2ESTABLISHING REWARDS AND PAY PLANS INTRODUCTIONTYPES OF EMPLOYEE REWARDSWHAT IS COMPENSATION ADMINISTRATION?JOB EVALUTION AND THE PAY STRUCTURESOME SPECIAL CASES OF COMPENSATIONEXECUTIVE COMPENSATION PROGRAMSINTERNATIONAL COMPENSATIONSUMMARY / QUESTION ANSWER
3TYPES OF EMPLOYEE REWARDS Intrinsic versus Extrinsic Rewards.Financial versus Non-financial Rewards.Performance-based versus Membership-based Rewards.
4WHAT IS COMPENSATION ADMINISTRATION? Job EvaluationRewardsGoals of Compensation AdministrationGovernment Influence on Compensation Administration- Fair Labour Standards Act- The Civil Rights and Equal Pay Acts
5JOB EVALUTION AND THE PAY STRUCTURE What is Job Evaluation?Isolating Job Evaluation CriteriaMethods of Job Evaluation- Ordering Method- Classification Method- point MethodEstablishing the Pay Structure- Compensation Surveys- Wage Curves- The Wage Structure
6SOME SPECIAL CASES OF COMPENSATION Incentive Compensation Plans- Individual Incentives- Group Incentives- Plant-wide IncentivePaying for PerformanceTeam-based Compensation
7EXECUTIVE COMPENSATION PROGRAMS Salaries of Top ManagersSupplemental Financial CompensationSupplemental Non-financial Compensation: Perquisites
8INTERNATIONAL COMPENSATION Base PayDifferentialsIncentivesAssistance Programs
9JOB EVALUTIONJob Evaluation is the process whereby an organization systematically establishes its compensation program. In this process, jobs are compared in order to arrive at each job’s appropriate worth within the organization.
10Employees exchange work for rewards. Probably the most important rewards, and indeed the most obvious, is money.But all employees don’t earn the same amount of money.
11THE GOALS OF COMPENSATION ADMINISTRATION The goals of compensation administration are to design a cost-effective pay structure that will attract, motivate, and retain competent employees.It should also be one that will be perceived as fair by employees.Fairness is a term that frequently arises in the administration of an organization's compensation program.Organizations generally seek to pay the least that they have to in order to minimize costs, so fairness means a wage or salary that is adequate for the demands and requirements of the job. Fairness is a two-way street.
12WHAT IS JOB EVALUTION?Job analysis is the process of describing the duties of a job, authority relationship, skills required, conditions of work, and additional relevant information.Data generated from job analysis could be used to develop job descriptions and specifications, as well as to do job evaluations.By Job evaluation, we mean using the information in job analysis to systematically determine the value of each job in relation to all jobs within the organization. Job evaluation seeks to rank all the jobs in the organization and place them in a hierarchy that reflects the relative worth of each.Job evaluation assumes normal performance of the job by a typical worker. So, in effect, the process ignores individual abilities or the performance of the jobholder.The ranking that results from job evaluation is the means to an end, not an end in itself. It should be used to determine the organization's pay structure.
13PAYING FOR PERFRORMANCE Pay-for-performance programs are compensation plans that pay employees on the basis of some performance measure.Piecework plans, gain sharing, wage incentive plans, profit sharing, and lump sum bonuses are examples of pay-for-performance programs.What differentiates these forms of pay from the more traditional compensation plans is that instead of paying an employee for time on the job, pay is adjusted to reflect some performance measure.These performance measures might include such things as individual productivity, team or work group productivity, departmental productivity, or the overall organization's profits for a given period.Performance-based compensation is probably most compatible with demonstrating to employees that a strong relationship exists between their performance and the rewards they receive.
14TEAM -BASED COMPENASATION In today’s dynamic organization, much more emphasis has been placed on involving employees in most aspects of the job that affect them.When organizations group employees into teams and empower them to meet their goals, teams reap the benefits of their productive effort.The is, team-based compensation plans are tied to team-based performance.If goals were achieved, then all shared in the “Glory”. If any of the managers failed, the entire team would not receive a dime of bonus money. The concept is now being driven down to the employee population!Under a team-based compensation plan, team members who have worked on achieving and in many cases, exceeding established goals often share equally in the rewards (although, in the truest sense, teams allocate their own rewards).Providing for fair treatment of each team member, group cohesiveness is encouraged.
15SUMMARY Explain the various classifications of rewards. Discuss why some rewards are considered membership based.Define the goal of compensation administration.Discuss job evaluation and its three basic approaches.Explain the evaluation of the final wage structure.Describe competency-based compensation programs.Discuss why executives are paid significantly higher salaries than other employees in an organization.Identify what is meant by the balance sheet approach to international compensation.
16PAY-FOR-PERFORMANCEEmployees should have a clear understanding of what they’re attempting to accomplish. Manager needs to see that this task is achieved by helping employees set their work goals.While this appears to be common sense, it’s not always the case. Setting pay-for-performance objectives is a skill that every manager needs to perfect. You can better facilitate this process by following these guidelines.- Identify an employee’s key job tasks.- Establish specific and challenging goals for each keytask.- Allow the employee to actively participate.- Prioritize goals.- Built in feedback mechanisms to assess goal.- Link rewards to goal attainment.
17FACTOR 1ST 2ND 3RD 4TH 5TH DEGREE DEGREE DEGREE DEGREE DEGREE Skill1. Education2. Problem SolvingResponsibility1. Safety of others2. Work of others2. Problem Solving:This factor examination the types of problem dealt with in your job. Indicate the one level that is most representative of the majority of your job responsibilities.Degree 1: Actions are performed in a set order per written or verbal instruction.Problems are referred to supervisor.Degree 2: Solves routine problems and makes various choices regarding the order in which the work is performed within standard practices. May obtain information from varied sources..Degree 3: Solves varied problems that require general knowledge of company policies and procedures applicable with in area of responsibility. Decisions made based on a choice from established alternatives. Expected to act within standards and established procedures.Degree 4: Requires analytical judgment, initiative, or innovation in dealing with complex problems or situations. Evaluation not easy because there is little precedent or information may be incomplete.Degree 5: Plans, delegates, coordinates, and/or implements complex tasks involving new or constantly changing problems or situations involves the origination of new technologies or policies for programs or projects. Actions limited only by company policies and budgets.Source: Material reprinted with permission of The Dartnell Corporation, Chicago, IL
21EMPLOYEE BENEFITS INTRODUCTION LEGALLY REQUIRED BENEFITS VOULNTARY BENEFITSPAID TIME OFFSURVIVOR BENEFITSFAMILY-FRIEND BENEFITSAN INTEGRATIVE PERESPECTIVE ON EMPLOYEE BENEFITSRETIRMENT PROGRAMSSUMMARY / QUESTION ANSWERThe Costs of Providing Employee BenefitContemporary Benefits OfferingsSocial SecurityUnemployment CompensationWorker’s CompensationHealth Insurance- Traditional Insurance- Health Maintenance Organization- Preferred Provider Organizations- Employer-Operated Coverage- Health Insurance ContinuationVacation and Holiday LeaveDisability InsuranceGroup Term Life InsuranceTravel InsuranceThe Service Side of BenefitFlexible Spending AccountsModular PlansCore-Plus Options PlansDefined benefit PlansDefined Contribution Plans- Money Purchase Pension Plan- Profit-Sharing Plans- Individuals Retirement Accounts- Roth IRAs- 401(K)s
22The Costs of Providing Employee Benefits INTRODUCTIONThe Costs of Providing Employee BenefitsContemporary Benefits Offerings
23LEGALLY REQUIRED BENEFITS Social SecurityUnemployment CompensationWorkers’ Compensation
24- Traditional Health Insurance VOLUNTARY BENEFITSHealth Insurance- Traditional Health Insurance- Health Maintenance Organizations- Preferred Provider Organizations- Employer-Operated Coverage- Health Insurance Continuation