chptr 2

1. Compensation And Benefit
Chapter 1
A Component Of Human
Resource Systems
By: Hany E. Guirgis
Feb 8, 2007

2. 2
Agenda
 What is Compensation?
 Extrinsic Compensation
 Compensation Professionals’ Goal.
 Compensation Department Main Goal.

3. 3
objectives
At the end of this lecture you will be:
 Able to define Compensation
 Generally understand the different types of
extrinsic compensation.
 Understand the main goals for Compensation
Department.

4. Defining the Compensation Context
 What is Compensation?
Compensation represents both the intrinsic
and extrinsic rewards employees receive for
performing their jobs.
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5. Defining the Compensation Context
(Cont’d)
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Core compensation
• Hourly wage
·Annual salary
Adjustments to core
compensation
• Cost-of living
·Seniority
·Merit
·Incentive
·Person-focused
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Extrinsic
Compensation
Intrinsic
Compensation
Legally Required
Employee Benefits
• Social Security
Act
•Workers
compensation laws
·Family & Medical
leave Act
Discretionary Employee
Benefits
Health insurance
Disability insurance
·life insurance
·retirement plans
·paid time-off
·Accommodation and
enhancement
Job characteristics
• Skill variety
•Task identity
·Task significance
·Autonomy
·Feedback

6. 6
Extrinsic Compensation.
 Core Compensation
1) Salaries (Monthly).
2) Wages (Hourly, Daily, or Weekly).
 Cost-of-Leaving Adjustment (COLAs).
1) Consumer Price Index (CPI).
2) Seniority Pay.
3) Merit Pay.
4) Incentive Pay.
5) Person-focused Pay (Pay-for-Knowledge and
Skill-Based Pay).

7. Extrinsic Compensation (Cont’d)
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 Employee Benefits:
 Legally Required Benefits
1) Social Insurance
2) Sick leave.
 Discretionary Benefits:
1) Health Insurance
2) Life Insurance.
3) Retirement Plans.
4) Paid time-off.

8. Compensation Professionals’ Goals
 How HR Professionals fit into the corporate
hierarchy. (Line employees and Staff
employees).
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 Recruitment.
 Performance appraisal.
 Training and Development.
 Employee Relations.
 Employee Termination.

9. Compensation Professionals’ Goals
(Cont’d)
 How the Compensation Function fits into HR
Department:
 Compensation, Recruitment, and Selection.
 Compensation and Performance Appraisal.
 Compensation and Training.
 Compensation and Employee Termination.
 Compensation and Employee Relations.
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10. Compensation Department Main Goal
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 Internal Consistency.
 Job analysis.
 Job evaluation.
 Market Competitiveness.
 Strategic analysis (External market and Internal
factors).
 Salary Surveys.

11. 11
Q & A

12. 12
Thank you