Introduction
Appropriate Compensation will be implemented if the
company can fully assess employee performance. Because the main reason someone
works for a company is to survive. Therefore, Compensation is a crucial thing
in improving one's employee performance. According to (Fiegenbaum & Thomas, 1993),
"Compensation is any form of payment to employees for work they provide
their employer", or it can be interpreted that Compensation is a form of
reward given to employees as compensation for the work they
do
as employees. Compensation policies are also a way to retain potential
employees (Mujanah, 2019). Two
ways can be done in providing Compensation (Mulyadi, 2001), namely
direct Compensation such as salaries, wages, incentives and others�meanwhile,
indirect Compensation such as allowances and facilities. The globalization of product markets has
intensified compentition in an increasingly wide array of industries, including
automobiles, consumer electronics, steel and computer chips to name just a few
(Gerhart & Bretz Jr, 1994).
PT ABC is a company that operates as a sole agent and
distributor of heavy equipment in Indonesia. It was established for
approximately 43 years in 1978, to be precise, in the city of Lampung. Provides
a variety of heavy equipment such as generators, cutting plates, bending
plates, welding, ovens and others. The salary distribution at PT ABC uses an
employee level system and is already above the minimum wage for Lampung.
However, the provision of Compensation, which is employees' rights and
obligations, is still not appropriate. Because in the division, there is no
difference between old workers and new workers, working hours, and positions.
Based on the problems above, we conducted research on PT
ABC. In this study, we apply the Hay System method so that the employee
compensation policy can follow each employee's job value and job grading at PT
ABC. This subsequent research can be a suggestion and input in determining the
salary for the position and improving the remuneration system at the company.
A.
Research purposes
1)
Identify the salary and compensation system at
PT ABC.
2)
Develop job grading and job values based on
the Hay System method at PT ABC.
3)
Analyzing and evaluating the improvement of
the appropriate salary and compensation system at PT ABC.
B.
The scope of research
This study focuses on the financial Compensation of
employees at PT ABC using direct and indirect financial compensation data
provided. The data used includes basic salary and other benefits. This study
involved the resource person as the Branch Head in determining the compensable
factor weights and job values using the Hay System (Ma�arif & Tanjung, 2003).
In determining the salary structure used in this study, the Adhered and
Overlapping system was used.
C.
Benefits of research
It is hoped that this research can provide benefits for PT
ABC in determining the distribution of the salary system and an effective
compensation system to be a reference in the event of a change in the company's
business processes. In addition, the benefit for readers is that it can provide
information about theory in the application of compensation management science
and can be used as comparison material in other studies (Bohlander, G. and Snell, 2010).
Methods
A.
Framework
Figure 1
�Framework
B. Research Location and
Time
This
research refers to the case study analysis at PT ABC Lampung City. PT ABC is a
company located on Jl. Raya Natar No.78, Lampung. The research started in
August 2021 and has been going on for approximately six weeks with all
interviews to obtain information and data, data processing, data improvement,
and making scientific articles.
C. Data Types and Sources
Data
collection carried out by our group used primary and secondary data. We
obtained primary data through online interviews using electronic communication
media, namely Zoom Meeting or Whatsapp, by providing a questionnaire created to
be filled out by employees of PT ABC Lampung City. Then the data that has been
received will be processed in order to get calculations that follow the rules;
meanwhile, secondary data obtained from direct sources. In addition, we also
use additional knowledge or data sources using the literature method from
websites, journals or theses. Therefore, this research is quantitative and
qualitative research by describing the compensation system run by PT ABC
Lampung City.
D. Data Processing and
Analysis Methods
Systematic
data processing and analysis used to develop a compensation system model based
on job value and job grading at PT ABC Lampung City is the salary survey
method, salary mapping analysis (salary mapping), namely the adhered method and
the overlapping method, and the last one is the point system method. Eckenrode
based.
The
introductory part that is carried out to determine employee salary standards is
the Salary survei (Ma�arif & Tanjung, 2003).
This is done to realize external equity, an important factor in determining and
planning the salary structure . Salary surveys can be conducted in various
ways, from obtaining the salary level imposed by the company to make a formal
questionnaire (Performance Expert). Meanwhile, salary mapping analysis is used
to determine the percentage of the spread and mid to mid-range of positions in
the research object to other sections or levels of positions (Yom, Fadilah, & Maulida, 2021).
state
that the point system method is used in job evaluation because it can provide
more valid results, be more difficult to abuse, and provide a better assessment
than other ranking or classification methods. In comparison, the Eckenrode
weighting method is one of the weighting methods used to determine the degree
of importance/weight (B) of each criterion (K) and sub-criteria (SK) specified
in decision making (Tanjung, 2003).
Results
and Discussion
A.
Overview of PT ABC Lampung City
PT
ABC Lampung City is a Small and Medium Enterprise included in the medium-scale
which has a turnover of 5 billion rupiahs. PT ABC is located on Jl. Raya Natar
No.78, Lampung. PT ABC was established in 1978 and operated as a sole agent and
distributor of heavy equipment in Indonesia.
PT
ABC has a vision, namely "Being one of the best by providing quality
products and support at all times to bring out all the potential it has to the
fullest". Then, to carry out the vision takes a mission, mission of PT ABC
is:
1) PT
ABC will continue to maintain a solid financial position and continuously
develop excellence in all sectors within the organization,
2) PT
ABC has also become a reliable company in the heavy equipment business. Both national
and international customers are well known for their determination to lead the
world to a better future.
B.
Overview of the Compensation System of PT ABC
Lampung City
The
compensation system found at PT ABC Lampung City can be analyzed using salary
mapping based on position. If viewed based on its organizational structure, PT
ABC Lampung City has several levels of positions. The highest level is headed
by the Branch Head and followed by a supervisor deputy supervisor until several
staff. The following is the organizational structure at PT ABC Lampung City.�
Figure
2 above shows the value of each factor from the positions
that exist at PT. A B C. If each factor has been assigned a value, the next
step is to calculate the Job Value of each position. Job Value can be
calculated by multiplying the weight with a predetermined value. After that,
they are sorted by total Job Value from the largest to the lowest.
H.
Job Value Calculation
The next step is to determine the job value of each
position, namely by sorting the positions based on the largest final total to
the lowest by multiplying the weight with the value obtained from the previous
step.
Results
and Discussion
Figure
3
Job
Value
From figure
3 above, it shows the Job Value of each position at PT. A B C. The Branch Head
has the highest Job Value, while the position with the lowest Job Value is
Staff Storeman.
I.
Planing Job
Grading use Given
Grade
The next step is compiling 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.
Figure 4
�Job Grading Using Given
Grade
Based on figure
4
above, we will make as many as four grades. The following are the steps to get
the job grading above:
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.
= [(Highest Job Value � Lowest Job Value)/4]
= [(805 - 224)/4]
= 146
2.
To obtain the upper limit of Given I, the
lowest job value is added to the given grade interval obtained previously.
= 224 + 146
= 370
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. And so on until the Given Grade IV is
obtained.
Figure
6
�Grafik Job Grading
J.
Designing Job Grading Using Min Max
In addition to using the
given grade method, the min-max can also make compensation improvements.
Method.
Figure 6
�Job Grading Using Min Max. Method
Figure 6
shows eight grades, with grade I filled by Staff Storeman and two other
divisions with a minimum score of 224 and a maximum of 263. Grade II was filled
by Staff Collection and 11 other divisions with a minimum score of 263 and a
maximum of 310. Grade III is filled by the Collector Staff and five other
divisions with a minimum score of 310 and 364. For Grade IV, the Deputy
Supervisor Parts Support is filled with a minimum score of 364 and a maximum of
428. Grade V is filled by the Deputy Supervisor of Agri & Construction and
one other division with a minimum score of 428 and a maximum of 504. For Grade
VI to be filled by Service Supervisors and one other division with a minimum
score of 504 and a maximum of 593. For Grade VII to be filled by a procurement
supervisor with a minimum value of 593 and a maximum of 697. Finally, the
position of the branch head is in grade VIII with a minimum score of 697, and
the maximum value is 819.
K.
Salary Mapping Preliminary PT. ABC
PT currently implements the
compensation system. ABC can be analyzed further by using salary mapping
(Salary Mapping) based on position.
Figure
7
Salary Mapping Results
Description :
X? = not very ideal, V? = ideal but
questionable, X= not ideal, V= ideal.
Based on Table 6 above, the following results
are obtained:
� Grade I, the salary given is not ideal (X)
� Grade II, the salary given is not ideal (X)
� Grade III, the salary given is not ideal (X)
� Grade IV, the salary given is not ideal (X)
Figure 3
Grafik Salary Mapping Preliminary
From the results above, it
can be concluded that the compensation system is in the form of salary at PT.
ABC is still not ideal. This is due to the irregular spread value from one
position level to another. The discrepancy is seen in the irrational Spread in
Grade I and Grade IV because it shows the numbers 188.9% in Grade I and 0% in
Grade IV (Sinambela, 2021). In
addition, the Spread on Grade I and Grade II does not show an increase but a
decrease. Based on these things, it can be said that the compensation system at
PT. ABC is still not ideal. This shows that internal justice has not been
created in the company.
L.
Compensable Factors
According to
(Ruky, 2002), the
basis for determining the value of the position is using compensable factors.
In this study, the compensable factor HAY system was used, which consisted of
three factors, namely Know-How, Accountability, and Problem-Solving, as well as
ten sub-factors. The complete explanation of the ten sub-factors is as follows.
1)
Education
Education refers to the
essential abilities, skills, and academic requirements demanded in a position
usually assumed to be obtained after attending high school, business school,
commerce school, college, or graduate school. The education sub-factor consists
of three levels, namely:
- Level 1: Graduated from high school or
equivalent high school
- Level 2: Was at the first level of
University/Academic
- Level 3: Bachelor
(Lamontagne, Keegel, Louie, Ostry, & Landsbergis,
2007).
2)
Work Experience
Experience in training and
development gained from previous work required to qualify a position, plus
training and development on a job required for skills. The work experience
sub-factor consists of four levels, namely:
- Level 1: 6-12 months
- Level 2: 1-3 years old
- Level 3: 3-5 years old
- Level 4: over five years old
(Source: Support Staff Job Evaluation Manual.
2007. Ontario Public Service Employees Union).
3)
Complexity of work
This sub-factor measures the
amount and difficulty of analysis, problem-solving and reasoning required to
perform work-related tasks. It consists of four levels, namely:
- Level 1: Workers have been given procedures,
and information related to work do not require in-depth analysis and reasoning.
- Level 2: The job involves light analysis to
decide what needs to be done and planning to organize the work.
- Level 3: The work consists of unusual or
non-standard professional activities, and information must be developed through
unique analytical methods, requiring special formulation and particular
calculations to complete the work.
- Level 4: The work consists of unusual or
non-standard professional activities, and information must be developed through
unique analytical methods, requiring special formulation and particular calculations
to complete the work.
(Source: Government of Newfoundland and
Labrador Job Evaluation System (JES) Framework, Page 18-19).
1)
Responsibility for Decision Making
2)
This sub-factor measures job responsibilities
for developing and implementing policies and services. It considers the nature
of the responsibilities and the extent and extent of the job holder's
contribution to the relevant decision-making process. It consists of four
levels, namely:
3)
- Level 1: Not responsible for service
development but may be asked to comment on policies, procedures or possible
developments.
4)
- Level 2: Implement policies for own work
areas and propose changes to work practices or procedures for own work areas.
5)
- Level 3: Implement policies for their work
area and propose policy or service changes that have an impact outside their
area of activity.
6)
- Level 4: Corporate responsibility for
crucial policy implementation or service policy development, impacting across
or outside the organization.
7)
(Source (Council, 2016)).
8)
Financial Responsibility
9)
This sub-factor measures job responsibilities
for financial resources and physical assets. It consists of four levels,
namely:
10)
- Level 1: Observing personal tasks concerning
equipment and resources used in the course of work.
11)
- Level 2: Authorized signatory for small
cash/financial payments.
12)
- Level 3: Responsible for purchasing multiple
assets or monitoring physical equipment.
13)
- Level 4: Responsible for the organization's
financial resources and physical assets.
14)
(Source: The NHS Staff Council Working in
Partnership. 2018. NHS Job Evaluation Handbook. Job Evaluation Group. 7TH
Edition: 64-72).
15)
3) Consequences of mistakes
16)
This sub-factor measures the effect of the
action and includes the relationship between the nature of the job, loss of
time and resources, and the effect of the job. It consists of four levels,
namely:
17)
- Level 1: Faults are easily detected by
routine checks and are usually limited to specific jobs. Errors have no minimal
impact on the material or product and are easy to fix.
18)
- Level 2: Errors are usually detected by
routine checks at a later stage of work. Mistakes can affect the work of
others, causing inconvenience and loss of time to correct.
19)
- Level 3: Errors are not easy to detect,
usually affect materials and products and result in some delay, financial loss,
or reduced service.
20)
- Level 4: Errors may be difficult to detect,
usually result in substantial losses and affect relations with outsiders.
21)
(Source: Job Evaluation Manual. Greater
Victoria School District)
22)
�Responsibility for the Work of Others
23)
This sub-factor measures ongoing
responsibility for oversight of staff direction. It consists of five levels,
namely:
24)
- Level 1: The job has no requirements to
exercise supervision. Sometimes it is possible to explain work procedures to
new employees.
25)
- Level 2: Work will involve coordinating and
scheduling the day-to-day work of other employees or volunteers in the unit,
monitoring the output and assignments of delegation.
26)
- Level 3: This job requires employees, on an
ongoing basis, to assume some regular supervisory duties over other employees.
27)
- Level 4: This position requires employees to
assume formal, supervisory responsibilities over other employees.
28)
- Level 5: The primary purpose of this job is
as a full-time supervisor.
29)
�(Source: Job Evaluation Manual. Greater
Victoria School District)
30)
Social Skills (Cooperation and Communication)
31)
Measures the skills needed to communicate,
build and maintain relationships and gain cooperation from others. It consists
of five levels, namely:
32)
- Level 1: Routinely give and receive
information orally to assist in their work�communication, especially with
co-workers.
33)
- Level 2: Routinely provide and receive
information orally, in writing or electronically to inform colleagues,
patients, clients, guardians, public or internal-external contacts.
34)
- Level 3: Giving and receiving complex or
sensitive information or providing advice, instruction or training to groups
where the subject is direct.
35)
- Level 4: Giving and receiving complex,
sensitive or controversial information, where skills of persuasion, motivation,
negotiation, training, empathy or reassurance are required. This may be because
agreement or cooperation is needed or because there are barriers to
understanding.
36)
- Level 5: Giving and receiving complex,
sensitive or controversial information, where there are significant barriers to
acceptance that need to be overcome using the interpersonal and communication
skills developed will be required when communicating in an emotional setting.
37)
(Source: The NHS Staff Council Working in
Partnership. 2018. NHS Job Evaluation Handbook. Job Evaluation Group. 7TH Edition:
30-31)
38)
Working Conditions
Namely, job holders' active, face-to-face
skills for various relationships with others inside and outside the
organization. It consists of three levels, namely:
- Level 1: Maintain a courteous and effective
working relationship with others to request or submit information, ask
questions or obtain clarification.
- Level 2: The skills of persuasion or
assertiveness and sensitivity to the point of view of others are often needed
to influence behaviour, change opinions, or reverse situations.
- Level 3: The highest level of interpersonal
skills is usually required by positions where alternative or combined skills in
understanding and motivating important people are of the highest level.
(Source: The NHS Staff Council Working in
Partnership. 2018. NHS Job Evaluation Handbook. Job Evaluation Group. 7TH
Edition)
39)
Physical Effort
This sub-factor measures the nature, level,
frequency and duration of physical effort. Take into account any circumstances
that may affect the effort required, such as: working in awkward positions or
confined spaces. It consists of five levels, namely:
- Level 1: Combination of sitting, standing,
and walking with little requirement for physical effort. There may be a
requirement to exert light physical effort for a short period.
- Level 2: There is often a requirement for
light physical effort for several brief periods during working hours.
- Level 3: There is often a requirement to
exert moderate physical effort for several short periods during working hours.
- Level 4: There is often a requirement to
exert moderate physical effort for several long periods during working hours.
- Level 5: There is often a requirement to
exert intense physical effort for several short periods during working hours.
(Source: The NHS Staff Council Working in
Partnership. 2018. NHS Job Evaluation Handbook. Job Evaluation Group. 7TH
Edition)
M.
Salary Improvement of PT ABC Lampung City by
Using the Adhered Method
Furthermore, after knowing
the salary mapping analysis using actual salary or actual salary, it turns out
that the compensation conditions applied are not ideal, so improvements are
needed. The first improvement is to use the Adhered method.
Figure 8
Salary Improvement
using the Adhered Method
Figure 8
above is an improvement in Compensation using the Adhered method and a spread
of 30% for Grade I, 42% for Grade II, 43% for Grade III, and 44% for Grade IV.
The spread level is appropriate, which is an increase in each grade according
to the position. Here are the steps in making salary adjustments with the
Adhered method (Mundakir & Zainuri, 2018).
1)
Determining the minimum salary for positions
in Grade I, in this case, adjusted to institutional policies and taking into
account the UMK. So that the new minimum salary for Grade I will be IDR
3,600,000.00.
2)
Determine the maximum salary for grade I with
the formula:
[minimum salary on grade + (minimum salary on
grade x spread)]
3)
Determine the salary midpoint with the
formula:
[(minimum salary at +maximum salary)/2]
4)
Determine the minimum value for the next
grade. The maximum score in the previous grade will be the minimum score in the
next grade.
5)
Next, calculate the mid to mid-value with the
formula:
[(calculated grade midpoint value - grade
below midpoint grade)/ midpoint grade below it]
6)
Repeat steps 2-5 until all minimum, maximum,
midpoint, and mid-to-mid values for each grade are known.
Figure 4
�Salary Mapping Graph after
being fixed with the Adhered Method
The graph above represents
the compensation improvement system with the adhered method, and the ideal
compensation system is obtained (Mulyadi, 2001). 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, following the provisions of the interval or distance that has been
determined and coincides.
N.
Salary Improvement of PT ABC Lampung City by
Using the Overlapping Method
In improving salaries at PT
ABC Lampung City, apart from using the adhered method, the overlapping method
can also be done. In contrast to the adhered method, in the overlapping method,
the maximum value of the previous class can be greater than the minimum value
of the next class.
Figure 9
�Salary Improvement using the
Overlapping Method (Overlapping)
Figure 9
above is a salary improvement using the overlapping method. There is a difference
from the previous method, namely, adhered, the spread value. In this method,
the spread value used is 30% for Grade I, 46% for Grade II, 53% for Grade III,
and 55% for Grade IV. The spread level here is appropriate, which is an
increase in each grade according to the position. Here are the steps in making
salary improvements with the Overlapping method.
1)
Determine the minimum salary for Grade I. The
minimum salary used in the overlapping method is still the same as that used
for the adhered method, which is Rp. 3,600,000.00.
2)
Determine the maximum salary in grade I with
the formula:
3)
[minimum salary + (minimum salary on grade x
spread)]
4)
Determine the midpoint in grade I. The formula
can calculate a midpoint:
5)
�[(minimum salary on grade + maximum salary on
grade)/2]
6)
Determine the midpoint value for all
subsequent grades. The midpoint value in the overlapping method can be
determined directly without giving a value to the minimum and maximum salary
columns. In determining the midpoint value, the company adjusts the ability and
salary of the Lampung City UMK survey.
7)
Determine the mid to mid-value with the
formula:
8)
[(calculated grade midpoint value - grade
below midpoint grade)/ midpoint grade below it]
9)
�Determine the minimum salary column value
for the next grade with the formula:
10)
[midpoint / (1 + (0.5 x spread on that
line)]Repeat steps 2, 5, and 6 until all minimum salary, maximum salary,
midpoint value, and mid to mid-value for each grade are known.
Figure 5
�Salary Mapping Graph after
being fixed with the Overlapping Method
The graph above represents
the compensation improvement system with the overlapping method. The ideal
compensation system is obtained. It can be seen from mid to mid that each grade
is always smaller than the predetermined spread, such as using the adhered
method, but the salary values of each grade overlap with other grades.
Conclusion
Based on
the results of research and analysis that has been carried out, it can be said
that PT ABC Lampung City is level four in a compensation system based on the
hierarchy contained in its organizational structure. At level four there is one
position, namely branch head, at level three there are three positions occupied
by supervisory positions, at level two filled by three positions, namely the
position of deputy supervisor, and at level one occupied by twenty-one
positions, namely staff.
Based on
the analysis using the job point system method, the factors that become the
basis for determining salaries are based on weighting at PT ABC Lampung City in
order from the highest to the lowest, namely responsibility for finances,
responsibility for decision making, education, consequences of mistakes, work
experience, working conditions, responsibility for the work of others, social
skills (cooperation and communication), physical effort, work complexity.
After
analyzing and improving the payroll system, it can be concluded that an
effective compensation system to be applied by PT ABC Lampung City is to use
the Overlapping method. This is because a minor difference is obtained when
compared to using adhered by using the overlapping method. So it is more
effective to use the overlapping method, which allows for overlapping salaries
between levels.
Suggestions
that can be given in this study include, among others, in paying PT ABC Lampung
City, they can make salary improvements with the Overlapping method because the
difference in salary obtained through this improvement is less than the Adhered
method and still meets the budget for operational salary expenses.
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