compensating employees
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Compensating EmployeesTRANSCRIPT
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7-1
Compensating Employees
7
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Learning Objectives
When you finish studying this chapter, you should be able to:1. Discuss four basic factors determining pay rates.2. Explain each of the steps in establishing market-
competitive pay rates.3. Compare and contrast piecework and team or
group incentive plans.4. List and describe each of the basic benefits
most employers might be expected to offer.
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What Determines How Much You Pay?
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What Determines How Much You Pay?
• Legal: Important compensation laws
• How unions influence compensation decision
• Compensation policies
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How to Create a Market-Competitive Plan
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Step 1: Determine the Worth of Each Job: Job Evaluation
1. Purpose of job evaluation 2. Compensable factors 3. Job evaluation methods
a. Rankingb. Job classificationc. The point method
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Step 2: Group Similar Jobs into Pay Grades
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Points from Job Evaluation
Process
Job Grade
50 – 60 1
61 – 70 2
71 – 80 3
81 – 90 4
91 – 100 5
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Step 3. Price Each Pay Grade
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Step 4: Conduct Salary Survey
• Benchmark job• 20% or more directly
from the marketplace• Collect data on
benefits
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Step 5: Compare and Adjust
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Step 6: Develop Rate Ranges
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Pricing Managerial and Professional Jobs
• Pay package elements • Strategy and executive pay – Strategic direction– Skills and competencies list–Does existing pay plan produce results?– If not, re-design
• Pay for professionals
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Incentive Plans (1)
• Piecework plans • Team or group incentive plans• Incentives for managers and executives– Stock Options – Sarbanes-Oxley
• Incentives for salespeople
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Incentive Plans (2)
• Non-tangible and recognition-based merit pay as an incentive
• Profit-sharing plans • Employee Stock Ownership Plans (ESOPs)• Gainsharing plans • Earnings-at-risk pay plans
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Incentive Plans (3)
• Incentives at Nucor Corporation • Improving Productivity through HRIS• Job Design • Designing effective Incentive Program– The five building blocks of effective
incentive plans
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Employee Benefits
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Employee Benefits (1)
• Pay for time not worked–Unemployment insurance–Vacations and holidays– Sick leave– FMLA– Severance
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Employee Benefits (2)
• Insurance benefits–Workers’ compensation
• Hospitalization, medical and disability insurance– Pregnancy Discrimination Act– COBRA– Insurance cost control– Protection and Affordable Care Act of 2010
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Employee Benefits (3)
• Long-term care• Retirement benefits– Social security–Pension plans–401(k) plans–Cash balance pensions– ERISA–Vesting
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Employee Benefits (4)
• Employee services and family-friendly/work-life – Family-friendly benefits–Why Work-Life Benefits?–Workplace flexibility
• Flexible benefits• Employee leasing• Websites
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Current Compensation Trends
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Current Compensation Trends
• Competency and skill-based pay• Broadbanding• Actively managing pay allocation and
talent management• Board oversight of executive pay• Total rewards
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Copyright
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