2 Contrasting Perspectives of Compensation Society’s ViewsStockholders’ ViewsEmployees’ ViewsManagers’ Views
3 Exhibit 1.1: Hourly Compensation Costs for Production Workers (2005 data) United States $23.65BrazilCanadaMexicoAustraliaHong KongJapanSouth Korea($8.23 in 2000)SingaporeSri Lanka *(2004 data, comparable to China)TaiwanAustriaBelgiumCzech Republic($2.83 in 2000)DenmarkFinlandFranceGermanyHungary($2.79 in 2000)IrelandItalyNetherlandsNorwayPolandPortugalSpainSwedenSwitzerlandUnited KingdomHourly compensation costs include (1) hourly direct pay and (2) employer social insurance expenditures and other labor taxes.
4 Exhibit 1.2: Labor Costs as a Percentage of Revenues, Airline Industry
5 What Is Compensation?Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship.
7 Exhibit 1.5: THE PAY MODEL EFFICIENCY Performance Quality Customers POLICIESTECHNIQUESOBJECTIVESALIGNMENTWork Descriptions Evaluation/ analysis certificationINTERNAL STRUCTUREEFFICIENCYPerformanceQualityCustomersStockholdersCostsFAIRNESSCOMPLIANCECOMPETITIVENESSMarket Surveys Policy PAY definitions lines STRUCTURECONTRIBUTORSSeniority Performance Merit INCENTIVE based based guidelines PROGRAMSMANAGEMENTCosts Communication Change EVALUATION
8 Caveat Emptor - Be An Informed Consumer Does the research measure anything useful?Does the study separate correlation from causation?Are there alternative explanations?
9 Listening to HR’s Critics Quantify people-management results into dollarsProductivity of workforceCost of vacant positionCost of keeping bad managerDollar impact of hiring and keeping top performers vs. average ones in mission-critical jobsAdopt “fact-based” decision-makingNot “I think” or “I believe” but “I know” re: cause and effectCauses of turnoverWhat motivates workers to produce moreWhich HR actions can turn business unit aroundSource: Workforce Management, 7/31/06