Denial of benefits to employees during initial “probationary” periods
Financing of benefits.
Benefit choices to give employees.
Cost containment procedures to use.
Communicating benefits options to employees.
Compensation Management and Other HRM Functions Presentation Slide 9 –2 Pay rates affect selectivity Selection Selection standards affect level of pay required Pay can motivate training Training and Development Increased knowledge leads to higher pay Training and development may lead to higher pay Compensation Management A basis for determining employee’s rate of pay Aid or impair recruitment Recruitment Supply of applicants affects wage rates Low pay encourages unionization Labor Relations Pay rates determined through negotiation
Links the compensation of employees to the mission, objectives, philosophies, and culture of the organization.
Serves to mesh the monetary payments made to employees with specific functions of the HR program in establishing a pay-for-performance standard.
Seeks to motivate employees through compensation.
Significant Goals Driving Pay and Reward Changes Figure 9.1 Source: Towers Perrin and Duncan Brown, “Reward Strategies for Real: Moving from Intent to Impact,” WorldatWor k Journal 10, no. 3 (Third Quarter 2001): 43. Used with permission.
Linking Compensation to Organizational Objectives
Evaluating the individual components of the compensation program (pay and benefits) to see if they advance the needs of employees and the goals of the organization.
“ How does this compensation practice benefit the organization?”
“ Does the benefit offset the administrative cost?”
An employee’s perception that compensation received is equal to the value of the work performed.
A motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve.
Individuals form a ratio of their inputs to outcomes in their job and then compare the value of that ratio with the value of the ratio for other individuals in similar jobs.
Relationship between Pay Equity and Motivation Figure 9. 2 The greater the perceived disparity between my input/output ratio and the comparison person’s input/output ratio, the greater my motivation to reduce the inequity.
An organizational policy requiring that compensation levels and decisions about employee compensation be kept secret and, usually, prohibiting employees from revealing their compensation information to anyone.
Can create employee misperceptions and distrust of compensation fairness and pay-for-performance standards.
Components of the Wage Mix Presentation Slide 9 –3 WAGE MIX Labor Market Conditions Area Wage Rates Cost of Living Collective Bargaining Legal Requirements Compensation Strategy of the Organization Worth of the Job Employee’s Relative Worth Employer’s Ability to Pay
The systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization.
Different Job Evaluation Systems Figure 9.5 JOB AS JOB PARTS BASIS FOR A WHOLE OR FACTORS COMPARISON (NONQUANTITATIVE ) (QUANTITATIVE) Job vs. job Job ranking Factor comparison system system Job vs. scale Job classification Point system system SCOPE OF COMPARISON