Human Resource Management

Compensation and Benefits

Compensation
Hot topics
Compensation Management
Benefits
Hot or Warm Topics
Executive compensation - Are
corporate executives overpaid or
underpaid?
Sex discrimination and comparable
worth
Open vs. secret pay plans
Skill-based compensation plans
Team vs. individual pay

Compensation Goals
Attracting good employees
Retaining good employees
Motivating employees
Complying with the law
Having a cost effective compensation
system
Compensation and the
Three Equities
External Equity
Attracting good employees
Internal Equity
Retaining good employees
Individual or Employee Equity
Motivating employees
External Equity

Attracting good employees
Labor Market Model
Market Surveys
http://salarysource.com/
http://swz.salary.com/
Pay strategy/policies
Internal Equity
Retaining good employees
Job Evaluation Techniques
Ranking
Jobs are compared to each other based on their overall
worth to the company. The worth of a job is usually
measured by judgments of skill, effort, responsibility, and
working conditions.
The advantage of the ranking method is that it is simple.
The disadvantages, similar to the ranking method of
performance appraisal, are that the intervals between the
ranks are assumed to be equal, the judgments are
global, and as the number of jobs for evaluation
increases it becomes increasingly difficult. Also, the
evaluators must have knowledge of all jobs.
Classification method
Jobs are classified into a grade/category structure. Each tier of
the structure has a description and associated job titles. For
example, the Westinghouse system had:
Grade 1 Unskilled ex. File clerk
Grade 2 Skilled ex. Typist, lathe operator
Grade 3 Interpretive ex. Chief clerk
Grade 4 Creative ex. Engineers, sales reps
Grade 5 Executive ex. Department heads
Grade 6 Administrative ex. Chief engineer, Director of R&D
Grade 7 Policy ex. Vice-president of Marketing
Each job is assigned to the grade/category providing the
closest match to the job. Standards are developed mainly
along occupational lines. The standards help identify and
describe key characteristics of occupations that are important
for distinguishing different levels of work.
Pay ranges are then assigned to grades.
The advantages of this method are that it is simple and has
been in use for many years.
Its disadvantages include the fact that classification judgments
are subjective, and the standard used for comparison may have
built-in biases. Also, some jobs may fit into more than one
grade/category or their descriptions are so broad that they do
not relate to specific jobs.
Factor Comparison
Select benchmark jobs.
Sets of compensable factors are identified as
determining the worth of jobs. The number of factors is
usually four or five and typically relate to skill,
responsibility, effort and working conditions.
Jobs are then ranked on each factor.
Wages are then allocated to the factors. The
organizations other jobs are then compared to the
benchmark jobs and rates of pay for each of the other
jobs.
Factor comparison has the advantage that the value of
the job is expressed in monetary terms, and the method
is applicable to a wide range of jobs.
The methods disadvantages are that the pay points for
each factor is based on subjective judgments.


Point Method
The point method is an extension of the factor
comparison method. Usually between eight
and fourteen compensable factors (typically
related to skill, effort, responsibility, and
working conditions) are identified as
determining the worth of jobs.
Factors are divided into degrees
Points are assigned the degrees
Benchmark jobs are compared to market rates
Individual or Employee Equity
Motivating performance

Individual or Employee Equity
Motivating performance
At the individual level
Pluses and minuses
Methods/techniques
At the organization level
Pluses and minuses
Methods/techniques
Compensation and the Legal
Environment
The Fair Labor Standards Act of 1938
Minimum Wage
Exempt vs. Non-exempt and overtime
http://www.ewin.com/articles/exneot.htm
http://www.dol.gov/elaws/esa/flsa/screen75.
asp
The Equal Pay Act of 1963

Benefits continued
Paid time off
Employee services