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

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

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

4.
| Defining the Compensation Context
I What is Compensation?
Compensation represents both the intrinsic
and extrinsic rewards employees receive for
performing theirjobs.

5.
Defining the Compensation Context
Total Compensation
(Cont’d)
Extrinsic
Compensation
Intrinsic
Compensation
Core compensation
' Hourly wage
‘Annual salary
Adjustments to core
compensation
' Cost-of living
‘Seniority
Legally Required
Employee Benefits
' Social Security
Act
‘Merit 'Workers
‘Incentive compensation laws
‘Person-focused ‘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.
i Extrinsic Compensation.
I Core Compensation
1) Salaries (Monthly).
2) Wages (Hourly, Daily, or Weekly).
I Cost-of-Leaving Adjustment (COLAS).
Consumer Price Index (CPI).
Seniority Pay.
Merit Pay.
Incentive Pay.
Person—focused Pay (Pay—for—Knowledge and
_
/
O1-l>Cx)l'J
/ // /
Skill—Based Pay).

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

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

9.
i Compensation Professionals’ Goals
(Cont’d)
I 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.

10.
| Compensation Department Main Goal
I Internal Consistency.
> Job analysis.
> Job evaluation.
I Market Competitiveness.
> Strategic analysis (External market and Internal
factors).
> Salary Surveys.
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11.
Q&A

12.
Thank you
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