Human Resource Management 11e gary dessler chapter 11

1. © 2008 Prentice Hall, Inc.© 2008 Prentice Hall, Inc.
All rights reserved.All rights reserved.
PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook
The University of West AlabamaThe University of West Alabama
1
Human ResourceHuman Resource
ManagementManagement
ELEVENTH EDITIONELEVENTH EDITION
G A R Y D E S S L E RG A R Y D E S S L E R
Establishing Strategic Pay PlansEstablishing Strategic Pay Plans
ChapterChapter
1111
Part 4 | CompensationPart 4 | Compensation

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rights reserved. 11–2
After studying this chapter, you should be able to:
1.1. List the basic factors in determining pay rates.List the basic factors in determining pay rates.
2.2. Explain in detail how to establish pay rates.Explain in detail how to establish pay rates.
3.3. Explain how to price managerial and professional jobs.Explain how to price managerial and professional jobs.
4.4. Discuss competency-based pay and other currentDiscuss competency-based pay and other current
trends in compensation.trends in compensation.

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Basic Factors in DeterminingBasic Factors in Determining
Pay RatesPay Rates
Direct Financial
Payments
Indirect Financial
Payments
Employee
Compensation

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Legal Considerations in CompensationLegal Considerations in Compensation
Employee
Compensation
Equal Pay Act (1963)
Employee Retirement
Income Security Act (ERISA)
Age Discrimination in
Employment Act
Americans with
Disabilities Act
Davis-Bacon Act (1931)
Walsh-Healey Public
Contract Act (1936)
Title VII of the 1964
Civil Rights Act
Fair Labor Standards Act
(1938)
The Family and Medical
Leave Act
The Social Security Act of
1935 (as amended)
Workers’ Compensation

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Equity and Its Impact on Pay RatesEquity and Its Impact on Pay Rates
External
Equity
Procedural
Equity
Internal
Equity
Individual
Equity
Forms of Equity

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Addressing Equity IssuesAddressing Equity Issues
Salary Surveys
Job Analysis and
Job Evaluation
Performance Appraisal
and Incentive Pay
Communications, Grievance
Mechanisms, and Employees’
Participation
Methods to
Address Equity
Issues

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The Salary SurveyThe Salary Survey
To price
benchmark
jobs
To make
decisions
about benefits
Step 1. The Wage Survey:
Uses for Salary Surveys
To market-
price wages
for jobs

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Sources for Salary SurveysSources for Salary Surveys
Employer Self-
Conducted
Surveys
Government
Agencies
Consulting
Firms
Sources of Wage and
Salary Information
Professional
Associations
The
Internet

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Establishing Pay Rates (cont’d)Establishing Pay Rates (cont’d)
Skills
Effort
Responsibility
Working Conditions
Step 2. Job Evaluation:
Identifying
Compensable Factors

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Establishing Pay Rates (cont’d)Establishing Pay Rates (cont’d)
Ranking
Factor
Comparison
Job
Classification
Methods for
Evaluating Jobs
Point
Method

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Establishing Pay Rates (cont’d)Establishing Pay Rates (cont’d)
Point Method
Ranking Method
Classification Methods
Step 3. Group
Similar Jobs
into Pay Grades

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Pricing Managerial and Professional JobsPricing Managerial and Professional Jobs
Base
Pay
Executive
Benefits and
Perks
Short-term
Incentives
Long-Term
Incentives
Compensating Executives
and Managers

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Competency-Based Pay (cont’d)Competency-Based Pay (cont’d)
Support High-
Performance
Work Systems
Support
Performance
Management
Why Use Competency-
Based Pay?
Support
Strategic Aims

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Other Compensation TrendsOther Compensation Trends
• BroadbandingBroadbanding
 Consolidating salary grades and ranges into just aConsolidating salary grades and ranges into just a
few wide levels or “bands,” each of which contains afew wide levels or “bands,” each of which contains a
relatively wide range of jobs and salary levels.relatively wide range of jobs and salary levels.
 Pro and ConsPro and Cons
 More flexibility in assigning workers to different job grades.More flexibility in assigning workers to different job grades.
 Provides support for flatter hierarchies and teams.Provides support for flatter hierarchies and teams.
 Promotes skills learning and mobility.Promotes skills learning and mobility.
 Lack of permanence in job responsibilities can be unsettlingLack of permanence in job responsibilities can be unsettling
to new employees.to new employees.

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K E Y T E R M S
employee compensationemployee compensation
direct financial paymentsdirect financial payments
indirect financial paymentsindirect financial payments
Davis-Bacon Act (1931)Davis-Bacon Act (1931)
Walsh-Healey Public Contract ActWalsh-Healey Public Contract Act
(1936)(1936)
Title VII of the 1964 Civil Rights ActTitle VII of the 1964 Civil Rights Act
Fair Labor Standards Act (1938)Fair Labor Standards Act (1938)
Equal Pay Act (1963)Equal Pay Act (1963)
Employee Retirement IncomeEmployee Retirement Income
Security Act (ERISA)Security Act (ERISA)
salary compressionsalary compression
salary surveysalary survey
benchmark jobbenchmark job
job evaluationjob evaluation
compensable factorcompensable factor
ranking methodranking method
job classification (or grading) methodjob classification (or grading) method
classesclasses
gradesgrades
grade definitiongrade definition
point methodpoint method
factor comparison methodfactor comparison method
pay gradepay grade
wage curvewage curve
pay rangespay ranges
competency-based paycompetency-based pay
competenciescompetencies
broadbandingbroadbanding
comparable worthcomparable worth

16. © 2008 Prentice Hall, Inc.© 2008 Prentice Hall, Inc.
All rights reserved.All rights reserved.
PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook
The University of West AlabamaThe University of West Alabama
1
Human ResourceHuman Resource
ManagementManagement
ELEVENTH EDITIONELEVENTH EDITION
G A R Y D E S S L E RG A R Y D E S S L E R
Quantitative Job Evaluation MethodsQuantitative Job Evaluation Methods
Appendix forAppendix for
Chapter 11Chapter 11
Part 4 | CompensationPart 4 | Compensation

17. © 2008 Prentice Hall, Inc. All
rights reserved. 11–17
Quantitative Job Evaluation MethodsQuantitative Job Evaluation Methods
• Factor Comparison Job Evaluation MethodFactor Comparison Job Evaluation Method
Step 1.Step 1. Obtain job informationObtain job information
Step 2.Step 2. Select key benchmark jobsSelect key benchmark jobs
Step 3.Step 3. Rank key jobs by factorRank key jobs by factor
Step 4.Step 4. Distribute wage rates by factorsDistribute wage rates by factors
Step 5.Step 5. Rank key jobs according to wagesRank key jobs according to wages
assigned to each factorassigned to each factor
Step 6.Step 6. Compare the two sets of rankings toCompare the two sets of rankings to
screen out unusable key jobsscreen out unusable key jobs
Step 7.Step 7. Construct the job-comparison scaleConstruct the job-comparison scale
Step 8.Step 8. Use the job-comparison scaleUse the job-comparison scale