Compensation and benefits refer to the pay and indirect compensation provided to employees in exchange for their work. They are an important part of human resource management. Compensation includes salary and hourly wages, while benefits cover indirect pay like health insurance and retirement plans. Compensation and benefits packages motivate employees and impact retention when they are fair, clearly communicated, and meet employee needs and expectations.
Compensation and Human Theory A close look at all the t.docxmaxinesmith73660
Compensation and Human Theory
A close look at all the theories of human motivation reveals a common driving
principle: people do what they are rewarded for doing. This has been termed "the
greatest management principle in the world." Reinforcement, expectancy, and goal
setting describe how to motivate people. Hence they are also called the "process
theories." Rewards are both intrinsic—that is feeling good about an accomplishment—
and extrinsic—that is being recognized for an accomplishment. Compensation is part
of the mix of rewards for employees.
David McClelland’s early studies showed that receiving a bonus or salary increase had
a short-term positive effect. Withholding a bonus or salary increase had a long-term
negative effect. Pay satisfaction is comprised of four elements: the level of pay and
benefits, the extent to which workers perceive their earnings are fair or deserved,
comparisons with other people’s pay, and noneconomic satisfactions such as intrinsic
satisfaction with the content of one's work.
Compensation is a topic near and dear to every employee. Companies are learning that
sharing the economic gains of reaching targets helps employees stay motivated to reach
increasingly difficult goals. For example, PepsiCo has instituted a program called
"SharePower" that makes all employees—not just a select group of senior executives—
who work at least 1,500 hours per year and who are employed by Pepsi for 1 year or
longer, eligible for stock. Since its introduction, stories abound at Pepsi about how
employees have gone the extra mile to serve customers. When HR professionals help
employees see that a particularly demanding project or exercise will result in economic
payback for the employee, the employee is likely to work harder. With a clear line of
sight between work and reward, employees may cope better with increased demands.
Financial incentives, in order to be effective, must be clearly linked with desired
outcomes. For example, in one banking call center, management rewarded employees
who had shorter time per call averages because they were able to take more calls. The
employees strove to have shorter online times each day. Unfortunately, they often did
not complete customer requests and customers had to call several times to get a request
completed or problem solved. Call volumes in the center went up dramatically, and
customer satisfaction with the call center service went down. The plan was changed
once management determined they had created the problem.
Benefits and services are a major ingredient in employee compensation. Estimates are
that on average, benefits as a part of payroll are 41%. The overall benefits plan of a
company is also an important element in employee retention. Each plan is designed for
the specific company and its unique situation, although there are many similarities
within industries. As part of the corporate downsizings, many companies outsource
their bene.
MHR 6901, Compensation Management 1
Course Learning Outcomes for Unit I
Upon completion of this unit, students should be able to:
1. Discuss the role of employees, employers, unions, and the government in the development of
compensation programs.
1.1 Describe issues that influence an individual’s decision to apply for or accept a specific job.
1.2 Explain how compensation plans can influence the success of an organization.
1.3 Explore how influences outside an organization can affect its compensation plan.
2. Assess the impact of the Civil Rights Act of 1964, the Bennett Amendment, and Executive Order
11246 on compensation practices.
2.1 Outline the provisions of the Civil Rights Act of 1964, the Bennett Amendment, and
Executive Order 11246.
2.2 Establish the reasons why the Civil Rights Act of 1964, the Bennett Amendment, and
Executive Order 11246 were implemented.
Course/Unit
Learning Outcomes
Learning Activity
1.1 Unit I Essay
1.2 Unit I Essay
1.3 Unit I Essay
2.1 Unit I Essay
2.2 Unit I Essay
Reading Assignment
Chapter 1: Strategic Compensation: A Component of Human Resource Systems
Chapter 2: Contextual Influences on Compensation Practice
Unit Lesson
Hello, and welcome to this course. This course is an introduction to the area of compensation management.
This course looks at how compensation is developed, evaluated, and managed within an organization. You
will examine different theories of compensation management, why employees and non-employees are paid,
the manner in which they are paid, and different types of pay programs.
This course will be broken down into six different parts, which include strategic compensation, bases for pay,
designing compensation systems, employee benefits, compensation challenges, and compensation issues
around the world. When studying bases for pay, you will look at the traditional bases of pay, which include
merit pay, seniority pay, incentive pay, and person-focused pay. You will review pay systems that recognize
employee contributions, are internally consistent, and are competitive within the market. When reviewing
employee benefits, you will review both discretionary benefits and legally required benefits. Compensation
challenges will include the controversy surrounding executive compensation in the United States and paying
contingent or flexible employees. Finally, you will address compensation systems around the word and
compensating expatriates. As you can see, a wide array of compensation issues are present in today’s
workforce.
In this unit, we will concentrate on strategic compensation and some influences on compensation. So, what
do you think of when you hear the words compensation and strategic compensation? Most people think of
UNIT I STUDY GUIDE
Strategic Compensation
MHR 6901, Compensation Management 2
UNIT x STUDY GUIDE
Title
compensation as their pay and benefits, which is basically correct. The ...
Week One Discussion 500 Word Min.This weeks discussion covers .docxhelzerpatrina
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question:“What are the core competencies or skills an HRD manager must have, and how are they acquired? “
Week One
Discussion
:
500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16
-
19 in the course text
.
(Pictures Below)
Question:
“What
are the core competencies or skills an HRD manager must have, and how are they acquired
?
“
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question: “What are the core competencies or skills an HRD manager must have, and how are they acquired? “
MHR 6901, Compensation Management 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
5. Explain workers’ compensation.
5.1 Convince others that executive compensation is too high or is just right.
5.2 Identify compensation rules that apply to the flexible workforce.
Course/Unit
Learning Outcomes
Learning Activity
5.1 Unit VI Essay
5.2 Unit VI Quiz
Reading Assignment
Chapter 11: Compensating Executives
Chapter 12: Compensating the Flexible Workforce: Contingent Employees and Flexible Work Schedules
Unit Lesson
So far in this course, we have talked about how compensation is used and the components of a
compensation system. Let us review these a bit before we move into compensating executives.
Typically, compensation is used to recruit and retain highly qualified employees. The organization’s business
strategy (lead, lag, or match strategy) determines how the organization recruits and retains employees. A
good compensation system also increases morale or at least maintains employee satisfaction. As mentioned
earlier in the course, compensation systems include wages and benefits. A good compensation system is one
that evaluates the employees’ needs and makes adjustments, where possible, to meet those needs.
Employees who have their needs satisfied are more likely to be productive and loyal to the organization,
which, in turn, reduces costs for the organization. This is great for the average worker, but what about the
organization’s executives? Executive compensation is a challenge for most organizations and is a highly
controversial subject, especially after the government bailouts in 2008 and 2009.
Executive compensation is different than that for most salary or hourly employees and can consist of a variety
of options. It is generally focused on generating profits and long-term growth and is considered contingent
compensation, which means that the pay is structured to reward or pay based on th ...
Compensation and Human Theory A close look at all the t.docxmaxinesmith73660
Compensation and Human Theory
A close look at all the theories of human motivation reveals a common driving
principle: people do what they are rewarded for doing. This has been termed "the
greatest management principle in the world." Reinforcement, expectancy, and goal
setting describe how to motivate people. Hence they are also called the "process
theories." Rewards are both intrinsic—that is feeling good about an accomplishment—
and extrinsic—that is being recognized for an accomplishment. Compensation is part
of the mix of rewards for employees.
David McClelland’s early studies showed that receiving a bonus or salary increase had
a short-term positive effect. Withholding a bonus or salary increase had a long-term
negative effect. Pay satisfaction is comprised of four elements: the level of pay and
benefits, the extent to which workers perceive their earnings are fair or deserved,
comparisons with other people’s pay, and noneconomic satisfactions such as intrinsic
satisfaction with the content of one's work.
Compensation is a topic near and dear to every employee. Companies are learning that
sharing the economic gains of reaching targets helps employees stay motivated to reach
increasingly difficult goals. For example, PepsiCo has instituted a program called
"SharePower" that makes all employees—not just a select group of senior executives—
who work at least 1,500 hours per year and who are employed by Pepsi for 1 year or
longer, eligible for stock. Since its introduction, stories abound at Pepsi about how
employees have gone the extra mile to serve customers. When HR professionals help
employees see that a particularly demanding project or exercise will result in economic
payback for the employee, the employee is likely to work harder. With a clear line of
sight between work and reward, employees may cope better with increased demands.
Financial incentives, in order to be effective, must be clearly linked with desired
outcomes. For example, in one banking call center, management rewarded employees
who had shorter time per call averages because they were able to take more calls. The
employees strove to have shorter online times each day. Unfortunately, they often did
not complete customer requests and customers had to call several times to get a request
completed or problem solved. Call volumes in the center went up dramatically, and
customer satisfaction with the call center service went down. The plan was changed
once management determined they had created the problem.
Benefits and services are a major ingredient in employee compensation. Estimates are
that on average, benefits as a part of payroll are 41%. The overall benefits plan of a
company is also an important element in employee retention. Each plan is designed for
the specific company and its unique situation, although there are many similarities
within industries. As part of the corporate downsizings, many companies outsource
their bene.
MHR 6901, Compensation Management 1
Course Learning Outcomes for Unit I
Upon completion of this unit, students should be able to:
1. Discuss the role of employees, employers, unions, and the government in the development of
compensation programs.
1.1 Describe issues that influence an individual’s decision to apply for or accept a specific job.
1.2 Explain how compensation plans can influence the success of an organization.
1.3 Explore how influences outside an organization can affect its compensation plan.
2. Assess the impact of the Civil Rights Act of 1964, the Bennett Amendment, and Executive Order
11246 on compensation practices.
2.1 Outline the provisions of the Civil Rights Act of 1964, the Bennett Amendment, and
Executive Order 11246.
2.2 Establish the reasons why the Civil Rights Act of 1964, the Bennett Amendment, and
Executive Order 11246 were implemented.
Course/Unit
Learning Outcomes
Learning Activity
1.1 Unit I Essay
1.2 Unit I Essay
1.3 Unit I Essay
2.1 Unit I Essay
2.2 Unit I Essay
Reading Assignment
Chapter 1: Strategic Compensation: A Component of Human Resource Systems
Chapter 2: Contextual Influences on Compensation Practice
Unit Lesson
Hello, and welcome to this course. This course is an introduction to the area of compensation management.
This course looks at how compensation is developed, evaluated, and managed within an organization. You
will examine different theories of compensation management, why employees and non-employees are paid,
the manner in which they are paid, and different types of pay programs.
This course will be broken down into six different parts, which include strategic compensation, bases for pay,
designing compensation systems, employee benefits, compensation challenges, and compensation issues
around the world. When studying bases for pay, you will look at the traditional bases of pay, which include
merit pay, seniority pay, incentive pay, and person-focused pay. You will review pay systems that recognize
employee contributions, are internally consistent, and are competitive within the market. When reviewing
employee benefits, you will review both discretionary benefits and legally required benefits. Compensation
challenges will include the controversy surrounding executive compensation in the United States and paying
contingent or flexible employees. Finally, you will address compensation systems around the word and
compensating expatriates. As you can see, a wide array of compensation issues are present in today’s
workforce.
In this unit, we will concentrate on strategic compensation and some influences on compensation. So, what
do you think of when you hear the words compensation and strategic compensation? Most people think of
UNIT I STUDY GUIDE
Strategic Compensation
MHR 6901, Compensation Management 2
UNIT x STUDY GUIDE
Title
compensation as their pay and benefits, which is basically correct. The ...
Week One Discussion 500 Word Min.This weeks discussion covers .docxhelzerpatrina
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question:“What are the core competencies or skills an HRD manager must have, and how are they acquired? “
Week One
Discussion
:
500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16
-
19 in the course text
.
(Pictures Below)
Question:
“What
are the core competencies or skills an HRD manager must have, and how are they acquired
?
“
Week One Discussion: 500 Word Min.
This week's discussion covers HRD Skill requirements for managers.
Before entering the discussion board, please review pages 16 - 19 in the course text. (Pictures Below)
Question: “What are the core competencies or skills an HRD manager must have, and how are they acquired? “
MHR 6901, Compensation Management 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
5. Explain workers’ compensation.
5.1 Convince others that executive compensation is too high or is just right.
5.2 Identify compensation rules that apply to the flexible workforce.
Course/Unit
Learning Outcomes
Learning Activity
5.1 Unit VI Essay
5.2 Unit VI Quiz
Reading Assignment
Chapter 11: Compensating Executives
Chapter 12: Compensating the Flexible Workforce: Contingent Employees and Flexible Work Schedules
Unit Lesson
So far in this course, we have talked about how compensation is used and the components of a
compensation system. Let us review these a bit before we move into compensating executives.
Typically, compensation is used to recruit and retain highly qualified employees. The organization’s business
strategy (lead, lag, or match strategy) determines how the organization recruits and retains employees. A
good compensation system also increases morale or at least maintains employee satisfaction. As mentioned
earlier in the course, compensation systems include wages and benefits. A good compensation system is one
that evaluates the employees’ needs and makes adjustments, where possible, to meet those needs.
Employees who have their needs satisfied are more likely to be productive and loyal to the organization,
which, in turn, reduces costs for the organization. This is great for the average worker, but what about the
organization’s executives? Executive compensation is a challenge for most organizations and is a highly
controversial subject, especially after the government bailouts in 2008 and 2009.
Executive compensation is different than that for most salary or hourly employees and can consist of a variety
of options. It is generally focused on generating profits and long-term growth and is considered contingent
compensation, which means that the pay is structured to reward or pay based on th ...
Running head EMPLOYEE COMPENSATION AND BENEFITSEMPLOYEE COMPENS.docxsusanschei
Running head: EMPLOYEE COMPENSATION AND BENEFITS
EMPLOYEE COMPENSATION AND BENEFITS 5
HRM 530 Assignment 5: Employee Compensation and Benefits
Section 1: Narrative
(Student’s Name)
(Professor’s Name)
(Course Title)
(Date of Submission)
Introduction
Employee compensation and benefits refers to the combination of wages, salaries and benefits that a worker receives as exchange for work done either in accordance to the formulated duties or in excesses of overtime and other viable bonuses. Compensation can be calculable hourly wages plus bonuses and incentives while benefits may include healthcare insurance policies and retirement savings. Thus, the total employee compensation and benefits may refer to collective gain components that a worker is paid for the services that he/she offers to an organization (Cardinal & Florin, 2012).
In this paper, the discussion will based according with a medium-based enterprise employee compensation and benefits package for a position of a secretary. A medium-based organization need to provide an elaborate employee compensation and benefits package to attract and retain employees such as secretaries. The competitive compensation and benefits package that befit a secretary position in a medium-based organization that anticipate future growth include annual salaries, retirement savings, salary increments, bonuses, paid time-off from work plans, employee non-monetary assistance plans, and group health benefits.
Compensation and Benefits Package for a new Secretary Position
Compensation and benefits package for a new secretary position in a medium-based organization need to be developed in accordance to the stipulated labor laws as well as to the benefits of an organization. In the first place, employing a secretary is very essential for an aspiring medium-based company and retaining the acquired professional skills should be a priority in addition to motivating the employee into improving performance. Furthermore, competition across the different industry players is leading to increased job turnover rates and therefore, developing a compensation and benefits package plan for new secretaries will include the most attractive offers.
The employee compensation and benefits plan for a new secretary should include annual salaries, retirement savings, salary increments and bonuses, payment plans for time-off from work duties, employee non-monetary assistance plans, and group health benefits. According to employment standards, annual salaried employments accosted with other various benefits are more preferred than hourly-based form of employment due to job-based security and rights to various benefits for the employee. In addition, annual salaried employment opportunities provide an organization with several advantages such as productivity, employee retention, improved skill acquisition, and tax benefits.
Thus, a secretary’s compensation plan that will be developed will be based on annual salary and shou ...
Running head EMPLOYEE BENEFITS PROGRAMS .docxtodd271
Running head: EMPLOYEE BENEFITS PROGRAMS 1
EMPLOYEE BENEFITS PROGRAMS 7
Strategic Value of Employee Benefits Programs
Phyllis Spears Jones
Strayer University
HRM599 Capstone
Dr. Gary Wash
June 2, 2020
Strategic Value of Employee Benefits Programs
For a commercial entity to stay competitive in the changing business world, it needs to have a strategic human resource department that acts as a strategic partner to ensure it has the best to gain a competitive advantage. The human resources department, therefore, needs to put itself in a decisive role that helps it to attract and retain highly skilled employees. This is affected by several factors that include types of benefits from the company that accrues to the workers. In other words, employee benefit programs are useful in creating an atmosphere that makes employees more engaged and motivated (Klonoski, 2016). Therefore, for a company to be strategically in terms of competition, the human resources department needs to step away from conventional administrative roles to be a strategic partner who recognizes the value of employee benefit programs and the role they play in generating a significant competitive advantage. This makes it vital to be mindful that an excellent employee benefits package attracts and maintains the skills required to distinguish a company from its competitors. This paper discusses the factors to considers when providing employee benefit programs, compares and contrasts income protection programs, and pays for time not worked programs and other benefits that are necessary for the benefits package.
Factors to Consider Before Providing Employee Benefits Programs
Everyone is aware that rewards are components of an organization's overall incentive package. It is also worth noting that other than the traditional pensions and healthcare plans, employees need a broader choice of benefits that reflect the changing needs and lifestyles (Hagel & White, 2016). It is undeniable that every commercial entity must ensure that it has in place attractive employee compensation packages to attract and retain the talent needed to gain a meaningful competitive advantage. It must, however, be recalled that many essential variables play a crucial role in deciding an economic entity's employee benefits programs. One of these variables is the type of benefits to be provided. Some benefits are too expensive to provide while others are within reach of many business organizations. Therefore, a commercial enterprise must weigh its financial soundness to avoid providing a benefits program that works against its overall objectives.
Another variable to consider is aligning the benefits strategy with the business objectives. The human resource department of an organization must revisit a plan quite regularly to ensure that it meets the changin.
Compensation Dimensions (Payment for Work and Performance, Payment for Non-working Days, Loss of Job Income Continuation Benefit, Disability Income Continuation Benefit, Deferred Income, Spouse/Family Income Continuation Benefit, Health, Accident and Liability Protection, Income Equivalent Payments)
At One4all Rewards, our passion is helping organisations create effective programmes for rewards and incentives.
This research (a study of over 1,000 workplaces in the UK) tests some theories of behavioural science in a workplace environment. We believe that our findings and conclusions can help organisations use their budget and bonus pots more effectively, as well as challenging established practices about how reward programmes are structured.
By applying a little science, you can learn a lot about how best to push the button for increased motivation and productivity.
d
CHAPTER EIGHT
Compensation Programs
CHAPTER OUTLINE
Compensation Management
Legal Aspects of Compensation Management
Federal Legislation
State Legislation
Local Legislation
Direct Financial Compensation
Salaries
Wages
Incentives and Bonuses
Tips
Indirect Financial Compensation
Mandatory Benefits
Voluntary Benefits
Other Voluntary Benefits
Nonfinancial Compensation
Human Resources Terms
For Your Consideration
Case Study: Human Resources Management in Action
Internet Activities
CHECKLIST OF CHAPTER LEARNING OBJECTIVES
As a result of satisfactory completion of this chapter, readers will be able to:
1. Describe the differences between extrinsic and intrinsic rewards as they relate
to employee compensation programs.
2. Explain how compensation programs are affected by federal, state, and
local laws.
3. List and describe the most common forms of direct financial compensation.
4. List and describe the most common forms of indirect financial compensation.
5. List and describe some of the most common forms of nonfinancial compensation.
c08.indd 263c08.indd 263 12/14/07 12:03:44 PM12/14/07 12:03:44 PM
264 CHAPTER 8 ! Compensation Programs
Impact on Human Resources Management
Despite arguments to the contrary, pay is not the central issue responsible for attract-ing and retaining most employees. Pay is only one of a variety of factors that
impact an employee’s willingness to work. Worker pay is, however, critically important
to employees and employers alike, because it affects so many other business issues.
In general, workers who feel they are unfairly paid will, if possible, seek jobs
they believe more equitably reward their efforts. Alternatively, employers who pay
their employees significantly more than other employers may find their operating
costs are too high to allow them to stay competitive and achieve the profits they
need to stay in business. Unfortunately for HR managers, elusive concepts such as
fair, equitable, and competitive defy unanimous agreement. As a result, the chal-
lenge faced by HR managers is to design and manage compensation systems that are
simultaneously perceived as reasonable by both employees and employers. The best
of HR managers actually go one step further and use their compensation programs
as an essential tool for attracting and retaining excellent workers, as well as maxi-
mizing profits for their employers.
It is important to realize that people rarely are attracted to, or leave, a job for
money alone. Instead, they are attracted or leave for career advancement, new chal-
lenges, lack of appreciation by the company, inability to have an impact, coworker con-
flict, job insecurity, family matters, and a variety of other factors. This is not to imply
that pay is unimportant to workers at all levels; it is critically important.
Running head EMPLOYEE COMPENSATION AND BENEFITSEMPLOYEE COMPENS.docxsusanschei
Running head: EMPLOYEE COMPENSATION AND BENEFITS
EMPLOYEE COMPENSATION AND BENEFITS 5
HRM 530 Assignment 5: Employee Compensation and Benefits
Section 1: Narrative
(Student’s Name)
(Professor’s Name)
(Course Title)
(Date of Submission)
Introduction
Employee compensation and benefits refers to the combination of wages, salaries and benefits that a worker receives as exchange for work done either in accordance to the formulated duties or in excesses of overtime and other viable bonuses. Compensation can be calculable hourly wages plus bonuses and incentives while benefits may include healthcare insurance policies and retirement savings. Thus, the total employee compensation and benefits may refer to collective gain components that a worker is paid for the services that he/she offers to an organization (Cardinal & Florin, 2012).
In this paper, the discussion will based according with a medium-based enterprise employee compensation and benefits package for a position of a secretary. A medium-based organization need to provide an elaborate employee compensation and benefits package to attract and retain employees such as secretaries. The competitive compensation and benefits package that befit a secretary position in a medium-based organization that anticipate future growth include annual salaries, retirement savings, salary increments, bonuses, paid time-off from work plans, employee non-monetary assistance plans, and group health benefits.
Compensation and Benefits Package for a new Secretary Position
Compensation and benefits package for a new secretary position in a medium-based organization need to be developed in accordance to the stipulated labor laws as well as to the benefits of an organization. In the first place, employing a secretary is very essential for an aspiring medium-based company and retaining the acquired professional skills should be a priority in addition to motivating the employee into improving performance. Furthermore, competition across the different industry players is leading to increased job turnover rates and therefore, developing a compensation and benefits package plan for new secretaries will include the most attractive offers.
The employee compensation and benefits plan for a new secretary should include annual salaries, retirement savings, salary increments and bonuses, payment plans for time-off from work duties, employee non-monetary assistance plans, and group health benefits. According to employment standards, annual salaried employments accosted with other various benefits are more preferred than hourly-based form of employment due to job-based security and rights to various benefits for the employee. In addition, annual salaried employment opportunities provide an organization with several advantages such as productivity, employee retention, improved skill acquisition, and tax benefits.
Thus, a secretary’s compensation plan that will be developed will be based on annual salary and shou ...
Running head EMPLOYEE BENEFITS PROGRAMS .docxtodd271
Running head: EMPLOYEE BENEFITS PROGRAMS 1
EMPLOYEE BENEFITS PROGRAMS 7
Strategic Value of Employee Benefits Programs
Phyllis Spears Jones
Strayer University
HRM599 Capstone
Dr. Gary Wash
June 2, 2020
Strategic Value of Employee Benefits Programs
For a commercial entity to stay competitive in the changing business world, it needs to have a strategic human resource department that acts as a strategic partner to ensure it has the best to gain a competitive advantage. The human resources department, therefore, needs to put itself in a decisive role that helps it to attract and retain highly skilled employees. This is affected by several factors that include types of benefits from the company that accrues to the workers. In other words, employee benefit programs are useful in creating an atmosphere that makes employees more engaged and motivated (Klonoski, 2016). Therefore, for a company to be strategically in terms of competition, the human resources department needs to step away from conventional administrative roles to be a strategic partner who recognizes the value of employee benefit programs and the role they play in generating a significant competitive advantage. This makes it vital to be mindful that an excellent employee benefits package attracts and maintains the skills required to distinguish a company from its competitors. This paper discusses the factors to considers when providing employee benefit programs, compares and contrasts income protection programs, and pays for time not worked programs and other benefits that are necessary for the benefits package.
Factors to Consider Before Providing Employee Benefits Programs
Everyone is aware that rewards are components of an organization's overall incentive package. It is also worth noting that other than the traditional pensions and healthcare plans, employees need a broader choice of benefits that reflect the changing needs and lifestyles (Hagel & White, 2016). It is undeniable that every commercial entity must ensure that it has in place attractive employee compensation packages to attract and retain the talent needed to gain a meaningful competitive advantage. It must, however, be recalled that many essential variables play a crucial role in deciding an economic entity's employee benefits programs. One of these variables is the type of benefits to be provided. Some benefits are too expensive to provide while others are within reach of many business organizations. Therefore, a commercial enterprise must weigh its financial soundness to avoid providing a benefits program that works against its overall objectives.
Another variable to consider is aligning the benefits strategy with the business objectives. The human resource department of an organization must revisit a plan quite regularly to ensure that it meets the changin.
Compensation Dimensions (Payment for Work and Performance, Payment for Non-working Days, Loss of Job Income Continuation Benefit, Disability Income Continuation Benefit, Deferred Income, Spouse/Family Income Continuation Benefit, Health, Accident and Liability Protection, Income Equivalent Payments)
At One4all Rewards, our passion is helping organisations create effective programmes for rewards and incentives.
This research (a study of over 1,000 workplaces in the UK) tests some theories of behavioural science in a workplace environment. We believe that our findings and conclusions can help organisations use their budget and bonus pots more effectively, as well as challenging established practices about how reward programmes are structured.
By applying a little science, you can learn a lot about how best to push the button for increased motivation and productivity.
d
CHAPTER EIGHT
Compensation Programs
CHAPTER OUTLINE
Compensation Management
Legal Aspects of Compensation Management
Federal Legislation
State Legislation
Local Legislation
Direct Financial Compensation
Salaries
Wages
Incentives and Bonuses
Tips
Indirect Financial Compensation
Mandatory Benefits
Voluntary Benefits
Other Voluntary Benefits
Nonfinancial Compensation
Human Resources Terms
For Your Consideration
Case Study: Human Resources Management in Action
Internet Activities
CHECKLIST OF CHAPTER LEARNING OBJECTIVES
As a result of satisfactory completion of this chapter, readers will be able to:
1. Describe the differences between extrinsic and intrinsic rewards as they relate
to employee compensation programs.
2. Explain how compensation programs are affected by federal, state, and
local laws.
3. List and describe the most common forms of direct financial compensation.
4. List and describe the most common forms of indirect financial compensation.
5. List and describe some of the most common forms of nonfinancial compensation.
c08.indd 263c08.indd 263 12/14/07 12:03:44 PM12/14/07 12:03:44 PM
264 CHAPTER 8 ! Compensation Programs
Impact on Human Resources Management
Despite arguments to the contrary, pay is not the central issue responsible for attract-ing and retaining most employees. Pay is only one of a variety of factors that
impact an employee’s willingness to work. Worker pay is, however, critically important
to employees and employers alike, because it affects so many other business issues.
In general, workers who feel they are unfairly paid will, if possible, seek jobs
they believe more equitably reward their efforts. Alternatively, employers who pay
their employees significantly more than other employers may find their operating
costs are too high to allow them to stay competitive and achieve the profits they
need to stay in business. Unfortunately for HR managers, elusive concepts such as
fair, equitable, and competitive defy unanimous agreement. As a result, the chal-
lenge faced by HR managers is to design and manage compensation systems that are
simultaneously perceived as reasonable by both employees and employers. The best
of HR managers actually go one step further and use their compensation programs
as an essential tool for attracting and retaining excellent workers, as well as maxi-
mizing profits for their employers.
It is important to realize that people rarely are attracted to, or leave, a job for
money alone. Instead, they are attracted or leave for career advancement, new chal-
lenges, lack of appreciation by the company, inability to have an impact, coworker con-
flict, job insecurity, family matters, and a variety of other factors. This is not to imply
that pay is unimportant to workers at all levels; it is critically important.
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Modern Database Management 12th Global Edition by Hoffer solution manual.docxssuserf63bd7
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name:Solution manual for Modern Database Management 12th Global Edition by Hoffer
Edition:12th Global Edition
author:by Hoffer
ISBN:ISBN 10: 0133544613 / ISBN 13: 9780133544619
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Focusing on what leading database practitioners say are the most important aspects to database development, Modern Database Management presents sound pedagogy, and topics that are critical for the practical success of database professionals. The 12th Edition further facilitates learning with illustrations that clarify important concepts and new media resources that make some of the more challenging material more engaging. Also included are general updates and expanded material in the areas undergoing rapid change due to improved managerial practices, database design tools and methodologies, and database technology.
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2. Compensation and benefits refer to the benefits
a firm provides to its employees in exchange for
their labor. Compensation and benefits are thus
a key part of Human Resource Management.
4. WHAT ARE COMPENSATION AND
BENEFITS?
COMPENSATION
- Salary
- Hourly, weekly, monthly, or hourly rate
BENEFITS
- Cover indirect pay (health insurance, stock options, or any myriad things
offered the employees)
6. - Overtime pay, stock options, 401k matches, pension plans, days off, and
even free lunches make up an essential part of the compensation and
benefits package.
- United States - health insurance makes up a key component of benefits.
- Europe - there is often a focus on more social benefits, including parental
leave, severance pay, and termination notice.
- France and Finland - it is not uncommon for employers to pay for
restaurant vouchers that cover part of the employee’s lunch.
7. Philippines
Personnel benefits costs shall include salary increases, step increment, incentive
and service fees, commutation of vacation and sick leaves, retirement and life
insurance premiums, compensation insurance premiums, health insurance
premiums, HDMF contributions, hospitalization and medical benefits, scholarship
and educational benefits, training and seminar expenses, all kinds of allowances,
whether commutable or reimbursable, in cash or in kind, and other personnel
benefits and privileges authorized by law, including the payment of retirement
gratuities, separation pay and terminal leave benefits. (DBM, 2011)
8. 2021 PHILIPPINES BENEFITS SUMMARY
Holidays
Vacation
Retirement
Healthcare
Leaves: Sick, Maternity (expanded), Paternity, Bereavement, Solo Parent
Leave, Calamity, Magna Carta for Women (SL), Leave for victims of VAWC
Disability/ Life Insurance
9. Other Benefits:
- 13th Month Pay
- Mid-year bonus
- Rice Allowance
- Meal subsidy
- Tuition fee subsidy
- Global Education Opportunities Program
- Kapwa Tulong Club
- Attendance bonus
- Prolong Sickness (PSL) Benefits
- Loyalty Token
10. Most often, compensation and benefits (commonly referred to as comp &
benefits) fall under the responsibility of the Human Resources department.
In a small company, an HR generalist would handle all aspects of this
process, while in a large company, there would be dedicated departments
to manage these.
11. WHY ARE
COMPENSATION
AND BENEFITS
IMPORTANT?
First, people won’t work for you without pay.
Secondly, as of June 2019, benefits make up
31.4 percent of the cost of employing someone.
*compensation motivate employees and increases
make a difference.
12. COMPENSATION
AND BENEFITS
AND EMPLOYEE
MOTIVATION
According to Glassdoor, a 10 percent increase in base
pay resulted in a 1.5 percent increase in the chance that
the employee would stay at the company for their next
role, rather than moving on.
A Payscale study found a strong correlation between pay
and engagement (and engagement profoundly
influences retention), but what was stronger is pay clarity.
When employees understood that their compensation
was fair, it increased their engagement.
13. Procedural and distributive fairness
1. Distributive fairness - refers to the perceived fairness of the amount of
compensation the employee receives.
2. Procedural fairness - refers to the perceived fairness of the means used to
determine those amounts.
*Research shows that both distributive fairness and procedural fairness lead to
higher employee retention.
14. *However, when it comes to employee engagement (or motivation), procedural
fairness seems more important than distributive fairness.
In other words, it’s not so much about money as it is about communication and
honesty.
-many companies keep salary information confidential.
-Some managers even punish employees for sharing their salaries with co-workers
*Secrecy can backfire, though, as employees are concerned that their pay is not fair.
15. When an employee clearly
understands that their
compensation is
commensurate with their
skills, position in the
company, and broader job
market, they are more likely
to be engaged in their
work.
16. Benefits and Motivation
Other benefits, such as pensions, 401ks, and stock options, also help increase
employee retention.
Many of these benefits require a period before the employee is vested.
If you quit before this date, you give up the stock or 401k match or other benefits.
Researchers at the University of Pennsylvania found that delayed compensation did
decrease turnover overall, but it also resulted in employees quitting just after they
did vest.
The Society for Human Resource Management (SHRM) found that 62 percent of U.S.
employees rated their health care benefits as very important to them.
The same SHRM study also found that indirect compensation benefits also strongly
influenced employee happiness.
The traditional money-based programs, such as retirement benefits, were also
important.
17. HOW DO HR DEPARTMENTS
CALCULATE COMPENSATION AND
BENEFITS?
While governments set the floor for pay, known as a minimum wage,
businesses are generally free to set their own wages.
A market-rate can also be defined as a “going rate” and is the amount
people are willing to pay for a particular good or service. Employees are
offering their services and fall under this definition.
A compensation specialist will use salary surveys to help her determine a
market rate.
18. Compensation managers often use statistical tools, such as regression
analysis, to establish a proper salary position. The variables that the
regression use can include:
1. Highest degree earned (and type and degree area)
2. Years of experience
3. Tenure with the company
4. Position tenure
5. Current salary
6. Full-time equivalent status
7.Exempt vs. non-exempt status
8. Grade level or salary band classification
9. Employee location (if you have multiple locations)
10. Job performance ratings
19. 3 MODELS TO EXPLAIN
COMPENSATION AND BENEFITS
While compensation and benefits is a flat model to explain differences in pay,
there are two scientific models that enable us to understand compensation
and benefits in a better way.
1. Compensation and benefits vs. total rewards
2. Warr’s Vitamin Model
3. Simon Sinek’s Why Model
20. 1. Compensation and benefits vs. total
rewards
As discussed, compensation and benefits are not the
only aspects of employee happiness, engagement,
and retention.
The Total Rewards Model
demonstrates the interplay
between the organization and
compensation.
21.
22. The Total Rewards Model, coined by WorldatWork, proposes that total rewards
are made up out of two elements:
1. Direct compensation. This consists of:
Salary. This is the base and variable pay for work.
Rewards. Other monetary benefits from working at the company, including health
care, retirement pay, and allowances.
2. Indirect compensation. This consists of:
Work-life balance. A good work-life balance is crucial for a happy career.
Recognition. Recognition by colleagues and supervisors, as well as external
recognition for your job.
Development & career. Training and development, mentor programs, talent
(mobility) programs.
23. If you only look at compensation
when determining what makes
employees happy, you’ll fall short.
Total rewards look at how all aspects
of an employee’s work-life impact
their satisfaction. Research shows that
Total Rewards offers a valid
framework to reduce employee
turnover.
24. For years, Gallup tracked employee
engagement daily and found that
engagement generally stayed
between 30 and 35 percent of
employees. This means there is a lot
of work to be done in this area.
25. As established above, pay and
benefits are not the only things
that make employees
happy. Management practices
have significant impacts on
employee happiness and
profitability and even reduced
workplace accidents. Ignoring the
culture part of an employees’ total
rewards can reduce company
performance and increase
turnover.
26. 2. Warr’s Vitamin Model
Another approach to compensation and benefits is Warr’s vitamin model.
A vitamin deficiency produces bodily impairment and may lead to physical
illness.
Normal vitamin intake improves health. However, an excess of vitamins can
have different effects.
According to Warr, an overdose of vitamins C and E neither improve nor
impair the individual’s health. However, excess of vitamins A and D lead to
toxic concentrations, which causes ill health.
27. Warr grouped job characteristics in these two categories, CE and AD.
1. CE is short for Constant Effects. Once an optimum is reached, any additional
resources don’t add anything to employee well-being. Examples include
Pay level
Pleasant environmen
Safe work practices
Adequate equipment
Value to society
Supportive and considerate supervision
Job security
28. 2. AD is short for Additional Decrement. Once the optimum is reached, any
additional resources hurt employee well-being. Examples include
Task discretion
Influence
Skill use
Number of job demands
Difficulty of job demands
Range of different tasks
Future predictability
Availability of feedback
Amount of social contact
29.
30. It is key to identify the optimum level for employees when it comes to
compensation and benefits. Too much will either cost the organization
resources (time, money, administration) in the case of CE, or will decrease
employee well-being in the case of AD.
31. 3. Simon Sinek’s Why Model
Sinek’s Why model can also apply to compensation and benefits.
Sinek says that the best and most influential communicators begin with
the why – why we do this. And the answer to the question, “Why?” cannot
be to achieve shareholder value. That does not inspire.
32. Inspiration and understanding of underlying company culture and values
increase engagement, especially among Millennials and Gen Z.
They prefer to meet with their managers one on one–and finding the why
in their job is part of this.
Millennials want to see companies benefiting society, not just
shareholders. If you can explain why your company exists, it can impact
your millennial turnover and engagement.
33. Your compensation packages and your total rewards models should not remain
static. There are generational differences. As Gen Z enters the workforce, you’ll
note that they (generally speaking) behave differently than prior generations, and
compensation needs to adjust.
34.
35. COMPENSATION AND BENEFITS
PACKAGE EXAMPLE
What should a compensation and benefits package look like? There is no
one answer for that as the package for a grocery store clerk will have little
in common with the CEO’s package. However, here are some standard
items that companies often include in a job offer
36. You’ll need to adjust for your organization, local laws, and employee level.
Salary
Overtime pay
Bonuses and commissions (discretionary and non-discretionary)
Retirement (defined benefit and defined contribution plans)
Stock options
Restricted stock
Vacation
Profit-sharing
Merit pay
Sign-on bonuses
Relocation bonuses
Housing, school, and meal reimbursement
Healthcare benefits (medical, dental, vision, etc.)
37. Other things to consider:
Salespeople, for instance, will need a commission plan that details what
their commission is, and under what circumstances they receive it (is it
when the paperwork for the sale is signed or is it when the customer
pays?).
Profit-sharing plans need to define what constitutes a profit, and when
such, the company pays the bonuses (yearly, quarterly?).
Companies must operate within the confines of laws. Summary Plan
Descriptions should define everything legally, and you should provide
these to employees, so they know precisely what their compensation and
benefits are. While all these things are, generally, negotiable, you must
maintain equity with similarly situated employees, to prevent illegal or
immoral discrimination.
38. Compensation packages cannot detail the total rewards aspect of any job
offer. But, understand that your job candidates look for that.
You can no longer hide behind a large salary offer and hope that everyone
ignores the culture your office has to offer.
Compensation and benefits are key components for company success,
employee engagement, and turnover. You should evaluate your plans and
programs regularly (at least yearly) to ensure that you meet both employee
expectations and remain competitive in the marketplace.
40. BAYER
Bayer is committed to providing state-of-the-art
benefits to its employees. Benefits contribute to
individual and family health, increase financial
security, and help create a comfortable work-life
balance that improves quality of life.
We ensure a high level of social protection in our
workplaces. Nearly all Bayer Group employees have
health insurance as well as access to a company
pension plan. The working conditions for over half of
our employees are governed by collective or
company agreements. We are constantly working to
increase the benefits we provide and our goal for the
future is to have the highest level of social protection
available for all employees.
44. In institutions, the ratio of health professionals per 100,000 people also in
2017 was:
Doctors: 3.9 per 100,000
Nurses: 8.6 per 100,000
Midwives: 4.1 per 100,000
Medical technologists: 1.3 per 100,000