table 5
Job Grading Using Given Grade
Based
on table 5, the author made three grades. The following are the steps to obtain
the job grading:
1. Calculate
the interval in each given grade by calculating the difference between the
highest and lowest job values and then dividing by the number of
grades to be made.
=
[(HighestJob value
� Lowest �Job
value)/3]
=
[(814 - 357)/3]
2. To
obtain the upper limit of Given I, the lowest job value is added to the given
grade interval obtained previously.
= 357+ 152
= 509
3. The
upper limit of Given I is used as the lower limit of Given II. Then if it is
added to the given grade interval, it will produce the upper limit of Given II.
Thus,
until the Given Grade III is obtained.
Figure 3
Job Grading Chart
e.
Job Grading Design Using Min Max Method
In
addition to using the given grade method, compensation improvements can also
use the min max method.
Table 6
Job Grading
Using Min Max
Table
6 shows six grades, with grades I filled by social media and marketing staff
positions with a minimum score of 357 and a maximum of 420. Grade II is
supplied by one position, namely marketing admin staff, with a minimum score of
420 and a maximum of 494. Then, in grade III, with a minimum score of 494 and a
maximum score of 581 filled by creative staff. Grade IV with a minimum score of
581 and a maximum score of 683 is supplied by creative staff. Grade V with a
minimum score of 683 and a maximum score of 803 is filled by the Head of
Operations to Rainbow Kids Team Leader. The highest grade VI with a minimum
score of 803 and a maximum score of 955 is supplied by the Head of HRD.
f.
Initial Salary
Mapping of PT XY dan its
Graph
The compensation system currently used by PT XY can be
analyzed further by using salary mapping based on position.
����������������������������
Table 7
Salary Mapping Results
Based
on Table 7, the results obtained are, for Grade 1, the salary given is ideal.
Grade II salary is not suitable because the mid to mid is more than the spread.
For Grade 3, it can also be said to be ideal because the mid to mid is less
than the spread.
Figure 4
Initial
Salary Mapping Chart
g.
Company XY Salary Mapping Using Point System
Adhered
The salary
mapping stage is classifying salary ranges based on job grades. Initially, the
salary mapping was carried out using actual salary data, but the compensation
conditions applied were not ideal, so improvements were made using the Adhered
method.
Table 8
Salary Improvement Using Adhered Method
Table
8 shows a salary improvement using the Adhered method, where the spread level
increases according to the position held. The following are the steps to make
salary adjustments using the Adhered method:
1. Determine
the minimum salary for positions in Grade I following the ability to pay the
minimum salary by company XY. So that the new minimum salary for Grade I will
be IDR 2,500,000.00.
2. Determine
the spread for grade I, can use the existing spread in the salary mapping of
the actual salary in grade I.
3. Determine
the maximum salary with the formula [minimum salary + (minimum salary x
spread)].
4. Determine
the salary midpoint with the formula [(minimum salary+maximum salary)/2].
5. The
maximum score in the previous class will be the minimum score in the next
class.
6. Calculate
the mid-to-mid value with the formula [(mid-point value in the row � mid-point
value below it)/ mid-point value below it].
Figure 5
Illustration of Adhered Compensation System
The ideal
compensation system is obtained after fixing the salary using the Adhered method.
It can be seen that from mid to mid, each grade is always smaller than the
spread. In addition, the difference in the interval or distance obtained is not
too far away and is by the provisions of the gap or space that has been
determined.
h. Company
XY Salary Mapping Using Point System Overlapping
Company
XY does not only use the Adhered method to make salary adjustments. They also
use the Overlapping method. The difference with the Adhered method is that the
maximum value of the previous class can be greater than the minimum value of
the next class.
Table 9
Salary Improvement by Overlapping
�Compensation
System
Based on
the salary improvement table above, it can be seen that the minimum salary for
grade I was increased according to the company's ability, which was Rp.
2,500,000.00. Here are the steps on how to make salary adjustments with an
overlapping system:
- Determine
the minimum salary for Grade I and the grade I spread positions.
- Determine
the maximum salary in Grade I with the formula [minimum salary + (minimum
salary x spread)].
- The
midpoint value in the Overlapping method is directly filled in without
giving the minimum and maximum columns value first. In determining the
mid-point value, the company adjusts to the company's ability.
- Determine
mid to mid with the formula [(Midpoint on the line � Midpoint of the
previous line) / Midpoint of the previous line].
- Determine
the minimum salary column in the Grade above with the formula [Mid point /
(1+ (0.5 x spread on that row)].
- Determine
the maximum salary column with the formula [Minimum + (Minimum x Spread on
that row)].
Figure 6
Overlapping Compensation System Illustration
After
reforming the salary, the ideal compensation system is obtained. It can be seen
that from mid to mid, each grade is always smaller than the spread. In
addition, the difference in the interval or distance obtained is not too far
away and is by the provisions of the interval or distance that has been
determined.
i.
Managerial Implications
Based on
the calculation simulation that has been done, PT XY can consider a new basic
salary structure to be implemented in the company because the total new basic
salary is still within the range of employee wage operating costs. However, an
effective salary structure for PT XY is the overlapping method. The difference
in salary increases is less than the actual salary, there is no salary decrease
for each position, and the salary distribution is more evenly distributed. In
addition, it also makes it easier for companies to classify positions and employee
career paths.
Table 10
The difference between the actual
salary in 2021, the adhered method, and the overlapping method
|
|
Total actual salary in 2021
|
Salary for adhered method
|
Salary for overlapping method
|
|
|
Rp60.000.000
|
Rp76.041.666,67
|
Rp69.352.240,90
|
|
Interval
|
|
Rp16.041.666,67
|
Rp9.352.240,90
|
Conclusion
Based on the results
of the study, the conclusion can be drawn are:
1. PT XY has 3
levels in compensation management, namely at level 3, consisting of Head of
HRD, Rainbow Kids Team Leader, Head of Product Development, Marketing Team
Leader, and Head of Operational. While level 1 is junior staff consisting of
Marketing Admin Staff, Social Media Staff, and Marketing Scriptwriter Staff.
Level 2 is senior staff consisting of Rainbow Kids Team staff, Creative
Designer Staff, Creative Cameramen Staff, Creative IT Staff, and Video Editor
Staff.
2. After the
analysis and improvement of the payroll system has been completed, it can be
concluded that the effective compensation system to be applied by PT XY is to
use the Overlapping method. The overlapping method was chosen for determining
the new salary because the difference in salary increases is less than the
adhered method. There is no salary decrease, and the salary distribution is more
evenly distributed so that it is not too burdensome for UKM XY.
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