1. IMPORTANT PLEASE SELECT A TABLE AT WHICH NONE OF THE PEOPLE OF YOUR REGULAR GROUP ARE SITTING GOAL IS TO REARRANGE ALL GROUPS (JUST FOR THIS MEETING)

2. Introduction into Compensation and Ocean Park Case Session 18

3. Agenda  What determines pay levels?  Elements of compensation  Ocean Park case discussion

4. Decisions About Pay  Job Structure Relative pay for different jobs within the organization  Pay level Average amount the organization pays for a particular job  Pay structure The pay policy resulting from job structure and pay-level decisions

5. Issues in Developing a Pay Structure Legal Requirements Market Forces -Product markets -Labor markets Market Forces -Product markets -Labor markets Organization’s Goals -High-quality workforce -Cost control -Equity and fairness -Legal compliance Organization’s Goals -High-quality workforce -Cost control -Equity and fairness -Legal compliance Pay Level Decision Job Structure Decision Pay Structure Decision -Pay rates -Pay grades -Pay ranges -Pay differentials Pay Structure Decision -Pay rates -Pay grades -Pay ranges -Pay differentials (Re-arranged from Figure 11.1)

6. Legal Requirements in Hong Kong  Minimum wage No minimum wage except for foreign domestic helpers.  Child labor Children under to age of 15 are prohibited to work (13 and 14 is allowed in some non-manufacturing industries as part-timers).  Working hours Shift to five-day workweek.  Discrimination Ordinances (EOC)

7. Economic Influences on Pay  Product Markets Number and diversity of organizations that offer competing goods and services Labor costs are a key consideration to stay competitive  Labor Markets Companies have to stay competitive with regard to pay to attract the best employees Cost-of-Living

8. Employee Judgments about Pay Fairness What might employees do if they perceive pay unfairness?

9. Job Structure: Relative Value of Jobs  Job evaluation An administrative procedure for measuring the relative internal worth of the organization's jobs  Hay Guide-Chart Profile Method Method of job evaluation that creates a profile for each position based on its  Required know-how  Degree of problem solving  Accountability

10. Pay Structure: Putting it all Together  Pay may be in terms of Salary, hourly rate, piecework rate  Pay policy line Shows the mathematical relationship between job evaluation points and pay rate  Pay Grades Sets of jobs having similar worth or content, grouped together to establish rates of pay

11. Sample Pay Grade Structure

12. Test Your Knowledge  To correct a Red-circled employee, I would….. a. Give them a raise b. Demote them c. Give them a bonus, but no raise d. Move them to a job with a higher pay range

13. Pay Structure and Actual Pay  HR is typically responsible for setting the pay structure and monitoring it over time  Compa-Ratio: ratio of average pay to the midpoint of the pay range Figure 11.7

14. Total Compensation Base Compensation Pay Incentives Benefits Elements of Compensation

15. Base Compensation  The fixed pay an employee receives on a regular basis Salary or hourly wages The most standard part about pay

16. Pay Incentive  A program designed to reward employees for good performance Bonuses, profit sharing

17. Indirect Benefit  Benefits Health insurance, housing scheme, annual leaves  Perquisites, perks Car, parking, club member, etc.

18. Strategic Aspects  Compensation constitutes the single most important cost in the firm 60% or even higher of the total cost  The pay strategy should be consistent with overall business strategy Hi-tech industry: Research & Development

19. Ocean Park Case Study  Small Group Discussion  Wrap-up and questions for Mr. Ho

20. Ocean Park: Key Players Thomas J. Mehrmann Chief Executive Brian Ho HR Director (and OUR GUEST SPEAKER for next week) Allan Zeman Chairman of the Board

21. Redevelopment Master Plan 2006-2010  HKD 5.5 Billion  33 additional animal species, number of rides will double to 70.  Two new hotels providing 1200-1500 rooms  From 4.3 mln visitors in 2004 to 5 mln visitors in 2010  50% of visitors from mainland, 40% local, 10% overseas.

22. Growing Number of Mainland Visitors ** Over 10 percent annual growth in the number of visitors!

23. How’s HK Disneyland doing?  Not many statistics available  Walt Disney revealed in an SEC filing that Hong Kong Disneyland drew fewer visitors from October to December 2006 than in the same period a year ago.  Missed target of 5.6 million visitors for 2006.  Disney also disclosed that if business doesn’t improve quickly, it will fail to meet performance pledges to its creditors, forcing it to refinance $294 million in debt.

24. Competitive advantages  What are the competitive advantages of Ocean Park?  What are those of Hong Kong Disneyland?