The document discusses various elements of total compensation including base compensation, pay incentives, and benefits/indirect compensation. It explains different approaches to compensation including job-based and skill-based plans. Key aspects of developing an effective compensation plan are discussed such as internal vs external equity, fixed vs variable pay, performance vs membership, and decentralization vs centralization of pay decisions. Contemporary trends like broadbanding and various types of pay for performance systems are also summarized.
Why do some organizations link incentive pay to the organization-'s ov.docxSUKHI5
Why do some organizations link incentive pay to the organization\'s overall performance? Discuss the advantages or disadvantages of using incentive pay for overall organizational performance over individual performance.
Solution
Incentive and performance-based construction contracts rewarded contractors who completed projects by prescribed deadlines or ahead of schedule.
Employee incentives are rewards doled out to workers at a company based on their individual or team performance, or the overall performance of the company. Incentives come in the form of raises, commission payments, one-time bonuses, stock options and indirect incentives such as plane tickets, concert tickets and extra vacation time. Incentives typically are determined and implemented by managers. Managers also determine which benchmarks will be used to determine which employees are eligible for the incentive offered.
Advantage: Healthy Competition
Employee incentives can generate healthy competition between individuals or teams of employees within a company. If only a certain number of employees receives incentives based on individual or group performance, that can make everyone work harder, if the incentive is compelling enough. Concurrently, commission schemes, which are another type of incentive, can spur sales staff to work smarter and harder, because a significant portion of their pay depends on performance incentives.
Advantages: Retention
Intelligently designed incentives can be a boon to companies looking to retain employees for the long term. Lucrative incentives, whether these are in the form of stock or bonuses, make it worthwhile for employees to stay at your firm, even if a salary offer from a competitor is more attractive. Incentives can also make employees feel as if their hard work is appreciated, thus reflecting well on their managers and the company as a whole.
Disadvantage: Employee Resentment
In a perfect meritocracy, where the employees who work the hardest always reap the most rewards, incentives pose little problem. But no companies operate in an ideal world and thus incentives can breed resentment and discord among teams and employees. While it\'s easy to quantify a salesman\'s performance, it is harder to quantify a staff writer\'s contribution to the department, even if the writer is adding just as much value to the company. That can lead those under an incentive scheme to feel unappreciated or the recipients of unfair treatment.
.
Introduction1but the focus in this chapter is pay. they al.docxmariuse18nolet
Introduction
1
but the focus in this chapter is pay.
they all help maintain employee commitment
There are many work motivators, including
promotions
desirable work assignments
peer recognition
work freedom
Rewards Review
2
bonuses
piecework
commission
incentive
plans
merit pay
plans
cost of living
increase
labor market
adjustment
profit sharing
time-in-rank
increase
protection
Program
pay for time
not worked
services/
perks
assigned
parking space
preferred
assignments
business
cards
own
secretary
impressive
title
participation in
decision making
greater job
freedom
more
responsibility
opportunities
for growth
diversity
of activities
Financial
Non-financial
Extrinsic
Implied
membership-based
Performance
based
Explicit
membership-based
Intrinsic
Types of Reward Plans
3
intrinsic rewards (personal satisfactions) come from the job itself, such as:
pride in one’s work
feelings of accomplishment
being part of a work team
extrinsic rewards come from a source outside the job, mainly by management:
money
promotions
benefits
Intrinsic versus Extrinsic Rewards
Types of Reward Plans
4
financial rewards:
Financial versus Nonfinancial Rewards
nonfinancial rewards:
wages
bonuses
profit sharing
pension plans
paid leaves
purchase discounts
make life on the job more attractive; employees vary greatly on what types they like
Types of Reward Plans
5
performance-based rewards are tied to specific job performance criteria
commissions
piecework pay plans
incentive systems
group bonuses
merit pay
membership-based rewards such as cost-of-living increases, benefits, and salary increases are offered to all employees
Performance-based versus Membership-Based
Compensation Administration
6
An effective, fair compensation program:
Companies derive their compensation programs from job evaluation, which defines the appropriate worth of each job.
Both employees and employers
can research compensation
facts and issues at
www.salary.com
http://salary.nytimes.com/
http://www.salaryexpert.com/
attracts
motivates
Retains competent employees
Compensation Administration
7
The Fair Labor Standards Act requires:
minimum wage
overtime pay
record-keeping
child labor restrictions
exempt employees
include professional and
managerial employees
not covered under
FLSA overtime provisions
nonexempt employees
eligible for premium pay
(time and one-half)
when they work more than
40 hours in a week
Compensation Administration
8
Civil Rights Act:
broader than Equal Pay Act
prohibits discrimination on the basis of gender
used to support comparable worth concept
salaries established based on skill, responsibility, effort, and working conditions
Equal Pay Act of 1963 requires that men and women hired for the same job be paid the same.
Job Evaluation and the Pay Structure
9
Job analysis information determines the relative value, or rank, of each job in the organization.
Research wage information at
the Bureau of Labor Statistics
http://.
Getting the best from staffRaymond Jeffords, Marsha Scheidt and .docxhanneloremccaffery
Getting the best from staff
Raymond Jeffords, Marsha Scheidt and Greg M. Thibadoux
Journal of Accountancy. 184.3 (Sept. 1997): p101.
Copyright: COPYRIGHT 1997 American Institute of CPA's
http://www.journalofaccountancy.com/
Abstract:
Keeping professional staff motivated can be a complex task, so mixed-cost compensation or competency-based pay should be considered. Tying pay to performance can increase productivity. Pay structures should be evaluated to determine if expanded pay ranges or other compensation arrangements would be preferable. Compensation incentives may be less important than certain nonmonetary incentives, including individual recognition or alternative career paths.
Full Text:
Success in any undertaking requires more than ability and resources; it also depends on motivation. Without it, the resources and service capacity of your firm cannot be fully realized. What then can a firm or company do to ensure that employee drive does not wither away and die because of inadequate or inappropriate compensation and promotion practices?
Most important, managers must understand that annual raises and promotion opportunities aren't always enough. Managing the changing needs of professional staff requires individualized attention, specialized incentive programs and compensation plans more closely tied to individual achievement and performance. This article examines what it takes to motivate a professional staff and lists both monetary and nonmonetary methods managers should consider when planning compensation for their employees.
WHAT MOTIVATES PROFESSIONAL STAFF?
Do not expect a standard compensation plan or a firmwide incentive program to have. the same effect on every employee. To produce top performance, compensation plans and incentive programs must be tailored to meet the specific needs of each employee. Employees of different ages, experience and responsibility levels also have varying needs over time. That is, the impact of monetary incentives usually diminishes as employees get older and gain job experience, while nonmonetary incentives, such as challenging assignments, special projects and personal recognition, grow more important. Therefore, managers must not only tailor incentives to specific needs but also consider reevaluating each incentive program to accommodate their employees' needs.
KEEPING YOUR BEST
The most common compensation scheme involves periodic pay raises tied to an employee's performance review. These reviews determine the employee's pay level and rank according to firmwide salary standards and fixed promotion criteria. However, the difference in pay raises given to average and top performers often is negligible. The result may be salary increases that disappoint the firm's most valued employees. Such methods of compensation can actually reduce employee performance and lower morale. For example, in Punished by Rewards (Boston: Houghton Mifflin, 1993), Alfie Kohn said that "not receiving a reward one h ...
Dr. Jhansi Rani M R - International CompensatIon (Module VI B)MRJhansiRani
Dr. Jhansi Rani M R, Dr. M. R. Jhansi Rani, Approaches of international compensation, key components of an International compensation program, executive compensation.
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
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Why do some organizations link incentive pay to the organization-'s ov.docxSUKHI5
Why do some organizations link incentive pay to the organization\'s overall performance? Discuss the advantages or disadvantages of using incentive pay for overall organizational performance over individual performance.
Solution
Incentive and performance-based construction contracts rewarded contractors who completed projects by prescribed deadlines or ahead of schedule.
Employee incentives are rewards doled out to workers at a company based on their individual or team performance, or the overall performance of the company. Incentives come in the form of raises, commission payments, one-time bonuses, stock options and indirect incentives such as plane tickets, concert tickets and extra vacation time. Incentives typically are determined and implemented by managers. Managers also determine which benchmarks will be used to determine which employees are eligible for the incentive offered.
Advantage: Healthy Competition
Employee incentives can generate healthy competition between individuals or teams of employees within a company. If only a certain number of employees receives incentives based on individual or group performance, that can make everyone work harder, if the incentive is compelling enough. Concurrently, commission schemes, which are another type of incentive, can spur sales staff to work smarter and harder, because a significant portion of their pay depends on performance incentives.
Advantages: Retention
Intelligently designed incentives can be a boon to companies looking to retain employees for the long term. Lucrative incentives, whether these are in the form of stock or bonuses, make it worthwhile for employees to stay at your firm, even if a salary offer from a competitor is more attractive. Incentives can also make employees feel as if their hard work is appreciated, thus reflecting well on their managers and the company as a whole.
Disadvantage: Employee Resentment
In a perfect meritocracy, where the employees who work the hardest always reap the most rewards, incentives pose little problem. But no companies operate in an ideal world and thus incentives can breed resentment and discord among teams and employees. While it\'s easy to quantify a salesman\'s performance, it is harder to quantify a staff writer\'s contribution to the department, even if the writer is adding just as much value to the company. That can lead those under an incentive scheme to feel unappreciated or the recipients of unfair treatment.
.
Introduction1but the focus in this chapter is pay. they al.docxmariuse18nolet
Introduction
1
but the focus in this chapter is pay.
they all help maintain employee commitment
There are many work motivators, including
promotions
desirable work assignments
peer recognition
work freedom
Rewards Review
2
bonuses
piecework
commission
incentive
plans
merit pay
plans
cost of living
increase
labor market
adjustment
profit sharing
time-in-rank
increase
protection
Program
pay for time
not worked
services/
perks
assigned
parking space
preferred
assignments
business
cards
own
secretary
impressive
title
participation in
decision making
greater job
freedom
more
responsibility
opportunities
for growth
diversity
of activities
Financial
Non-financial
Extrinsic
Implied
membership-based
Performance
based
Explicit
membership-based
Intrinsic
Types of Reward Plans
3
intrinsic rewards (personal satisfactions) come from the job itself, such as:
pride in one’s work
feelings of accomplishment
being part of a work team
extrinsic rewards come from a source outside the job, mainly by management:
money
promotions
benefits
Intrinsic versus Extrinsic Rewards
Types of Reward Plans
4
financial rewards:
Financial versus Nonfinancial Rewards
nonfinancial rewards:
wages
bonuses
profit sharing
pension plans
paid leaves
purchase discounts
make life on the job more attractive; employees vary greatly on what types they like
Types of Reward Plans
5
performance-based rewards are tied to specific job performance criteria
commissions
piecework pay plans
incentive systems
group bonuses
merit pay
membership-based rewards such as cost-of-living increases, benefits, and salary increases are offered to all employees
Performance-based versus Membership-Based
Compensation Administration
6
An effective, fair compensation program:
Companies derive their compensation programs from job evaluation, which defines the appropriate worth of each job.
Both employees and employers
can research compensation
facts and issues at
www.salary.com
http://salary.nytimes.com/
http://www.salaryexpert.com/
attracts
motivates
Retains competent employees
Compensation Administration
7
The Fair Labor Standards Act requires:
minimum wage
overtime pay
record-keeping
child labor restrictions
exempt employees
include professional and
managerial employees
not covered under
FLSA overtime provisions
nonexempt employees
eligible for premium pay
(time and one-half)
when they work more than
40 hours in a week
Compensation Administration
8
Civil Rights Act:
broader than Equal Pay Act
prohibits discrimination on the basis of gender
used to support comparable worth concept
salaries established based on skill, responsibility, effort, and working conditions
Equal Pay Act of 1963 requires that men and women hired for the same job be paid the same.
Job Evaluation and the Pay Structure
9
Job analysis information determines the relative value, or rank, of each job in the organization.
Research wage information at
the Bureau of Labor Statistics
http://.
Getting the best from staffRaymond Jeffords, Marsha Scheidt and .docxhanneloremccaffery
Getting the best from staff
Raymond Jeffords, Marsha Scheidt and Greg M. Thibadoux
Journal of Accountancy. 184.3 (Sept. 1997): p101.
Copyright: COPYRIGHT 1997 American Institute of CPA's
http://www.journalofaccountancy.com/
Abstract:
Keeping professional staff motivated can be a complex task, so mixed-cost compensation or competency-based pay should be considered. Tying pay to performance can increase productivity. Pay structures should be evaluated to determine if expanded pay ranges or other compensation arrangements would be preferable. Compensation incentives may be less important than certain nonmonetary incentives, including individual recognition or alternative career paths.
Full Text:
Success in any undertaking requires more than ability and resources; it also depends on motivation. Without it, the resources and service capacity of your firm cannot be fully realized. What then can a firm or company do to ensure that employee drive does not wither away and die because of inadequate or inappropriate compensation and promotion practices?
Most important, managers must understand that annual raises and promotion opportunities aren't always enough. Managing the changing needs of professional staff requires individualized attention, specialized incentive programs and compensation plans more closely tied to individual achievement and performance. This article examines what it takes to motivate a professional staff and lists both monetary and nonmonetary methods managers should consider when planning compensation for their employees.
WHAT MOTIVATES PROFESSIONAL STAFF?
Do not expect a standard compensation plan or a firmwide incentive program to have. the same effect on every employee. To produce top performance, compensation plans and incentive programs must be tailored to meet the specific needs of each employee. Employees of different ages, experience and responsibility levels also have varying needs over time. That is, the impact of monetary incentives usually diminishes as employees get older and gain job experience, while nonmonetary incentives, such as challenging assignments, special projects and personal recognition, grow more important. Therefore, managers must not only tailor incentives to specific needs but also consider reevaluating each incentive program to accommodate their employees' needs.
KEEPING YOUR BEST
The most common compensation scheme involves periodic pay raises tied to an employee's performance review. These reviews determine the employee's pay level and rank according to firmwide salary standards and fixed promotion criteria. However, the difference in pay raises given to average and top performers often is negligible. The result may be salary increases that disappoint the firm's most valued employees. Such methods of compensation can actually reduce employee performance and lower morale. For example, in Punished by Rewards (Boston: Houghton Mifflin, 1993), Alfie Kohn said that "not receiving a reward one h ...
Dr. Jhansi Rani M R - International CompensatIon (Module VI B)MRJhansiRani
Dr. Jhansi Rani M R, Dr. M. R. Jhansi Rani, Approaches of international compensation, key components of an International compensation program, executive compensation.
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
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
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2. TOTAL COMPENSATION
The package of quantifiable returns an
employee receives for his or her labors.
Elements of Total Compensation
Total
Compensation
Pay
Incentives
Indirect
Compensation/
Benefits
Base
Compensation
3. The relative proportion of each element (known as
the pay mix) varies extensively by firm.
Generally, the largest element of total compensation is base
compensation, the fixed pay an employee receives on a
regular basis. (E.g. monthly paycheck)
Another component of total compensation is pay incentives,
which are programs designed to reward employees for good
performance. (E.g. Bonus or profit sharing)
4. Benefits is the final component, also called as indirect
compensation. (E.g. health insurance, pension)
A special category of benefits called perquisites or perks,
are available only to employees with some special status
in the organization, usually upper-level managers.
Common perks are company car, special parking space
etc.
5. The effectiveness with which compensation is allocated
can make a significant difference in gaining or losing a
competitive edge.
E.g. A high tech firm that provides generous
compensation to managerial and marketing personnel
but underpays its research and development staff may
lose its ability to innovate because competitors
constantly pirate away its best talent.
Thus, how much is paid and who gets paid what are
crucial strategic issues for the firm.
6. Importance of Compensation
Compensation is often considered a reflection of an
individual’s power, prestige, and worth. Compensation
affects a person economically, sociologically, and
psychologically.
For this reason, mishandling compensation issues is
likely to have a strong negative impact on employees
and, ultimately, on the firm’s performance.
The wide variety of pay policies and procedures presents
managers with two challenges: to design a compensation
system, that
1. Enables the firm to achieve its strategic objectives and
2. Is molded to the firm’s unique characteristics and
environment.
7. The Nine Criteria for Developing a Compensation
Plan
1. Internal versus External Equity
Will the compensation plan be perceived as fair within the
company, or will it be perceived as fair relative to what other
employers are paying for the same type of labor? Fair pay is
considered to be equitable.
2. Fixed versus Variable Pay
Will compensation be paid monthly on a fixed basis —through
base salaries —or will it fluctuate depending on such pre-
established criteria as performance and company profits?
Variable pay can take many forms- individual bonus, team bonus,
profit sharing and stock ownership programs.
8. 3. Performance versus Membership
Will compensation emphasize performance and tie pay
to individual or group contributions (E.g. giving cost-
saving suggestion), or will it emphasize membership in
the organization —logging in a prescribed number of
hours each week and progressing up the organizational
ladder?
4. Job versus Individual Pay
Will compensation be based on how the company values
a particular job, or will it be based on how much skill
and knowledge an employee brings to that job?
Rather than basing pay on a narrowly defined job,
organizations may choose to emphasize an individual’s
abilities, potential, and flexibility to perform multiple
tasks in setting his or her pay
9. 5. Egalitarianism versus Elitism
Will the compensation plan place most employees under the
same compensation system (egalitarianism), or will it
establish different plans by organizational level and/or
employee group (elitism)?
E.g. At Ben & Jerry’s, the compensation system is linked to
company prosperity. When the company does well, everyone
does well. The profit-sharing plan awards the same
percentage to all employees, from the top to the bottom.
The trend in recent years has been toward more egalitarian
compensation systems. This is because, it would give a focus
on more joint task accomplishment, more consultation
between juniors and seniors, and better cooperation among
employees.
10. 6. Below-Market versus Above-Market Compensation
Will employees be compensated at below-market levels,
at market levels, or at above-market levels?
The decision to pay above market for all employee
groups allows the firm to hire the “ cream of the crop”,
minimize voluntary turnover, and create a climate that
makes all employees feel they are part of an elite
organization. E.g. Microsoft, P&G.
However, few companies can afford such a policy.
Instead, most firms recognize the importance of certain groups
explicitly by paying them above market and cover these costs by
paying other groups below market.
11. 7. Monetary versus Non-monetary Awards
Will the compensation plan emphasize motivating
employees through monetary rewards like pay and stock
options, or will it stress non-monetary rewards such as
interesting work and job security?
E.g. Amway emphasizes on monetary awards and
Southwest Airlines on Non-monetary awards.
8. Open versus Secret Pay
Will employees have access to information about other
workers’ compensation levels and how compensation
decisions are made (open pay) or will this knowledge be
withheld from employees (secret pay)?
Open Pay has two advantages: 1. People will not
overestimate other’s pay. 2. Forces managers to be more
fair.
12. 9. Centralization versus Decentralization of Pay Decisions
Organizations must decide where pay decisions will be
made. Will compensation decisions be made in a tightly
controlled central location, or will they be delegated to
managers of the firm’s units?
Large and diversified organizations are better served by a
decentralized pay system. E.g. Mars, a worldwide leader
in the candy market, has only two HR people at corporate
headquarters. Each Mars unit is responsible for its own
pay decisions. This system is part of Mars’s HR resource
strategy to minimize corporate wide rules, regulations,
and red tape.
13. Compensation Tools
The goal of all these tools is to produce pay systems that
are equitable and that allow the firm to attract, retain,
and motivate workers while keeping labor costs under
control.
Two approaches- Job-based approaches and skill-based
approaches.
14. When to Use a Job-based Pay Policy
A job-based pay policy tends to work best in situations
where:
1. Technology is stable
2. Employees do not need to cover for one another
frequently
3. Much training is required to learn a given job
4. Turnover is relatively low
5. Employees are expected to move up through the
ranks over time
6. Jobs are fairly standardized within the industry
17. Pay Structure of a Large Restaurant Developed Using a
Job-Based Approach
Jobs
Number of
Positions Pay
GRADE 6
GRADE 5
GRADE 4
GRADE 3
GRADE 2
GRADE 1
Chef
Manager
Sous-Chef
Assistant Manager
Lead Cook
Office Manager
General Cook
Short Order Cook
Assistant to Lead Cook
Clerk
Server
Hostess
Cashier
Kitchen Helper
Dishwasher
Janitor
Busser
Security Guard
2
1
1
2
2
1
5
2
2
1
45
4
4
2
3
2
6
2
$20.00-$31.00/hr.
$11.50-$21/hr.
$7.50-$12.00/hr.
$6.50-$8.00/hr.
$6.00-$7.00/hr.
$5.50-$6.25/hr.
18. Skill- Based Compensation Plans
In this compensation plan, skills are used as basis for
compensation. All employees start at the same pay rate and
advance one pay level for each new skill they master.
Three types of skills may be rewarded:
1. Employees acquire depth skills when they learn more about a
specialized area or become expert in a given field.
2. They acquire horizontal or breadth skills when they learn more
and more jobs or tasks within the firm.
3. Vertical skills when they acquire “self management abilities”
such as coordinating, leadership.
E.g. AT&T (telecom), Embassy Suites (hotel) adopt skill-based
compensation plan.
19. Skill-based compensation offers advantages to firms:
1. It creates a more specific workforce that is not straight
jacketed by job descriptions specifying work
assignments for a given job title.
2. It promotes cross-training, thus preventing absenteeism
and turnover from disrupting the work unit’s ability to
meet deadlines.
3. It calls for fewer supervisors, so management layers can
be cut to produce a leaner organization.
4. It increases employees’ control over their compensation
because they know in advance what it takes to receive a
pay raise (learning new skills)
20. Skill-based pay poses some risks and that’s why it is the
choice of small portion (5 to 7%) of all firms.
1. Higher compensation and training costs; this is because
once employees master many skills they’ll expect more
pay than they would under job-based system.
2. Employees need to be given opportunity to utilize learnt
skills.
21. Contemporary Trends in Compensation
1. Broadbanding-The practice of using fewer pay grades
having broader pay ranges that in traditional systems.
Advantages
1. more consistent with downsized, flatter
organizational structures
2. breaks down previous structural pay barriers among
jobs to facilitate empowerment, teamwork, etc.
3. greater flexibility; more useful managerial tool
Disadvantages
1. traditional cost control in pay structure is lost
2. possibly more difficult to communicate to employees
22. 2. Pay for Performance Systems
Pay-for-performance systems, also called incentive
systems, reward employee performance on the basis of
three assumptions:
1. Individual employees and work teams differ in how
much they contribute to the firm—not only in what
they do, but also in how well they do it.
2. The firm’s overall performance depends to a large
degree on the performance of individuals and
groups within the firm.
3. To attract, retain, and motivate high performers
and to be fair to all employees, a company needs to
reward employees on the basis of their relative
performance.
23. Pay for Performance: The Challenges
1. The “Do Only What You Get Paid For” Syndrome
The closer pay is tied to particular performance indicators,
the more employees tend to focus on those indicators
and neglect other important job components
2. Negative Effects on the Spirit of Cooperation
Employees may withhold information from a colleague if
they believe that it will help the other person get ahead
3. Lack of Control
Employees often cannot control all of the factors affecting
their performance
24. 4. Difficulties in Measuring Performance
Assessing employee performance is one of the thorniest
tasks a manager faces, particularly when the
assessments are used to dispense rewards
5. Psychological Contracts
Once implemented, a pay-for-performance system
creates a psychological contract between the
employee and firm, and it is very resistant to change
6. The Credibility Gap
Employees often do not believe that pay-for-
performance programs are fair or that they truly
reward performance
25. Meeting the Challenges of Pay for Performance Systems
1. Link Pay and Performance Appropriately
There are few cases in which managers can justify paying
workers according to a pre-established formula or
measure.
Traditional piece-rate system, in which workers are paid
per unit produced, represent the tightest link between pay
and performance. Primary requirement is that the
employee has complete control over the speed and quality
of the work.
E.g. it is appropriate to pay a typist according to number of
pages typed; but what if the same profile handles other
responsibilities such as, handling phone calls?
26. 2.Use Pay for Performance as Part of a Broader HRM
System
Pay-for-performance programs are not likely to
achieve the desired results unless they are
accompanied by complementary HRM programs
E.g. performance appraisals and supervisory training
usually play a major role in the eventual success or
failure of a pay for performance plan
27. 3. Use Multiple Layers of Rewards
Because all pay-for-performance systems have positive
and negative features, providing different types of pay
incentives for different work situations is likely to
produce better results than relying on a single type of
pay incentive.
E.g. AT&T Credit, variable pay (in form of bonus) is
based on 12 measures reflecting the performance of both
regional teams and the entire business unit. Team
members must meet their individual performance goals
to qualify for variable pay.
29. Merit Pay Program (merit raise)
Links an increase in base pay to how successfully an
employee achieved some objective performance
standard.
Individual bonus programs (Lump-sum Merit Program)
Program under which employees receive a year-end
merit payment, which is not added to their base pay.
Advantages
•Provides financial control by maintaining annual
salary expenses and not escalating base salary levels
•Bonuses can be given outside the annual review
cycle
Awards, like bonuses, are one time rewards, but tend to be given
in the form of a tangible prize, such as paid vacation or dinner
at a fancy restaurant etc.
30. PIECEWORK
Straight Piecework
Pay is determined by multiplying the number of units
produced [such as garments sewn or customers contacted] by
the piece rate for one unit. The rate for each piece does not
change regardless of the number of pieces produced
Differential Piece Rate
This system pays employees one piece-rate wage if they
produce less than a standard output and a higher piece-rate if
they produce more than the standard.
31. Gain-sharing Plans
Programs under which both employees and the
organization share the financial gains according to a
predetermined formula that reflects improved
productivity and profitability.
Scanlon Plan- Rewards come from employee participation in
improving productivity and reducing costs. A committee is
formed to generate cost saving ideas. If actual labor costs are
lower than expected labor costs over an agreed-upon period, the
difference is shared.
Improshare- Gain-sharing based on increases in productivity of
the standard hour output of work teams.
32. Profit Sharing
Profit sharing is rewarding employees based on the
entire corporation’s performance.
In this program, no attempt is made to reward workers
for productivity improvements. Many factors that can
affect profits (such as luck, regulatory changes, and
economic conditions) have little to do with productivity,
and the amount of money employees receive depends on
all of these factors.
Employee Stock Ownership plan (ESOP)
A company wide pay for performance plan that rewards employees
with company stocks, either as an outright grant or at a favourable
price that may be below market value.
33. Benefit- An indirect reward given to an employee or group
of employees as a part of organizational membership.
Fringe Benefits- Benefits were labeled fringe because they
were relatively insignificant or fringe components of
compensation. However they are gaining popularity. They
are usually paid to all employees (unlike incentives which
are paid to specific employees whose work is above
standard) based on their membership in the organization.
Types:
Payment for time not worked
Employee security
Health benefits
Recreational facilities
Retirement benefits