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3P Compensation Management Explained

The 3P Compensation Concept outlines guidelines for determining employee salary and incentives based on three factors: pay for position, pay for person, and pay for performance. Pay for position is determined through broad banding which groups jobs into compensation bands based on common characteristics. Pay for person considers an employee's capabilities, experience, and market demand for their unique skills. Pay for performance establishes performance contracts to set objectives, review performance, and use corporate and individual performance as the basis for bonuses and incentives.

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Santhoshi Priya
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4K views2 pages

3P Compensation Management Explained

The 3P Compensation Concept outlines guidelines for determining employee salary and incentives based on three factors: pay for position, pay for person, and pay for performance. Pay for position is determined through broad banding which groups jobs into compensation bands based on common characteristics. Pay for person considers an employee's capabilities, experience, and market demand for their unique skills. Pay for performance establishes performance contracts to set objectives, review performance, and use corporate and individual performance as the basis for bonuses and incentives.

Uploaded by

Santhoshi Priya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
  • Pay for Person
  • 3P Compensation Concept
  • Pay for Position
  • Pay for Performance

3P Compensation Concept:

Management of any organization considers 3 parameters while deciding salary and incentives
1. Pay for position
2. Pay for person
3. Pay for performance

This program helps to establish guidelines for
1. An equitable grading structure
2. Determining capability requirements
3. Creating incentives
4. Long term reward plans

Pay for position:
Broad banding:
Thru broad branding the traditional structure pay grades determine through job evaluation which are replaced
by fewer and wider bands and a grading structure is created.
It is a compensation technique that reduces many different compensation categories to several compensation
bands. A banding procedure takes place when jobs grouped together by common characteristics.
On recruitment or promotion employee compensation may be set appropriate to employees qualification,
education, training and experience
Employee typically progress up thru the broad band if their performance ratings are good rather than
progressing up thru a grade by steps based on the time.

Pay for Person:
Pay for person takes into account a persons capabilities and experience in setting a pay level that is
both equitable and competitive.
It also considers the market demand of a persons unique skills and experience.
Pay for person is associated with competency based pay.



Pay for performance:
An individual performance is managed thru a performance contract which consists of
1. Clarification of the role.
2. Setting up the objectives
3. Review of performance
As an outcome a measure of performance at the corporate individual level becomes the bases for
setting the performance pay.

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