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2. Learning Objectives After studying this chapter, you should be able to:
Describe the basic issues involved in developing a compensation strategy
Discuss how organizations develop a wage and salary structure
Identify and describe the basic issues involved in wage and salary administration
Discuss the basic considerations in understanding benefit programs
Identify and describe mandated benefits
Identify and describe nonmandated benefits
Discuss contemporary issues in compensation and benefits
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3. What Is Compensation?
The set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization.
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4. What are Benefits? Purposes of Benefits Rewards Incentives
Items of Value
Purposes of Benefits
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5. Beyond the Book: Components of the Compensation System
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6. Understanding the Basic Purposes of Compensation
Internal Equity
External Equity
Pay Surveys
Developing a Compensation Strategy
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7. Example of a Pay Survey
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8. Wages Versus Salaries Wages Salary
Is hourly compensation paid to operating employees; basis for wages is time.
Salary
Is income paid to an individual on the basis of time.
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9. Which pay level is a firm on the decline likely to choose?
Strategic Options for Compensation
Which pay level is a firm on the decline likely to choose?
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10. Job Evaluation: Determining What to Pay
Point system
Classification system
Job Evaluation Methods
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11. Job-Classification System
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12. Organizational objectives
Beyond the Book: Linking Pay to Performance
Motivation
Productivity
Cost savings
Organizational objectives
Retention
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13. Pay-for-Knowledge and Skill-Based Pay
Compensating employees for learning specific information
Skill-based Pay
Rewards employees for acquiring new skills
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14. Wage and Salary Administration
The ongoing process of managing a wage and salary structure; managers must be sensitive to these costs and must be vigilant about managing them properly.
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15. Understanding Compensation
Pay Secrecy
Pay compression
Pay Inversion
Wage and Salary Administration Issues
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16. Types of Benefits Mandated Benefits Non-Mandated Benefits
Unemployment Insurance
Social Security
Workers’ Compensation
Non-Mandated Benefits
Private pension plans
Defined benefit plans
Defined contribution plans
Paid time off
Health insurance coverage
Additional Benefits
Wellness programs
Child care programs
Cafeteria-style benefits
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17. Beyond the Book: Benefits for U.S. Private Industry Workers0%
20%
40%
60%
80%
100%
Defined Benefit Pension
Defined Contribution Plan
Access to Paid Holiday
Acess to Paid Sick Leave
Access to Paid Vacation
Child Care Assistance
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18. Minimum Annual Vacation by Law in Different Countries
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19. Executive Compensation Components
Base Salary
Incentive Payments
Usually a bonus based on company performance
Perquisites
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20. Senior Executive Perquisites in Different Countries
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21. Number of Executives Receiving a Bonus of at Least $1 Million in 2008
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22. Legal Issues in Compensation
Fair Labor Standards Act
Includes provisions for the minimum wage, overtime, and child labor
HR managers must adhere to overtime laws
Vesting Rights
Entitle employees to guaranteed rights to receive pension benefits
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23. Evaluating Compensation Policies
Organizations should provide reasonable compensation and appropriate benefits to its employees—employees should be aware of them!
It is in the best interests of stockholders and other constituents of the organization that the firm manages its resources wisely.
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