1. Chapter 1: Strategic Compensation MGT 4543 Compensation Management You will need technology for today’s class activity.

2. Be prepared… Today, I will call on you for answers. Borrow a book if you do not have one yet. Please do NOT read from your book. We want to stay awake! What if you did not prepare for today’s class? – My best advice is to follow along, try to keep up, and THINK of a logical answer if you are called on. That is MUCH better than saying the dreaded, “I don’t know” or “I don’t have a book yet.”

3. What does SHRM stand for??? Society for Human Resource Management http://www.shrm.org/

4. Opportunities to get involved with HR professionals MSU student chapter of SHRM – Sign up to be on the e-mail list if you are interested! Golden Triangle Human Resource Association http://gthra.shrm.org/ SHRM – http://www.shrm.org/ http://www.shrm.org/

5. Opportunities to get involved with HR professionals Why join the MSU Student Chapter of SHRM? Exposure to HR professionals – Networking opportunities – Opportunities to learn more about HR GTHRA & MSU Partnership – Dual membership (if you attend GTHRA meetings) – Mentorship program (pilot kickoff this fall!!!)

6. Strategic Compensation What is compensation?

7. Strategic Compensation Explain each: – base pay – compensable factors – COLAs

8. Strategic Compensation Explain each: – seniority pay – merit pay – incentive pay

9. Strategic Compensation Explain each: – Pay-for-knowledge What type of workers are likely to receive this type of pay? – Skill-based pay What type of workers are likely to receive this type of pay?

10. Strategic Compensation Explain each: – Discretionary benefits Give some examples…your book has plenty to choose from! – Legally-required benefits Give some examples…your book has plenty to choose from!

11. Brief History of Compensation Industrial revolution – Division of labor; – Change from work _________________ to _________________ Scientific management – Productivity measures – Piecework plans Welfare practices & Gov regulation – Improving conditions for Ees (e.g., medical insurance for EEs) – Personnel management emerges Competitive advantage – Employees viewed as a source of ___________________ Pay-for-knowledge, pay-for-skill Emphasis on recruitment and retention – Pressure of globalized competition

12. Strategic Compensation How do strategy and tactics differ? What is strategic management?

13. Strategic Management & HRM

14. Strategic Compensation Cost leadership – What is cost leadership? – How do Ryanair’s compensation practices help it achieve its strategy? Differentiation – What is differentiation? – Discuss why brand loyalty and research & development frequently go hand-in-hand with differentiation.

15. Class Activity Using your technology, identify two companies – one pursuing a low-cost strategy and one pursuing a differentiation strategy. 1)Get out a piece of paper & write your name on it. 2)Name and describe each company - What good do they produce or what service do they offer? 3)Find each company’s mission and summarize it. 4)List 2 reasons why you believe that each company is pursuing a low-cost or differentiation strategy

16. Class Activity Low cost strategy Company name: _________________________ Description:_____________________________ Mission:________________________________ 2 reasons why you believe that the company is pursuing a low-cost strategy _____________________________________ Include this information on your sheet of paper to TURN in.

17. Class Activity Differentiation strategy Company name: _________________________ Description:_____________________________ Mission:________________________________ 2 reasons why you believe that the company is pursuing a differentiation strategy _____________________________________ Include this information on your sheet of paper to TURN in.

18. Strategic Compensation What does it mean for compensation systems to be internally consistent? Why is internal consistency in compensation important?

19. Strategic Compensation Describe the two processes to achieve internal consistency. Market competitiveness in compensation: How is it achieved? Why does it matter?

20. Strategic Compensation Fill in the blank: – pay structures – represent pay rate ____________ for jobs of ___________ worth & the framework for recognizing differences in employee ______________. Explain each: – pay grades – pay ranges

21. Pay Structure $27,000 Pay Grade 1 __________ $20,000 $32,000 Pay Grade 2 $25,000 $37,000 Pay Grade 3 __________ $30,000 Pay RangePay Range 200-400 401-600 601-800 Job evaluation points

22. Strategic Compensation What stakeholders must a compensation system satisfy? Why might satisfying various stakeholders be a challenge for HR departments?