Wage Payments INSY 3021 Auburn University Spring 2007

Retirement plans, 401K plans, paid time off (vacation, holiday, personal, bereavement), insurance's (medical, dental, vision, life, disability), educational benefits, Jury, FMLA, and other perks. Can be up to about 40% of the direct labor cost Fringe Benefits

Compensate the employee on the # of hours worked times an established hourly pay rate Advantages include: guaranteed wage, not production based, fringe benefits,and high base rates Disadvantage: allow to broad a gap between employee benefits and productivity. Benefits get taken for granted. Day Work Plans

Flexible Compensation Plans (related to output) Piecework and standard labor hour plan Gainsharing plans Employee stock ownership plans (ESOP) Profit-sharing plans

Pays employee strictly by the output generated during the pay period Outlawed in the United States All employees receive a guaranteed minimum wage Piecework

Federal Labor Standards Act (FLSA) ance/whd/hrg.htm#1

Workers operate on a daywork plan up to 100% productivity, then piecework beyond 100% Guaranteed base rate, established by job evaluation Standard Hour Plan

Rewards are paid to employees in the form of bonuses (immediate or deferred) based on the the following: Quality improvement, lower costs, beneficial suggestions, reduced labor content, etc… Productivity (Gain) Sharing Plans

Typically shared either 50% - 50% (or 33% -66%) with the company Scanlon, Rucker & IMPROSHARE plans are mentioned in the text. Many types and varieties exist Productivity (Gain) Sharing Plans (con’t)

Involve a trust that holds company stock for the employees Many companies participate in this type of plan Some entire companies are totally employee owned (AVIS, Southwest Airlines, etc.) Employee Stock Ownership Plan

An employer pays employees special pay based on the prosperity of the company Can be in the form of cash plans, deferred plans, or a combination of the two Payment can be spread to all employees equally, or prorated based on their annual base salary Profit Sharing

Include rewards that have no relation to pay Conferences, picnics, afternoon off, recognition, committee involvement, etc… Treat all employees the way that you expect to be treated Non-financial Performance Motivation Plans

Job Evaluation Determination of the basic worth of a job. Considerations: Benefit to the company Demands of the work on the employee

Four Formal Approaches Job Classification (civil service grades): Not quantitative. Job Ranking (pair-wise comparison of jobs):Not quantitative. Job Factor Comparison Job Point Plans

Job Factor Analysis Factors should be related to the job (not the worker) Factors must be non-discriminatory Should measure aspects of difficulty and value to the organization Rarely takes more than ten (10).

Key Jobs Create families of related jobs that encompass similar factors. Be consistent. Committee structure works best for these plans. GET MORE TRAINING before you attempt to do this!

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