This document discusses employee compensation and its components. It covers direct financial payments like wages and salaries which can be time-based or performance-based. It also discusses indirect financial payments like benefits. Several factors determine compensation plan design including strategy, equity, legal and union considerations. Compensation must be aligned with business strategy and attract behaviors needed to achieve strategic goals. Equity in compensation must also be maintained both internally and externally. Laws also regulate minimum wages, overtime, benefits and prohibit discrimination.
Compensation Management importance and factors influencing compensationalisdq550
Compensation is what employees receive in exchange for their work, including both monetary and non-monetary benefits. It is important for both motivating employees and reducing costs for organizations. Many factors influence compensation, including external factors like the labor market, cost of living, unions, and laws, as well as internal factors like the organization's compensation policies, ability to pay, job analyses, and individual employee performance. Effective compensation systems can help organizations attract, retain, and motivate talented staff.
The document discusses new trends in compensation management, including benefits like health insurance, accommodations, loans, education assistance, work-life balance policies, and variable pay. It provides details on approaches to compensation like pay transparency, broad banding, incentive pay, employee stock ownership plans, and flexible benefits programs including modular, core-plus, and flexible spending plans. The trends are aimed at attracting and retaining employees through customized compensation packages.
Merit pay is an increase in pay based on goals or achievements set by an employer, rather than a union contract or defined pay scale. It is also known as pay for performance and typically involves supervisors meeting with employees to discuss work and award increases or bonuses based on performance. Merit pay programs most often occur in private for-profit organizations rather than public sector ones. Elements of an effective merit pay program include using both objective and subjective performance indicators to determine pay increases, ensuring employees know their efforts will lead to raises, having available funds to fulfill compensation promises, adjusting base pay for inflation before awarding raises, and effective performance appraisals.
Broadbanding is a strategy that consolidates many traditional pay grades into a few wider salary ranges or "broad bands" in order to support more agile and flexible organizational structures. It reduces the number of salary grades by half to two-thirds and increases the spread between minimum and maximum pay to 75-125% to facilitate lateral moves, career development, and quicker responses to change. Most companies use 10 broadband levels, with 2 for executives, 4 for managers, and 4 for non-managers. While broadbanding aims to empower managers and focus on competencies over jobs, its success requires strong management training and commitment, and it risks employees rising too far above market rates without precise controls.
The document discusses compensation and benefits practices at various organizations. It provides an overview of compensation systems, including direct and indirect components. It also covers the needs for compensation, designing equitable compensation considering internal and external equity, and linking pay to performance. The document concludes by giving examples of compensation and benefits plans of companies like Google, Procter & Gamble, Apollo Hospitals, and Wipro.
This document discusses human resource management and compensation administration. It defines compensation as financial and non-financial rewards provided to employees in exchange for their services, including wages, salaries, paid time off, insurance, and retirement benefits. It outlines the purposes of compensation as attracting capable employees, motivating performance, and reducing employee turnover. It also describes the role of human resource managers in developing compensation programs and policies to attract, retain, and motivate diverse workforces.
Compensation management involves designing total compensation packages to attract, motivate and retain employees. It includes direct monetary compensation like salary and incentives, as well as indirect compensation like benefits. Compensation objectives are to recruit and retain talent, boost morale and performance, and ensure legal and internal pay equity. Various factors like an employee's role, skills, market pay and organizational budget affect compensation. Common components of compensation include salary, bonuses, statutory benefits, and stock ownership plans.
Compensation Management importance and factors influencing compensationalisdq550
Compensation is what employees receive in exchange for their work, including both monetary and non-monetary benefits. It is important for both motivating employees and reducing costs for organizations. Many factors influence compensation, including external factors like the labor market, cost of living, unions, and laws, as well as internal factors like the organization's compensation policies, ability to pay, job analyses, and individual employee performance. Effective compensation systems can help organizations attract, retain, and motivate talented staff.
The document discusses new trends in compensation management, including benefits like health insurance, accommodations, loans, education assistance, work-life balance policies, and variable pay. It provides details on approaches to compensation like pay transparency, broad banding, incentive pay, employee stock ownership plans, and flexible benefits programs including modular, core-plus, and flexible spending plans. The trends are aimed at attracting and retaining employees through customized compensation packages.
Merit pay is an increase in pay based on goals or achievements set by an employer, rather than a union contract or defined pay scale. It is also known as pay for performance and typically involves supervisors meeting with employees to discuss work and award increases or bonuses based on performance. Merit pay programs most often occur in private for-profit organizations rather than public sector ones. Elements of an effective merit pay program include using both objective and subjective performance indicators to determine pay increases, ensuring employees know their efforts will lead to raises, having available funds to fulfill compensation promises, adjusting base pay for inflation before awarding raises, and effective performance appraisals.
Broadbanding is a strategy that consolidates many traditional pay grades into a few wider salary ranges or "broad bands" in order to support more agile and flexible organizational structures. It reduces the number of salary grades by half to two-thirds and increases the spread between minimum and maximum pay to 75-125% to facilitate lateral moves, career development, and quicker responses to change. Most companies use 10 broadband levels, with 2 for executives, 4 for managers, and 4 for non-managers. While broadbanding aims to empower managers and focus on competencies over jobs, its success requires strong management training and commitment, and it risks employees rising too far above market rates without precise controls.
The document discusses compensation and benefits practices at various organizations. It provides an overview of compensation systems, including direct and indirect components. It also covers the needs for compensation, designing equitable compensation considering internal and external equity, and linking pay to performance. The document concludes by giving examples of compensation and benefits plans of companies like Google, Procter & Gamble, Apollo Hospitals, and Wipro.
This document discusses human resource management and compensation administration. It defines compensation as financial and non-financial rewards provided to employees in exchange for their services, including wages, salaries, paid time off, insurance, and retirement benefits. It outlines the purposes of compensation as attracting capable employees, motivating performance, and reducing employee turnover. It also describes the role of human resource managers in developing compensation programs and policies to attract, retain, and motivate diverse workforces.
Compensation management involves designing total compensation packages to attract, motivate and retain employees. It includes direct monetary compensation like salary and incentives, as well as indirect compensation like benefits. Compensation objectives are to recruit and retain talent, boost morale and performance, and ensure legal and internal pay equity. Various factors like an employee's role, skills, market pay and organizational budget affect compensation. Common components of compensation include salary, bonuses, statutory benefits, and stock ownership plans.
Here are some potential responses to AstraZeneca's questions:
1. Possible non-discriminatory explanations for the pay differences could include differences in average years of experience, differences in average performance ratings if incentive pay was involved, or differences in roles and responsibilities if job descriptions were not tightly controlled. A detailed analysis of individual employee data would be needed to determine the true causes.
2. To ensure pay equity going forward using your point method: conduct annual pay equity audits comparing pay by gender within each job class; educate managers on setting pay objectively based only on point factors, not other attributes; establish a process for employees to confidentially report inequities and investigate/address any issues found.
3. I would
This document discusses employee compensation and benefits. It defines compensation as direct financial rewards like salary and wages as well as indirect rewards like benefits and retirement plans. It also discusses non-financial compensation like career development. The document outlines different types of compensation including salary, wages, commissions, and bonuses. It also discusses benefits packages, employer challenges in administering benefits, core vs non-core benefits, and laws affecting compensation and benefits like the Fair Labor Standards Act. The conclusion emphasizes that compensation takes many forms including salary, benefits, and work environment and that employers aim to structure compensation to attract and retain needed employees.
Traditional base pay systems reward employees with permanent additions to base pay based on seniority or longevity. Seniority pay periodically increases pay according to length of service, while longevity pay increases pay for those at the maximum pay grade who are unlikely to move up. These systems benefit employees through guaranteed promotions and advancement, and benefit employers by facilitating administration and reducing favoritism. However, they may not adequately reward performance and can slow career growth.
The document discusses variable pay, including:
- Variable pay aims to reward employees for objectives and results beyond regular job responsibilities, while fixed pay compensates for day-to-day work.
- There are three categories of variable pay: incentives, bonuses, and recognition. Incentives are tied to pre-determined criteria while bonuses are for completing specific tasks. Recognition is more subjective.
- An effective variable pay program is linked to business objectives, has clear purposes and performance measures, and considers factors like eligibility, funding, and implementation.
- In India, the ratio of fixed to variable pay is shifting, with variable pay expected to increase to 25-30% on average from the previous 10-
This document discusses compensation management and provides details on:
1) The definition and types of compensation including direct compensation like wages and salaries, and indirect compensation like benefits.
2) The purposes and components of compensation including attracting applicants, retaining employees, motivating performance, and administering legal pay requirements.
3) Methods of determining employee pay such as base salary plus cost of living adjustments, scales, incentives, bonuses, and merit-based pay.
4) The job evaluation process which determines relative job worth through analyzing jobs, developing and selecting evaluation methods, and evaluating positions.
This document discusses compensation management. It defines compensation management as providing both monetary and non-monetary rewards to employees in exchange for their work. It outlines the key components of compensation management, including direct monetary compensation like salary and bonuses, indirect compensation like insurance and retirement plans, and non-monetary compensation like recognition and satisfaction. The document also discusses strategies for compensation management, including paying employees based on their position, personal skills, or performance. It concludes by outlining the steps to develop an effective total compensation strategy.
The document discusses traditional and modern pay systems, as well as the process for establishing pay plans.
1. Traditional pay systems are based on cost of living, seniority, and evenly distributed wages. Modern pay systems emphasize variable pay based on business, individual, team and organizational performance.
2. Establishing effective pay plans involves analyzing factors like the job market, designing compensation to attract and retain talent, and linking pay to performance to optimize costs.
3. Regular evaluation and review of pay plans is needed to ensure plans stay aligned with business strategy and changing internal and external conditions.
Compensation refers to the total cash and non-cash payments an employer provides to employees in exchange for their work. It includes regular wages as well as other types of pay and benefits. Compensation management involves designing and maintaining pay systems to improve organizational performance. Types of compensation include direct compensation like pay in the form of base salary and incentive pay, and indirect compensation like benefits such as paid time off, retirement plans, and services like housing and transportation assistance. The goal of compensation is to adequately and equitably reward employee contributions towards organizational objectives.
The document discusses components of compensation systems including internal equity, external equity, and individual equity. It covers job evaluation methods like job ranking, grading, factor comparison, and point method. Key aspects of designing compensation for internal equity are discussed like job analysis, job description, job specification, and job evaluation process. External equity is established through compensation surveys. Individual equity considers pay ranges, broadbanding, and setting individual pay based on seniority, merit and skills.
The document discusses compensation systems and employee behavior. It outlines the bases of traditional and modern pay systems. The traditional system bases pay on cost of living, seniority, and individual performance. The modern system uses variable pay based on business and individual/team performance. It emphasizes variable pay over base salary. The purpose of compensation is to attract talent, ensure equity, motivate staff, and reward valued behavior. Companies establish pay plans by linking compensation philosophy and activities to business goals, strategy, and objectives. The plans are periodically reevaluated.
Reward is an incentive plan to reinforce the desirable behavior of workers or employers and in return for their service to the organization.
Compensation and Reward system plays vital role in a business organization.
Reward Management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization.
This document provides an overview of compensation management. It discusses that compensation includes both direct monetary benefits like salary as well as indirect non-monetary benefits. An effective compensation system is designed based on factors like job analysis and market surveys. It is an important part of human resource management that helps motivate employees and improve organizational performance. The various components, types, and importance of compensation management are outlined.
The document discusses compensation and incentives. It defines compensation as something given in return for work, often money. Incentives encourage extra effort and are a performance-linked reward. Effective incentives plans are developed with worker input, guarantee minimum wages, are easy to understand and provide equal opportunity to earn more. Common incentives include bonuses, merit pay, sales commissions, profit sharing, and stock options plans. Incentives can be individual, organization-wide, or group-based.
Principles of compensation management - compensation management - Manu Melwi...manumelwin
Compensation management is a sensitive and crucial aspect of human resource management as its adequacy or inadequacy can affect, either positively or negatively, the competitiveness of the organization due to higher attrition rates, low commitment etc.
This document discusses reward management and reward systems. It covers:
1. Reward management aims to recognize employee contributions and align rewards with business goals to promote high performance.
2. A reward system includes interrelated processes like business strategy, reward strategy, performance management, and job design that ensure effective reward management.
3. Key elements of a reward system include financial rewards like base pay, contingent pay, benefits; and non-financial rewards like recognition, development opportunities, and work environment. Grade and pay structures provide the framework to implement pay policies.
The document discusses various aspects of wage and salary administration. It outlines objectives like recruiting employees and controlling payroll costs. It discusses principles like external equity, job evaluation, and maintaining competitiveness. Factors that determine wage structures include cost of living, productivity, and prevailing wages. Different types of wages like minimum, fair, and living wages are defined. Advantages and disadvantages of time wages and piece wages are provided. Guidelines for effective incentive plans emphasize linking pay to performance and clear communication. Key labor laws governing wages in India like the Minimum Wages Act, Payment of Wages Act, and Payment of Bonus Act are also summarized.
This document discusses compensation management and wage determination. It covers topics such as objectives of compensation, types of compensation (base compensation like wages and salaries vs. supplementary compensation like benefits), factors that influence wages, and methods of wage fixation. The key methods of wage fixation discussed are collective bargaining, wage boards, job evaluation, pay commissions, and arbitration/adjudication.
this presentation is all about rewarding employees to keep them motivated and boost their performance. the detailed description is in presentation itself so no need to describe below. hope you will enjoy my presentation. this presentation is for academic course showcase not for practical hr reference as i have talked about theotrical aspects only.
This chapter discusses employee benefits and their management. It covers the growth in benefits costs due to laws and taxes. Common benefit programs in the US include social insurance, private group insurance, retirement plans, and family-friendly policies. The chapter also examines strategies for controlling benefits costs, such as healthcare plans, wellness programs, and regulatory compliance. Effective communication with employees about benefits is also discussed.
The document discusses various methods used to evaluate jobs and determine compensation. It describes job evaluation methods like ranking and point systems that evaluate jobs based on compensable factors like skills, effort, and responsibility to determine each job's relative worth. Employers then group similar jobs into pay grades with ranges of points or ranks. Salary surveys of other employers provide market data to establish pay rates for each grade or job based on wage curves. Laws also influence compensation and require aspects like minimum wage, overtime pay, and prohibiting discrimination.
HR, 3eAngelo S. DeNisi, Ricky W. GriffnThe amount of value.docxwellesleyterresa
HR, 3e
Angelo S. DeNisi, Ricky W. Griffn
The amount of value people create for an organization and what the organization gives them as compensation for that value are important determinants of organizational competitiveness. If employers pay too much for the value created by workers, then profits (and hence competitiveness) will suffer. But if they pay too little or demand too much from their workers for what they are paying, they will suffer in different ways: lower-quality workers, higher turnover, or employee fatigue and stress. Clearly, then, managing compensation and benefits are important activities for any organization. And just as clearly, Nucor managers have a keen understanding of the relationship between worker compensation and company performance.
Compensation and benefits refer to the various types of outcomes employees receive for their time at work. Compensation is the set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization. Benefits are the various rewards, incentives, and other items of value that an organization provides to its employees beyond wages, salaries, and other forms of financial compensation. The term total compensation is sometimes used to refer to the overall value of financial compensation plus the value of additional benefits that the organization provides.
Compensationis the set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization.
Benefitsgenerally refer to various rewards, incentives, and other things of value that an organization provides to its employees beyond their wages, salaries, and other forms of direct financial compensation.
In this chapter, we cover the basic concepts of compensation and benefits. We start by examining how compensation strategies are developed, and then we turn to the administration of compensation programs and how organizations evaluate their compensation programs. We look at benefits, discussing the basic reasons for benefit plans and describing different types of benefit plans typically found in organizations. Next we consider the often controversial topic of executive compensation, discussing the basic components of executive-compensation packages and why they are so controversial. We conclude with a discussion of legal issues associated with compensation and benefits and the ways in which organizations can evaluate their compensation and benefit programs.
9-1 DEVELOPING A COMPRATION STRATEGY
Compensation should never be a result of random decisions but instead the result of a careful and systematic strategic process.3 Embedded in the process is an understanding of the basic purposes of compensation, an assessment of strategic options for compensation, knowledge of the determinants of compensation strategy, and the use of pay surveys.
9-1a Basic Purposes of Compensation
Compensation has several f ...
Here are some potential responses to AstraZeneca's questions:
1. Possible non-discriminatory explanations for the pay differences could include differences in average years of experience, differences in average performance ratings if incentive pay was involved, or differences in roles and responsibilities if job descriptions were not tightly controlled. A detailed analysis of individual employee data would be needed to determine the true causes.
2. To ensure pay equity going forward using your point method: conduct annual pay equity audits comparing pay by gender within each job class; educate managers on setting pay objectively based only on point factors, not other attributes; establish a process for employees to confidentially report inequities and investigate/address any issues found.
3. I would
This document discusses employee compensation and benefits. It defines compensation as direct financial rewards like salary and wages as well as indirect rewards like benefits and retirement plans. It also discusses non-financial compensation like career development. The document outlines different types of compensation including salary, wages, commissions, and bonuses. It also discusses benefits packages, employer challenges in administering benefits, core vs non-core benefits, and laws affecting compensation and benefits like the Fair Labor Standards Act. The conclusion emphasizes that compensation takes many forms including salary, benefits, and work environment and that employers aim to structure compensation to attract and retain needed employees.
Traditional base pay systems reward employees with permanent additions to base pay based on seniority or longevity. Seniority pay periodically increases pay according to length of service, while longevity pay increases pay for those at the maximum pay grade who are unlikely to move up. These systems benefit employees through guaranteed promotions and advancement, and benefit employers by facilitating administration and reducing favoritism. However, they may not adequately reward performance and can slow career growth.
The document discusses variable pay, including:
- Variable pay aims to reward employees for objectives and results beyond regular job responsibilities, while fixed pay compensates for day-to-day work.
- There are three categories of variable pay: incentives, bonuses, and recognition. Incentives are tied to pre-determined criteria while bonuses are for completing specific tasks. Recognition is more subjective.
- An effective variable pay program is linked to business objectives, has clear purposes and performance measures, and considers factors like eligibility, funding, and implementation.
- In India, the ratio of fixed to variable pay is shifting, with variable pay expected to increase to 25-30% on average from the previous 10-
This document discusses compensation management and provides details on:
1) The definition and types of compensation including direct compensation like wages and salaries, and indirect compensation like benefits.
2) The purposes and components of compensation including attracting applicants, retaining employees, motivating performance, and administering legal pay requirements.
3) Methods of determining employee pay such as base salary plus cost of living adjustments, scales, incentives, bonuses, and merit-based pay.
4) The job evaluation process which determines relative job worth through analyzing jobs, developing and selecting evaluation methods, and evaluating positions.
This document discusses compensation management. It defines compensation management as providing both monetary and non-monetary rewards to employees in exchange for their work. It outlines the key components of compensation management, including direct monetary compensation like salary and bonuses, indirect compensation like insurance and retirement plans, and non-monetary compensation like recognition and satisfaction. The document also discusses strategies for compensation management, including paying employees based on their position, personal skills, or performance. It concludes by outlining the steps to develop an effective total compensation strategy.
The document discusses traditional and modern pay systems, as well as the process for establishing pay plans.
1. Traditional pay systems are based on cost of living, seniority, and evenly distributed wages. Modern pay systems emphasize variable pay based on business, individual, team and organizational performance.
2. Establishing effective pay plans involves analyzing factors like the job market, designing compensation to attract and retain talent, and linking pay to performance to optimize costs.
3. Regular evaluation and review of pay plans is needed to ensure plans stay aligned with business strategy and changing internal and external conditions.
Compensation refers to the total cash and non-cash payments an employer provides to employees in exchange for their work. It includes regular wages as well as other types of pay and benefits. Compensation management involves designing and maintaining pay systems to improve organizational performance. Types of compensation include direct compensation like pay in the form of base salary and incentive pay, and indirect compensation like benefits such as paid time off, retirement plans, and services like housing and transportation assistance. The goal of compensation is to adequately and equitably reward employee contributions towards organizational objectives.
The document discusses components of compensation systems including internal equity, external equity, and individual equity. It covers job evaluation methods like job ranking, grading, factor comparison, and point method. Key aspects of designing compensation for internal equity are discussed like job analysis, job description, job specification, and job evaluation process. External equity is established through compensation surveys. Individual equity considers pay ranges, broadbanding, and setting individual pay based on seniority, merit and skills.
The document discusses compensation systems and employee behavior. It outlines the bases of traditional and modern pay systems. The traditional system bases pay on cost of living, seniority, and individual performance. The modern system uses variable pay based on business and individual/team performance. It emphasizes variable pay over base salary. The purpose of compensation is to attract talent, ensure equity, motivate staff, and reward valued behavior. Companies establish pay plans by linking compensation philosophy and activities to business goals, strategy, and objectives. The plans are periodically reevaluated.
Reward is an incentive plan to reinforce the desirable behavior of workers or employers and in return for their service to the organization.
Compensation and Reward system plays vital role in a business organization.
Reward Management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization.
This document provides an overview of compensation management. It discusses that compensation includes both direct monetary benefits like salary as well as indirect non-monetary benefits. An effective compensation system is designed based on factors like job analysis and market surveys. It is an important part of human resource management that helps motivate employees and improve organizational performance. The various components, types, and importance of compensation management are outlined.
The document discusses compensation and incentives. It defines compensation as something given in return for work, often money. Incentives encourage extra effort and are a performance-linked reward. Effective incentives plans are developed with worker input, guarantee minimum wages, are easy to understand and provide equal opportunity to earn more. Common incentives include bonuses, merit pay, sales commissions, profit sharing, and stock options plans. Incentives can be individual, organization-wide, or group-based.
Principles of compensation management - compensation management - Manu Melwi...manumelwin
Compensation management is a sensitive and crucial aspect of human resource management as its adequacy or inadequacy can affect, either positively or negatively, the competitiveness of the organization due to higher attrition rates, low commitment etc.
This document discusses reward management and reward systems. It covers:
1. Reward management aims to recognize employee contributions and align rewards with business goals to promote high performance.
2. A reward system includes interrelated processes like business strategy, reward strategy, performance management, and job design that ensure effective reward management.
3. Key elements of a reward system include financial rewards like base pay, contingent pay, benefits; and non-financial rewards like recognition, development opportunities, and work environment. Grade and pay structures provide the framework to implement pay policies.
The document discusses various aspects of wage and salary administration. It outlines objectives like recruiting employees and controlling payroll costs. It discusses principles like external equity, job evaluation, and maintaining competitiveness. Factors that determine wage structures include cost of living, productivity, and prevailing wages. Different types of wages like minimum, fair, and living wages are defined. Advantages and disadvantages of time wages and piece wages are provided. Guidelines for effective incentive plans emphasize linking pay to performance and clear communication. Key labor laws governing wages in India like the Minimum Wages Act, Payment of Wages Act, and Payment of Bonus Act are also summarized.
This document discusses compensation management and wage determination. It covers topics such as objectives of compensation, types of compensation (base compensation like wages and salaries vs. supplementary compensation like benefits), factors that influence wages, and methods of wage fixation. The key methods of wage fixation discussed are collective bargaining, wage boards, job evaluation, pay commissions, and arbitration/adjudication.
this presentation is all about rewarding employees to keep them motivated and boost their performance. the detailed description is in presentation itself so no need to describe below. hope you will enjoy my presentation. this presentation is for academic course showcase not for practical hr reference as i have talked about theotrical aspects only.
This chapter discusses employee benefits and their management. It covers the growth in benefits costs due to laws and taxes. Common benefit programs in the US include social insurance, private group insurance, retirement plans, and family-friendly policies. The chapter also examines strategies for controlling benefits costs, such as healthcare plans, wellness programs, and regulatory compliance. Effective communication with employees about benefits is also discussed.
The document discusses various methods used to evaluate jobs and determine compensation. It describes job evaluation methods like ranking and point systems that evaluate jobs based on compensable factors like skills, effort, and responsibility to determine each job's relative worth. Employers then group similar jobs into pay grades with ranges of points or ranks. Salary surveys of other employers provide market data to establish pay rates for each grade or job based on wage curves. Laws also influence compensation and require aspects like minimum wage, overtime pay, and prohibiting discrimination.
HR, 3eAngelo S. DeNisi, Ricky W. GriffnThe amount of value.docxwellesleyterresa
HR, 3e
Angelo S. DeNisi, Ricky W. Griffn
The amount of value people create for an organization and what the organization gives them as compensation for that value are important determinants of organizational competitiveness. If employers pay too much for the value created by workers, then profits (and hence competitiveness) will suffer. But if they pay too little or demand too much from their workers for what they are paying, they will suffer in different ways: lower-quality workers, higher turnover, or employee fatigue and stress. Clearly, then, managing compensation and benefits are important activities for any organization. And just as clearly, Nucor managers have a keen understanding of the relationship between worker compensation and company performance.
Compensation and benefits refer to the various types of outcomes employees receive for their time at work. Compensation is the set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization. Benefits are the various rewards, incentives, and other items of value that an organization provides to its employees beyond wages, salaries, and other forms of financial compensation. The term total compensation is sometimes used to refer to the overall value of financial compensation plus the value of additional benefits that the organization provides.
Compensationis the set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization.
Benefitsgenerally refer to various rewards, incentives, and other things of value that an organization provides to its employees beyond their wages, salaries, and other forms of direct financial compensation.
In this chapter, we cover the basic concepts of compensation and benefits. We start by examining how compensation strategies are developed, and then we turn to the administration of compensation programs and how organizations evaluate their compensation programs. We look at benefits, discussing the basic reasons for benefit plans and describing different types of benefit plans typically found in organizations. Next we consider the often controversial topic of executive compensation, discussing the basic components of executive-compensation packages and why they are so controversial. We conclude with a discussion of legal issues associated with compensation and benefits and the ways in which organizations can evaluate their compensation and benefit programs.
9-1 DEVELOPING A COMPRATION STRATEGY
Compensation should never be a result of random decisions but instead the result of a careful and systematic strategic process.3 Embedded in the process is an understanding of the basic purposes of compensation, an assessment of strategic options for compensation, knowledge of the determinants of compensation strategy, and the use of pay surveys.
9-1a Basic Purposes of Compensation
Compensation has several f ...
The document discusses various factors to consider when determining employee pay rates, including compensation plans, legal requirements, and equity. It covers types of wages based on time or performance, exempt vs non-exempt employee classifications, key US labor laws, and how to align compensation with business strategy and maintain pay equity.
certified compensation and benefits manager sample-materialVskills
The sample course material covers the following topics as under.
Introduction
Objectives of compensation management
Principles of compensation formulation
Types of wages and wage policies
Procedure and practices for wage determination
Compensation decisions
Compensation benchmarking
Compensation trends and practices in India
Get the complete material. Check more details on the below link.
http://www.vskills.in/certification/Human-Resources/Certified-Compensation-and-Benefits-Manager
The document discusses compensation practices in Bangladesh. It covers key topics like defining compensation, challenges that affect compensation, objectives of compensation management, components of compensation, and how to establish pay rates through conducting salary surveys, job evaluation, grouping jobs into pay grades, and setting wage curves. The presentation addresses current issues in compensation management and details the various contents of a compensation system, including wages/salaries, incentives, and benefits.
Project report on compensation and benefitssukesh gowda
This document provides an overview of compensation and benefits. It discusses compensation as an exchange between employees and employers, with employees receiving financial and non-financial rewards in return for their work. It also discusses the objectives of compensation systems, including attracting, retaining, and motivating employees, as well as ensuring fairness and equity. Key factors that influence compensation levels and structures are then outlined, including labor market conditions, legislation, collective bargaining agreements, management attitudes, and an organization's ability to pay.
This document discusses factors that determine pay rates, including various legal considerations and legislation. It outlines the main components of employee compensation as direct financial payments and indirect financial payments. The key steps in establishing pay rates are conducting a salary survey, performing job evaluation to group similar jobs into pay grades, pricing each grade, and fine-tuning rates. Job evaluation methods include ranking, classification, point method, and factor comparison. Legislation discussed includes the Minimum Wages Act, Payment of Wages Act, and Equal Remuneration Act in India as well as the Davis-Bacon Act, Walsh-Healey Act, Civil Rights Act, Fair Labor Standards Act, and Equal Pay Act in the US.
This document discusses compensation and benefits for employees. It begins by outlining the core values of the merging company which focused on customer service, flexibility in work location, and continuing education. It then discusses the goals of developing a compensation plan which are to attract, engage, and retain employees through competitive plans. The document outlines various types of compensation such as salary, hourly wages, piece work, and incentives like commissions, bonuses, and profit sharing. It also discusses developing compensation packages and policies based on both internal and external factors. Mandated benefits like social security, Medicare, unemployment insurance and workers compensation are also summarized.
1) The document discusses compensation management and provides an overview of compensation as a systematic approach to providing monetary value to employees in exchange for work.
2) It reviews literature on compensation management and discusses how compensation can motivate employees and impact performance if implemented properly.
3) The analysis section explores different components of compensation including direct financial payments, performance-based pay, and ensuring different types of equity in compensation.
This document summarizes a paper on compensation management. It discusses how compensation involves providing monetary value to employees in exchange for work. An ideal compensation system should motivate employees, boost performance, and engage workers. It should also be well-defined, uniform, and apply to all organization levels. Effective compensation allows for clearer visibility into individual employee performance for compensation planning decisions. The document reviews literature on compensation and discusses analyzing compensation structures, components, equity, and using market rates to determine appropriate pay rates.
This document discusses compensation and benefits at IBM. It outlines the different components of IBM's total compensation package, including base pay, performance bonuses, stock purchase plans, and healthcare benefits. It emphasizes that IBM aims to attract, retain, and motivate employees by offering competitive cash compensation tied to individual and company performance, as well as flexibility and work-life balance programs. The overall message is that IBM believes in rewarding and appreciating employees as key to business success.
Unit V Lesson Notes It is understood that a labor union is an.docxmarilucorr
Unit V: Lesson Notes
It is understood that a labor union is an organization that acts as a filter between its members and the organization in which the members are employed. It has also been identified that the main purpose of labor unions is to give employees the opportunity and power to negotiate for better working conditions, decent wages, and other benefits through collective bargaining. Now that the foundation of collective bargaining has been laid, it is now time to look a little further into some of the issues that employees bargain for.
Whether working in a union or non-union environment, what would be one of your major concerns with employment? When addressing this question, many of you would probably state “compensation/wages” would be the main topic of interest. Sure, there are other perks that you would look for; however, most would not consider employment or would consider leaving current employer for better wages.
According to the textbook, “wages and benefits represent the heart of the collective bargaining process. Guarantee of a certain standard of living and a reasonable return for their productive efforts is the major concern for most union members” (Carrell & Heavrin, 2013, p. 278). This second part of this statement can be said to be true for non-union workers as well. Although there are similarities among non-union and union environments, there are differences in how wages and benefits are determined and implemented.
Non-Union Environment: Most non-union employees do not have the opportunity to negotiate their wages. Most of these organizations have a set pay rate or pay range for all positions. Many organizations conduct job analysis and job evaluations to determine appropriate pay rates. When offered a job, some may try to negotiate on the front end with the hiring manager and/or human resources a certain pay rate. Sometimes, the employee does succeed and the organization may meet the applicant half-way or offer a little more to display true interest in the applicant. However, there are some organizations that will not budge and the applicant would be forced to accept or decline the offer. Even if the applicant does accept the offer, there may be limits on how often raises are given or if they are given at all. Based on experience, sometimes the applicant will accept the job and continue to look at organizations that offer better wages and benefits. Unlike union environments, wages can also differ tremendously among individuals who have the same job title and perform the same duties. This can have a major impact on the organization.
Union Environment: Wages within union environments are negotiated. Pay rates/ranges, along with pay raises, are determined and outlined within the collective bargaining agreement. The pay rates/ranges are set for each job covered under the agreement. Many organizations will conduct job evaluations, wage surveys, and other methods when making wage decisions. Management must look ...
The document discusses compensation and benefits in organizations. It defines compensation as financial returns and tangible benefits employees receive as part of employment. Compensation includes base salary, short-term incentives, and benefits like insurance and paid time off. The document outlines factors in determining compensation structures, rational pay levels, achieving equity in pay, and developing compensation plans.
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 ...
I need someoe to complete the replies for these two posts. Be cert.docxevontdcichon
I need someoe to complete the replies for these two posts.
Be certain you acknowledge their interest and support it with at least 2 scholarly references other than the course textbook that identify the importance of their chosen topic. For instance, if a classmate posted that they want to know more about the Fair Labor Standards Act, your reply might include an example of how FLSA impacts organizations and a second that identifies a current issue for organizations with respect to the FLSA (minimum two external references).
of at least 250 words each. Each reply must also cite at least 2 sources. Must be in APA format, no plagiarism.
1
In an increasingly competitive job market it is important that businesses are equipped to offer the best benefit and compensation packages that they can. In studying strategic compensation, we are afforded the opportunity to learn about compensation and benefit design, as well as the laws and regulations that impact the implementation of benefit and compensation packages. There are several topics that are of particular interest, some of which are discussed below.
One topic that is particularly interesting is retirement plans. The type and availability of various retirement plans has changed dramatically over the past few decades. As our text notes, there has been a fairly substantial decline in defined benefit plan participation, while participation in defined participation plans (Martocchio, 2015). The number of companies that offer employer-sponsored pension plans has also decreased dramatically, with many businesses favoring 401k-type programs, which have favorable tax advantages to both employees and employers. It is important to know the types of retirement plans that are attractive to employees, and manageable for employers. The issue of health insurance, as a part of retirement benefits, is also interesting, and merits additional study.
As someone who has worked for many years in what is considered a flexible job, compensating flexible workers is also of particular interest. One advertised benefit of flexible work is the ability to adapt the work schedule to fit personal needs. Another feature touted by many organizations that use flexible workers, is increased pay in lieu of benefits. Despite the lack benefits such as vacation and sick time, those who use flex employers are required to pay overtime for hours worked greater than 40, as well as paying the premiums for workman’s compensation insurance, among other benefits (Martocchio, 2015). It would certainly be beneficial for me to learn additional information about what types of benefits are legally required, and what benefits an employer might consider offering.
The third topic that I would like to learn more about, is building pay structures that reward employee contributions. When considering these types of plans, one would likely think first of the traditional incentive program found in many sales jobs. Indeed, these commission plans .
Compensation plays as an important motivating factor for every employee. Compensation is a systematic approach to provide monetarily value to employees in exchange for work performed. It can also achieve several purposes assisting in recruitment, job performance, and job satisfaction. This presentation will provide you the importance of "Compensation" as an area of Human Resource Management. Topics include compensation as a whole, how to create a market competitive plan and providing employees benefit.
This document discusses compensation management and provides details on various compensation-related topics. It begins by defining compensation and explaining how employers use it to attract, retain and motivate employees. It then describes the main types of compensation including direct financial payments and indirect financial benefits. Several factors that influence compensation decisions are outlined, including government regulations, cost of living, comparable wage rates, and market conditions. The document also covers maintaining pay equity internally through job evaluation and externally through wage surveys. Different payment methods like time-based, performance-based and a combination are explained. Finally, the passage discusses employee benefits in the form of time-off pay and non-pay benefits such as health insurance, accident insurance, and pension programs.
This document discusses reward management and salary/wage administration. It covers several key points:
1. Salaries and wages are an important part of compensation that motivate workers by providing a means to earn a living. Employers must pay reasonable salaries on time and uniformly.
2. Salary administration involves classifying jobs, evaluating compensation, and ensuring pay is appropriate within the organization and market. Elements include periodic payroll and ongoing monitoring and evaluation.
3. Several motivation theories are described, including Maslow's hierarchy of needs, ERG theory, equity theory, goal-setting theory, and McGregor's Theory X and Y. Money plays multiple motivational roles as a reinforcer, incentive, anxiety reducer,
There are several factors that influence employee remuneration both external and internal to an organization. External factors include the labor market, cost of living, labor unions, government legislation, the economy, and society. Internal factors are an organization's strategy, job evaluation, performance appraisal, and characteristics of employees. Remuneration is determined by balancing these various factors to attract, retain, and motivate skilled labor within legal and social norms.
The document discusses compensation and forms of pay. It defines compensation as a systematic approach to providing monetary and non-monetary value to employees in exchange for work. Compensation includes both wages and a variety of benefits. The objectives of an effective compensation system are to ensure legal compliance, cost-effectiveness, internal and external equity for employees, and performance enhancement for the organization. Compensation consists of base pay such as salary and wages as well as variable pay linked to performance and benefits provided to employees.
2. Employee compensation includes all forms of
pay going to employees and arising from
their employment.
It has two main components, direct financial
payments(wages, salaries, incentives,
commissions, and bonuses) and indirect
financial payments (financial benefits like
employer-paid insurance and vacations).
3. There are two basic ways to make direct financial
payments to employees:
based on increments of time or based on
performance.
Time-based pay is still the foundation of most
employers pay plans. Blue-collar and clerical workers
receive hourly or daily wages, for instance. Others,
like managers or Web designers, tend to
be salaried and paid weekly,monthly, or yearly.
The second direct payment option is to pay for
performance. For example, piecework ties
compensation to the amount of production (or
number of pieces ) the worker turns out. Sales
commissions are another performance-based (in this
case, sales-based) compensation.
4. Several factors determine the design of any pay plan:
company strategy and policy, equity, legal, and union.
Aligning Total Rewards with Strategy
The compensation plan should first advance the firms
strategic aims management should produce an aligned
reward strategy.
This means creating a compensation package including
wages, incentives, and benefits that produces the
employee behaviors the firm needs to support and achieve
its competitive strategy.
Total rewards encompass the traditional pay, incentives,
and benefits, but also things such as more challenging
jobs (job design), career development, and recognition
programs.
5. * What are our strategic aims?
* What employee behaviors and skills do we need to achieve our strategic aims?
* What compensation policies and practices salary, incentive plans, and benefits
will help
to produce the employee behaviors we need to achieve our strategic aims?
The employer s compensation strategy will manifest itself in pay
policies.
Managers need to formulate pay policies covering a range of
issues.
to emphasize seniority or performance.
How much hike to give over mkt hike rate
How to distinguish between high and low performers
Other pay policies usually cover how to award salary increases
and promotions,
overtime pay, probationary pay, leaves for military service, jury
duty, and holidays
6. Story of capuchin monkeys…
EQUITY THEORY OF MOTIVATION postulates
that people are strongly motivated to
maintain a balance between what they
perceive as their contributions and their
rewards.
Equity theory states that if a person perceives
an inequity, a tension or drive will develop in
the person s mind, and the person will be
motivated to reduce or eliminate the tension
and perceived inequity.
7. With respect to compensation, managers should address
four forms of equity:
* External equity refers to how a job s pay rate in one
company compares to the job s pay rate in other
companies.
* Internal equity refers to how fair the job s pay rate is
when compared to other jobs within the same company
(for instance, is the sales manager s pay fair, when
compared to what the production manager is earning?).
* Individual equity refers to the fairness of an individual s
pay as compared with what his or her coworkers are
earning for the same or very similar jobs within the
company, based on each individual s performance.
* Procedural equity refers to the perceived fairness of the
processes and procedures used to make decisions
regarding the allocation of pay.
8. Managers use various means to address such equity issues.
For example, they use salary surveys (surveys of what other
employers
are paying) to monitor and maintain external equity.
They use job analysis and comparisons of each job ( job
evaluation ) to maintain internal equity. They use performance
appraisal and incentive pay to maintain individual equity.
And they use communications, grievance mechanisms, and
employees participation to help ensure that employees view the
pay process as procedurally fair.
Some firms administer surveys to monitor employees pay
satisfaction.
Questions typically include,
How satisfied are you with your pay? and
What factors do you believe are used when your pay is
determined?
9. Employers do not have free reign in designing pay plans.
Various laws specify things like minimum wages, overtime
rates, and benefits.
Thus, the 1931 Davis-Bacon Act lets the secretary of labor set
wage rates for laborers and mechanics employed by
contractors working for the federal government.
The 1936 Walsh-Healey Public Contract Act sets basic labor
standards for employees working on any governmentcontract
that amounts to more than $10,000. It contains minimum
wage,maximum hour, and safety and health provisions, and
requires time-and-a-half payfor work over 40 hours a week.
Title VII of the 1964 Civil Rights Act makes it unlawful for
employers to discriminate against any individual with respect
to hiring, compensation, terms, conditions, or privileges of
employment because of race, color, religion, sex, or national
10. Equal Pay Act (1963)An amendment to the Fair
Labor StandardsAct designed to require equal
pay for women doing the same work as men
The Fair Labor Standards Act,originally passed in
1938 and since amended many times, contains
minimum wage,maximum hours, overtime pay,
equal pay, record-keeping, and child labor
provisions that are familiar to most working
people.
1974Employee Retirement Income Security Act
(ERISA) provided for the creation of government-
run, employer-financed corporations to protect
employees against the failure of their employers
pension plans. ERISA also regulates portability
rights (the transfer of an employee s vested
rights from one organization to another).
11. OTHER LEGISLATION AFFECTING COMPENSATION
Various other laws influence compensation decisions.
For example, the Age Discrimination in Employment
Act prohibits age discrimination against employees
who are 40 years of age and older in all aspects of
employment,
including compensation.
The Americans with Disabilities Act prohibits
discrimination against qualified persons with
disabilities in all aspects of
employment, including compensation.
The Family and Medical Leave Act aims to entitle
eligible employees, both men and women, to take up
to1 2 weeks of unpaid, job-protected leave for the
birth of a child or for thecare of a child, spouse, or
parent
12. Unions and labor relations laws also influence
pay plan design.
The National LaborRelations Act of 1935
(Wagner Act) granted employees the right to
unionize, and to bargain collectively.
Historically, the wage rate has been the main
issue in collective bargaining. However, unions
also negotiate other pay-related issues,
including time offwith pay, income security (for
those in industries with periodic layoffs), cost-
of-livingadjustments, and health care benefits.
13. Employers use two basic approaches to setting
pay rates: market-based approaches and job
evaluation methods
Many firms, particularly smaller ones, simply use
a market-basedapproach.Doing so involves
conducting formal or informal salary surveys to
determinewhat others in the relevant labor
markets are paying for particular jobs. They then
usethese figures to price their own jobs.
Job evaluation methods involve assigning
valuesto each of the company s jobs. This helps
to produce a pay plan in which each job s pay is
equitable based on its value to the employer
14. Job evaluation is a formal and systematic comparison of
jobs to determine the worth of one job relative to
another.
Job evaluation aims to determine a job s relativeworth.
Job evaluation eventually results in a wage or salary
structure or hierarchy (this shows the pay rate for
various jobs or groups of jobs).
The basic principle of job evaluation is this:
Jobs that require greater qualifications, more
responsibilities, and morecomplex job duties should
receive more pay than jobs with lesser requirements
The basic job evaluation procedure is to compare jobs in
relation to one another for example, in terms of required
effort, job complexity, and skills.
Suppose you know(based on your job evaluation) the
relative worth of the key jobs in your firm. You then
conduct a salary survey to see what others are paying for
similar jobs. You are then well on your way to being able
to price all the jobs in your organization equitably
15. We use two basic approaches to compare the
worth of several jobs.
First, you can take an intuitive approach. You
might decide that one job is more important
thananother is, and not dig any deeper. As an
alternative, you could compare the jobs by
focusing on certain basic factors the jobs have in
common
.Compensation management specialists call these
compensable factors. They are the factors that
establish how the jobs compare to one another,
and that determine the pay for each job.
16. Some employers develop their own compensable
factors. However, most use factors popularized by
packaged job evaluation systems or by federal
legislation.
For example, the Equal Pay Act uses four
compensable factors skills, effort, responsibility,
and working conditions
Identifying compensable factors plays a central role
in job evaluation. We usually compare each job with
all comparable jobs using the same compensable
factors.
17. Job evaluation is a judgmental process and
demands close cooperation among
supervisors, HR specialists, and employees
and union representatives.
The main steps include
identifying the need for the program,
getting cooperation, and
then choosing an evaluation committee.
The committee then performs the actual
evaluation.
18. The evaluation committee performs three main
functions.
First, it usually identifies 10 or 15 key benchmark
jobs. These will be the first jobs they ll evaluate and
will serve as the anchors or benchmarks against which
the relative importance or value of all other jobs is
compared.
Next, the committee may select compensable factors
(although the human resources department will
usually choose these).
Finally, the committee performs its most important
function
actually evaluating the worth of each job. For this, the
committee will probably use one of the following
methods: ranking, Grading, job classification,or point
method.
20. Developing compensation plans for managers or
professionals is similar in manyrespects to
developing plans for any employee. The basic
aim is the same: to attract,motivate,and retain
good employees.
But Managerial jobs tend to stress harderto-
quantify factors like judgment and problem
solving more than do production and clerical
jobs. There is also more emphasis on paying
managers and professionals based on their
performance or on what they can do, rather than
on static jobdemands like working conditions.
21. Compensation for a company s top executives usually consists of four main
elements
Base pay includes the person s fixed salary as well as, often, guaranteed
bonuses such as 10% of pay at the end of the fourth fiscal quarter, regardless
of whether or not the company makes a profit.
Short-term incentives are usually cash or stock bonuses for achieving short-
term goals, such as year-to-year increases in sales revenue.
Long-term incentives aim to encourage the executive to take actions
thatdrive up the value of the company s stock and include things like stock
options; these generally give the executive the right to purchase stock at a
specific price for a specificperiod.
Finally, executive benefits and perks include things such as supplemental
executive retirement pension plans, supplemental life insurance, and health
insurance without a deductible or coinsurance.
With so many complicated elements, employers must also be alert to the tax
and securities law implications of their executive compensation decisions
22. For top executive jobs (especially the CEO), job
evaluation typically has little relevance.
One recent study concluded that three main factors,
job complexity (span of control,the number of
functional divisions over which the executive has
direct responsibility,and management level), the
employer s ability to pay (total profit and rateof
return), and the executive s human capital
(educational level, field of study, work experience)
accounted for about two-thirds of executive
compensation variance.
In practice, CEOs may have considerable influence
over the boards of directors who theoretically set their
pay. So, their pay sometimes doesn t reflect strictly
arms-length negotiations.
23. In compensating professionals, employers should
first ensure that each employee is actually a
professional under the law
the persons main duty must be the performance
of work requiring advanced knowledge, and the
advanced knowledge must be customarily
acquired by a prolonged course of specialized
intellectual instruction
Compensable factors here tend to focus on
problem solving, creativity, job scope, and
technical knowledge and expertise. Firms use the
point method and job classification.
Factors like creativity are hard to measure, and
other issues often influence professionals job
decisions
24. Most employers therefore use a market-pricing
approach. They price professional jobs in the
marketplace as best they can, to establish the
values for benchmark jobs.
Then they slot these benchmark jobs and their
other professional jobs into a salarystructure.
Each professional discipline usually ends up
having four to six grade levels,each with a broad
salary range.
This helps employers remain competitive when
bidding for professionals who literally have
global employment possibilities
25. Competencies as observable and measurable behaviors of
the person that make performance possible.
competency-based pay means the company pays for the
employee s Where the company pays for the
employee s range, depth, and types of skills and
knowledge, rather than for the job title he or she holds
In sum, the biggest difference between traditional and
competency-based pay is this:
* Traditional job evaluation ties the worker s pay to the
worth of the job based onthe job description and duties.
Pay is job oriented.
* Competency-based pay ties the worker s pay to his or
her competencies pay is person oriented. Employees are
paid based on what they know or can do even if (at the
moment), they don t have to do it.
26. First, paying for competencies enables the
company to encourage employees to develop
the competencies the company requires to
achieve its strategic aims.
First, paying for competencies enables the
company to encourage employees to develop
the competencies the company requires to
achieve its strategic aims.
Third, traditional pay plans can backfire if a
high-performance work system is your goal.
27. In practice, a skill- (or competency or
knowledge-) based pay program generally has
five main elements:
1. A system for defining required skills
2. A process for linking the person s pay to his or
her skill level
3. A training system that lets employees acquire
the skills
4. A formal skills competency testing system
5. A work design that lets employees move
among jobs to permit work assignment flexibility
28. List and explain six important trends in
compensation management
1. Broadbanding
2. Actively Managing Compensation
Allocations, and Talent Management
3. Comparable Worth
4. Total Rewards and Tomorrow s Pay
Programs
29. Consolidating salary grades and ranges into just a few wide
levels or bands, eachof which contains a relatively wide
range of jobs and salary levels
PROS AND CONS Companies create broadbands for several
reasons. The basic advantage is that it injects greater
flexibility into employee assignments.
It is especially sensible where firms organize into self-
managing teams.
The new, broad salary bands can include both supervisors
and subordinates and also facilitate moving employees
slightly up or down along the pay scale, without bumping
the person into a new salary range
On the other hand, broadbanding can be unsettling,
particularly for new employees
30. Employers are increasingly segmenting their
employees and actively assigning more
resources to those they deem mission-critical
in terms of the firms strategy.
Many employers are taking this more active,
segmentation approach
31. Comparable worth refers to the requirement
to pay men and women equal wages for jobs
that are of comparable (rather than strictly
equal) value to the employer.
32. Companies face severe economic and competitive challenges and results in war for
talent as companies vie to hire and retain top employees
Younger millennial applicants will enter the workforce with greater expectations
for recognition and feedback than did their predecessors
Tomorrow s pay programs will therefore probably exhibit several features.
Every company has jobs that are strategically crucial to their futures, and others,
which while important, are supportive. Talent management oriented employers
will have to identify the strategically crucial jobs and pay them at premium levels.
To engage the millennial employees, it s essential that they know what s expected
of them, and that they get continuing constructive feedback about their
performance.
Incentives will be a component of every compensation package.
Employers will have to be creative about providing rewards like stock ownership
options to provide young talent with the opportunity tocreate retirement wealth
through their employment.
And nonfinancial rewards including personal recognition will grow in importance
as supplements to financial rewards.
total rewards encompass the traditional compensation components, but also
things such as recognition and redesigned more challenging jobs , telecommuting
programs,health and well being programs, and training and career development