This document discusses employee compensation strategies and practices. It begins by defining employee compensation and strategic employee compensation. It then provides examples of the compensation strategies of Wegmans Food Market Inc. and Descon Engineering Limited that align compensation with organizational objectives. The document also outlines some key US labor laws that influence compensation practices, such as the Civil Rights Act, Fair Labor Standards Act, and Equal Pay Act. It concludes by discussing Pakistan's Basic Pay Scales system established by the Civil Services Reform Commission.

1. Employee Compensation
Strategies & Practices
Salman Morris MBA (FUUAST)
1
Human Resource
Management

2. Overview
Salman Morris MBA (FUUAST)
1. What is Employee Compensation?
2. What is Strategic Employee Compensation?
3. Strategic Employee Compensation & Practices (Examples)
Wegmans Food Market Inc.
Descon Engineering Limited
4. Legal Consideration Regarding Compensation
Civil Rights Act 1991
Fair Labor Standard Act 1938
Equal Pay Act 1963
Walsh-Healey public Contract Act 1936
5. Basic Pay Scales (BPS)
Civil Services Reform Commission of Pakistan 1972
Revision basic Pay scale of Pakistan 2016
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Human Resource
Management

3. Salman Morris MBA (FUUAST)
3 1. What is Employee Compensation?
What’s in it for Me?
Nearly every individual asks this question before engaging in any
Job that:
Human Resource
Management

4. Human Resource
Management
Salman Morris MBA (FUUAST)
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Employee
Compensation
Financial Pays
Org. Culture
Environment
Organizational
Values
Behaviors
Relationship
Benefits
Components of Employee Compensation

5. Salman Morris MBA (FUUAST)
5 Definition of Employee Compensation
“It is what employees receive in exchange for their contribution to
the organization. It is a comprehensive term which includes
components of compensation offered to the employees.”
Or
“Compensation is a systematic approach to providing monetary
and non-monetary value to employees in exchange for work
performed.”
Human Resource
Management

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Management
Salman Morris MBA (FUUAST)
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What is Strategic Employee Compensation?
• “Use Compensation as Strategy for competitiveness”
• Strategic compensation management requires asking, “What
are our strategic aims?”; then asking,
“What are the employee behaviors or actions needed to
achieve these strategic aims?”;
and then putting in place compensation programs
to produce those employee behaviors.

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o A tool for enhancing organizational performance and sustained
competitiveness.
o Aligning employee behaviors to the strategic direction of the organization.
o To push Employees towards general strategy the organization.
o A customization of compensation system to create a type culture attracting a
workforce that possesses required KSA’s that support organization’s overall
strategic goals and Objectives.
SWOT Analysis: Use your
employees as your strength
Human Resource
Management
Definition

8. Human Resource
Management
Salman Morris MBA (FUUAST)
8 Compensation Strategy could be:
Above Market
Pay rates
Pay for higher qualified more productive workers who’s
replacement cost is high, i.e. Professionals and technical field
Employees
Middle Market
pay rates
Attempting to balance of employer costs and need to
attract and retain employees and/or the rate policy practiced
in the market.
Below Market
pay rates
Paying all that the firm can afford
Taking advantage of the abundant supply of
potential employees in a loose labor market.
PakistanDesconLtd.

9. Salman Morris MBA (FUUAST)
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CompensationStrategy
Targets/goals/
objectivesAlignment of Compensation Strategy
Human Resource
Management
Powered by best Compensation Policies & Practices
Employees
Employees
Firm A
Firm B
NoCompensationstrategy

10. Human Resource
Management
Salman Morris MBA (FUUAST)
10 Real World Examples(In Strategic & Practice Context)
1. Wegmans Food market Inc.
Introduction
• American Pvt. Ltd. Co.
• Food Super Market Chain
• Founded in 1916, Rochester, NY
Achievements
• Ranked in top 100 Firms in 1998
• After that Ranked in top 10 for 8 consecutive Years
• Best Grocery Store Award winner 2007
• Large U.S Grocery chain 2012 & 2014 by consumers report

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11
Wegmans exemplifies this. Competitors drive prices down. The usual reaction is to
cut employee pay. Wegmans instead views its workforce as central to its strategy of
“optimizing service while controlling costs by improving systems and productivity ”
For example, one dairy department employee designed a new way to organize the
cooler, thus improving ordering decisions and inventory control. Wegmans’
compensation policies aim to elicit just such employee commitment. It offers above
market pay rates, affordable health insurance, a full range of benefits, In sum,
Wegmans’ pay policies aim to produce the employee behaviors the company
needs to
achieve its strategic aims.
Wegmans Food market Inc. (continued)

12. Human Resource
Management
Salman Morris MBA (FUUAST)
12 Wegmans Food market Inc. (continued)
Wegmans Vs. Market
Wegmans pay policies are one reason for the firm’s exceptional profitability
o Employee Turnover (6-7% full
timers and 38% for Part timers)
o Average Sales $950,000 per week
o Annual Sales &46 million
o Stores are 120000 square feet
much larger then competitors
o Industry Average 47%
o Industry or National Avg. $361,564/ week
o Typical Competitor Walmart’s annual sales
$23.5 million
o Stores much smaller than Wegmans

13. Human Resource
Management
Salman Morris MBA (FUUAST)
13 Wegmans Food market Inc. (continued)
Compensation Practice
Strategy Employees are central force of overall strategy of the
business.
Policy Above market rate offered, exceptional working
environment to attract and retain talent or KSA’s they
want.
Philosophy Recognize our employees as most important asset

14. Human Resource
Management
Salman Morris MBA (FUUAST)
14 2. Descon Engineering Limited
Introduction
• Based in Lahore, Punjab, Pakistan
• Established in 1977
• Engineering, Chemical, power sector
Achievements
• One of the leading organizations in Pakistan and
Middle East
• Pakistan’s largest engineering and manufacturing
concern
• Take 126th position out of 250 best construction
companies in 2013, the only Pakistani company.
•

15. Human Resource
Management
Salman Morris MBA (FUUAST)
15 2. Descon Engineering Limited
The reward structure considered most competitive ones in Pakistan. Not
according to model as exercised in public sector organizations of Pakistan.
salary is negotiated with each employee on account of nature of work, qualification,
experience, skills, expertise and then a contract is signed between employee and
company
Descon sure that high achieving and performing employees are satisfied with their
reward package being equal to or exceeding what they might earn in the external
market.
Advocates externally competitive reward packages
Employee Category includes Permanent, Contract Base and temporary, Pay linked to
performance Criteria.
Acquired KSA’s if add value to the organization are recognized in the reward
structure.
Employee who successfully complete training, and enhance skills accordingly
Entitled to increment in pay and promotion.
#8. Slide 8

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Descon Engineering Limited
Compensation Practice
Pay Strategy Above and Middle Market pay strategy
Pay structure Based on qualification, experience, skills, expertise and
then a contract is signed
Categorized
Employees
(permanent, contract based, temporary) Each one of these has
different pay policies in accordance with the relevant grades, designations,
nature of work, responsibility and contribution towards organizational
objectives
Philosophy Be sensitive to the market supply and demand for a
qualified workforce when project financially feasible.
Pay Increment Pay increment recognized subject to add value to
organization

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Management
Salman Morris MBA (FUUAST)
17 4. Legal Consideration Regarding Compensation
Civil Rights Act 1991
o Prohibits discrimination on the basis of race and prohibits racial harassment on
the job.
o Returns the burden of proof that discrimination did not occur back to the
employer.
o Reinforces the illegality of employers who make hiring, firing, or promoting
decisions on the basis of race, ethnicity, gender, or religion.
o Permits women and religious minorities to seek punitive damages in
intentional discriminatory claims.
Provision(s)

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Management
Salman Morris MBA (FUUAST)
18 Fair Labor Standard Act 1938
Provision(s)
o Provides limit of minimum wage or pay
o Maximum working Hours (40 per week)
o Overtime pay (exceeding 40 our)
o Child labor Protection
o Employee must be 16 years old

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Equal Pay
Act 1963
Provision(s)
o An amendment to the Fair Labor Standards Act designed to require
equal pay for Women doing the same work as Men.

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Salman Morris MBA (FUUAST)
20 Walsh-Healey public Contract Act 1936
Provision(s)
o Minimum wage
o Working Conditions for Employees
o Government contract amounting to
more than $10,000 annually.

21. Human Resource
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21
Muhammad Shakeel
Voluntary Benefits (Continue)
1. Preferred provider organizations (PPOs)
Organization that requires using specific physicians and health-care
facilities to contain the rising costs of health care.
2. Health Insurance Continuation (HIC)
Provides for continued employee benefits up to three years after an
employee leaves a job.

22. Human Resource
Management
Salman Morris MBA (FUUAST)
22 Voluntary Benefits (Continue)
3. Health Insurance Portability and Accountability (HIPPA)
Deals primarily with health-care entities. This has generally not
been a concern for most organizations, but many learned that if they had
self-insured health insurance benefit programs, they, too, must comply with
HIPAA requirements.
Paid off Time
1. Vacation and Holiday Leave
Vacation time is usually related to the length of time on the job
some companies also allow personal days that can be used for any
reason.

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Disability Insurance Programs
provides salary continuation for:
short-term disabilities (sick leave)
long-term disabilities (coverage usually effective after 6
months)
some companies provide financial incentives to
employees to not use their sick leave
long-term disability plans usually replace a portion of
the employee’s salary, often 60%

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Group Term Life Insurance
 benefit is usually based on one’s annual rate of pay
 supplemental insurance increases coverage to two to five-times
the employee’s salary
Travel Insurance
 life insurance for business travel-related deaths (not including
normal commuting)
Survivor Benefits

25. Human Resource
Management
Salman Morris MBA (FUUAST)
25 Syed Muhammad FaizanCasual as always
Compensation philosophies
1. Recognize your employees most important human asset of your business
2. Be sensitive to the market supply and demand for a qualified workforce
3. When project looks feasible carefully and competitively recruit qualified personnel.
4. the Compensation Policies & Procedures should be transparent and easily
understandable to every employee.
Surprise..??? 

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5. Pay salaries must be competitive in labor markets in which we recruit
employees
6. Reward employees for their achievements in relation to established
performance standards
7. Provide a management system for salary administration throughout the
organization
8. Provide opportunities for increases in pay in full compliance with all
relevant local, State and federal laws, rules and regulations
Compensation philosophies (Continued)

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Salman Morris MBA (FUUAST)
27 5. Basic Pay Scales (BPS)
Revision of basic pay scale of civil servants of
Federal Government 2016

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The Only Easy Day, Was
Yesterday  Farewell
(Salman Morris)
Thank You