Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall9-1 Human Resource Management Chapter Ten Establishing Pay Rates

© 2008 Prentice Hall, Inc. All rights reserved. 11–2 Basic Factors in Determining Pay Rates Direct Financial Payments Indirect Financial Payments Employee Compensation

© 2008 Prentice Hall, Inc. All rights reserved. 11–3 Compensation Policy Issues Pay for performance Pay for seniority Salary increases and promotions Overtime and shift pay Probationary pay Paid and unpaid leaves Paid holidays Salary compression Geographic costs of living differences

© 2008 Prentice Hall, Inc. All rights reserved. 11–4 Equity and Its Impact on Pay Rates External Equity Procedural Equity Internal Equity Individual Equity Forms of Equity

© 2008 Prentice Hall, Inc. All rights reserved. 11–5 Addressing Equity Issues Salary Surveys Job Analysis and Job Evaluation Performance Appraisal and Incentive Pay Communications, Grievance Mechanisms, and Employees’ Participation Methods to Address Equity Issues

© 2008 Prentice Hall, Inc. All rights reserved. 11–6 Establishing Pay Rates 12 3 Steps in Establishing Pay Rates Determine the worth of each job in your organization through job evaluation (to ensure internal equity). Conduct a salary survey of what other employers are paying for comparable jobs (to help ensure external equity). Group similar jobs into pay grades.

© 2008 Prentice Hall, Inc. All rights reserved. 11–7 The Salary Survey To price benchmark jobs To make decisions about benefits Step 1. The Wage Survey: Uses for Salary Surveys To market- price wages for jobs

© 2008 Prentice Hall, Inc. All rights reserved. 11–8 Establishing Pay Rates (cont’d) Skills Effort Responsibility Working Conditions Step 2. Job Evaluation: Identifying Compensable Factors

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall9-9 Human Resource Management Chapter 11 Pay for Performance and Financial Incentives

© 2008 Prentice Hall, Inc. All rights reserved. 11–10 Employee Incentive Plans Individual Employee Incentive and Recognition Programs Sales Compensation Programs Organizationwide Incentive Programs Executive Incentive Compensation Programs Team/Group-based Variable Pay Programs Pay-for-Performance Plans

© 2008 Prentice Hall, Inc. All rights reserved. 11–11 Benefits Supplemental Pay Employee Services Insurance Benefits Retirement Benefits Types of Employee Benefits

© 2008 Prentice Hall, Inc. All rights reserved. 11–12 Policy Issues in Designing Benefit Packages Policy Issues Who will be covered Coverage during probation Degree of employee choice Which benefits to offer Whether to include retirees How to finance benefits Cost containment procedures Communicating benefits options

© 2008 Prentice Hall, Inc. All rights reserved. 11–13 Pay For Time Not Worked Vacations and Holidays Parental Leave Supplemental Unemployment Benefits Supplementa l Pay Benefits Unemployment Insurance Sick Leave Severance Pay

© 2008 Prentice Hall, Inc. All rights reserved. 11–14 Pay for Time Not Worked Unemployment Insurance Provides for benefits if a person is unable to work through no fault of his or her own. Is an employer payroll tax that is determined by an employer’s rate of personnel terminations. Vacations and Holidays Number of paid vacation days varies by employer. Number of holidays varies by employer. Premium pay for work on holidays.

© 2008 Prentice Hall, Inc. All rights reserved. 11–15 Pay for Time Not Worked (cont’d) Sick Leave Provides pay to an employee when he or she is out of work because of illness. Costs for misuse of sick leave Pooled paid leave plans Parental Leave

© 2008 Prentice Hall, Inc. All rights reserved. 11–16 Pay for Time Not Worked (cont’d) Severance Pay A one-time payment when terminating an employee.

© 2008 Prentice Hall, Inc. All rights reserved. 11–17 Insurance Benefits Workers’ Compensation Provides income and medical benefits to work- related accident victims or their dependents, regardless of fault. Death or disability: a cash benefit based on earnings per week of employment. Specific loss injuries: statutory list of losses. Controlling workers’ compensation costs Screen out accident-prone workers. Make the workplace safer. Thoroughly investigate accident claims. Use case management to return injured employees to work as soon as possible.

© 2008 Prentice Hall, Inc. All rights reserved. 11–18 Other Benefits Issues Life Insurance Types Group life insurance Accidental death and dismemberment Personnel policies Benefits-paid schedule Supplemental benefits Financing

© 2008 Prentice Hall, Inc. All rights reserved. 11–19 Other Benefits Issues Benefits for Part-Time and Contingent Workers Leave and health benefits are now more commonly available to part-time workers. Benefits for long-term independent contractors.

© 2008 Prentice Hall, Inc. All rights reserved. 11–20 Family-Friendly Benefits Subsidized child care Sick child benefits Elder care Time off Subsidized employee transportation Food services Educational subsidies Fitness and medical facilities Flexible work scheduling

© 2008 Prentice Hall, Inc. All rights reserved. 11–21 Flexible Benefits Programs Cafeteria (Flexible Benefits) Approach Each employee is given a limited benefits fund budget to spend on preferred benefits. Types of plans Flexible spending accounts Core plus option plans Flexible Work Arrangements Flextime schedules Compressed workweek schedules Job sharing Work sharing Telecommuting