Professional Documents
Culture Documents
SECTION 44
Compensating
Compensating
Management Human
Human Resources
Resources
TENTH EDITON
Chapter 12
Compensation
CompensationStrategies
Strategies
and
andPractices
Practices
PowerPoint Presentation
© 2003 Southwestern College Publishing. All rights reserved.
by Charlie Cook
Learning
Learning Objectives
Objectives
Figure 12–1
© 2002 Southwestern College Publishing. All rights reserved. 12–6
Direct
Direct Compensation
Compensation
Compensation Type
Base Pay The basic monetary compensation that an
employee receives, usually as a wage or
salary.
Figure 12–2
© 2002 Southwestern College Publishing. All rights reserved. 12–8
Continuum
Continuum of
of Compensation
CompensationPhilosophies
Philosophies
Figure 12–3
© 2002 Southwestern College Publishing. All rights reserved. 12–9
Compensation
CompensationApproaches
Approaches
Figure 12–4
© 2002 Southwestern College Publishing. All rights reserved. 12–10
Compensation
CompensationQuartile
QuartileStrategies
Strategies
Figure 12–5
© 2002 Southwestern College Publishing. All rights reserved. 12–11
Decisions
Decisions About
About Compensation
Compensation Levels
Levels
Compensation Strategies
Above-Market Paying for higher qualified, more productive
workers.
Limitations
Limitations Pricing
Pricing
(How
(Howmany?)
many?) Competencies
Competencies
Competency-
Competency-
Based
BasedPay
Pay
Systems
Systems
KBP/SBP
KBP/SBP
Maintenance
Maintenanceof
of Training
Training
Competencies
Competencies
Figure 12–6
© 2002 Southwestern College Publishing. All rights reserved. 12–14
Individual
Individual vs.
vs. Team
Team Rewards
Rewards
Using
UsingTeam-Based
Team-Based Reward
Reward Systems
Systems
Use
Useskill-based
skill-basedpay
payfor
forthe
thebase.
base.
Make
Makesystem
systemsimple
simpleand
andunderstandable.
understandable.
Use
Usevariable
variablepay
paybased
basedon
onbusiness
businessentity
entityperformance
performance
Distribute
Distributevariable
variablerewards
rewardsat
atthe
theteam
teamlevel
level
Maintain
Maintainaahigh
highdegree
degreeof
ofemployee
employeeinvolvement
involvement
Figure 12–7
© 2002 Southwestern College Publishing. All rights reserved. 12–17
Fair
Fair Labor
Labor Standards
Standards Act
Act (FSLA)
(FSLA) of
of 1938
1938
Provisions
Provisionsof
ofthe
theAct
Act
Minimum
Minimumwage
wagerequirement
requirementsets
setswage
wagefloor
floor
Child
Childlabor
labor(under
(under14
14years
yearsold)
old)isisprohibited
prohibited
Requires
Requiresovertime
overtimepayments
paymentsfor
fornon-exempt
non-exemptemployees
employees
Exempts
Exemptshighly-paid
highly-paidcomputer
computerworkers
workers
Requires
Requiresovertime
overtime(1
(1½)
½)pay
payfor
forhours
hoursover
over40
40hours
hours
Requires
Requirescompensatory
compensatorytime
timeat
atovertime
overtime(1
(1½)
½)pay
payrates
rates
© 2002 Southwestern College Publishing. All rights reserved. 12–18
Wage/Hour
Wage/HourStatus
Status Under
Under Fair
Fair Labor
Labor Standards
Standards Act
Act
Figure 12–8a
© 2002 Southwestern College Publishing. All rights reserved. 12–19
Wage/Hour
Wage/HourStatus
Status Under
Under Fair
Fair Labor
Labor Standards
Standards Act
Act
Figure 12–8b
© 2002 Southwestern College Publishing. All rights reserved. 12–20
Wage/Hour
Wage/HourStatus
Status Under
Under Fair
Fair Labor
Labor Standards
Standards Act
Act
Figure 12–8c
© 2002 Southwestern College Publishing. All rights reserved. 12–21
The
TheIRS
IRSTest
Test for
forEmployees
Employeesand
and
Independent
IndependentContractors
Contractors
Figure 12–10
© 2002 Southwestern College Publishing. All rights reserved. 12–25
Job
Job Evaluation
Evaluation
Job Evaluation
– The systematic determination of the relative worth
of jobs within an organization.
Benchmark Job
– A job found in many organizations and performed
by several individuals who have similar duties that
are relatively stable and require similar KSAs.
Ranking
Ranking Classification
Classification
Job
Job
Evaluation
Evaluation
Methods
Methods
Factor
Factor Point
Point
Comparison
Comparison Method
Method
Figure 12–11
© 2002 Southwestern College Publishing. All rights reserved. 12–28
Legal
Legal Issues
Issues and
and Job
Job Evaluation
Evaluation
Americans
Americanswith
withDisabilities
DisabilitiesAct
Act
Job
Jobevaluations
evaluationsmay
maynot
notidentify
identifyjob
jobfunctions
functionsrelated
relatedto
to
physical
physicaldemands
demandsas asessential
essential
Job
Job Evaluation
Evaluation
Gender
GenderIssues
Issues
Traditional
Traditionaljob
jobevaluations
evaluationsplace
placeless
lessweight
weighton
onknowledge,
knowledge,
skills,
skills,and
andworking
workingconditions
conditionsfor
forfemale-dominated
female-dominatedjobs
jobs
Select
Select Employers
Employerswith
with Comparable
ComparableJobs
Jobs
Determine
Determine Jobs
Jobsto
tobe
beSurveyed
Surveyed
Decide
DecideWhat
WhatInformation
Information Is
IsNeeded
Needed
Conduct
ConductSurvey
Survey
Figure 12–12
© 2002 Southwestern College Publishing. All rights reserved. 12–32
Pay
Pay Structures
Structures (cont’d)
(cont’d)
Pay Grades
– A grouping of individual jobs having approximately
the same job worth.
Broadbanding
– The practice of using fewer pay grades having
broader pay ranges that in traditional systems.
– Benefits
• Encourages horizontal movement of employees
• Is consistent with trend towards flatter organizations
• Creates a more flexible organization
• Encourages competency development
• Emphasizes career development
Figure 12–13
© 2002 Southwestern College Publishing. All rights reserved. 12–34
Pay
PayScattergram
Scattergram
Figure 12–14
© 2002 Southwestern College Publishing. All rights reserved. 12–35
Typical
TypicalPay
PayRange
RangeWidths
Widths
Figure 12–15
© 2002 Southwestern College Publishing. All rights reserved. 12–36
Example
Exampleof
of
Pay
PayGrades
Grades
and
andPay
Pay
Ranges
Ranges
Figure 12–16
© 2002 Southwestern College Publishing. All rights reserved. 12–37
Pay
Pay Rate
Rate Issues
Issues
Rates Out of Range
– Red-Circled Employees
• An incumbent (current jobholder) who is paid above
the range set for the job.
– Green-Circled Employees
• An incumbent who is paid below the range set for the
job.
Pay Compression
– A situation in which pay differences among
individuals with different levels of experience and
performance in the organization becomes small.
Figure 12–17
© 2002 Southwestern College Publishing. All rights reserved. 12–41
Compa-Ratio
Compa-Ratio Example
Example
Compa-ratio
– The pay level divided by the midpoint of the pay
range.