Professional Documents
Culture Documents
Identify the compensation policies and practices that are most appropriate for a particular firm. Weigh the strategic advantages and disadvantages of the different compensation options. Establish a job-based compensation scheme that is internally consistent and linked to the labor market. Understand the difference between a compensation system in which employees are paid for the skills they use and one in which they are paid of the job they hold. Make compensation decisions that comply with the legal framework.
Compensation
Financial rewards that employees receive can come in a wide array of forms Most visible forms are cash compensation and fringe benefits Total rewards an individual receives, when compared to with what he feels he should receive , determine satisfaction
Compensation
Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction
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Compensation
The methods and practices of maintaining balance between interests of operating the company within the fiscal budget and attracting, developing, retaining, and rewarding high quality staff through wages and salaries which are competitive with the prevailing rates for similar employment in the labor markets.
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Compensation
Compensation is a tool used by management for a variety of purposes to further the existence of the company. Compensation may be adjusted according the business needs, goals, and available resources.
Compensation
Recruit and retain qualified employees Increase or maintain morale/satisfaction Reward and encourage peak performance Achieve internal and external equity Reduce turnover and encourage company loyalty Modify (through negotiations) practices of unions
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Compensation will be perceived by employees as fair if based on systematic components Various compensation systems have developed to determine the value of positions
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Salary surveys
Collections of salary and market data. May include average salaries, inflation indicators, cost of living indicators, salary budget averages. When purchasing the results of salary surveys conducted by other vendors, note that surveys may be conducted within a specific industry or across industries as well as within one geographical region or across different geographical regions.
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Types of Compensation
Base Pay Commissions Overtime Pay Bonuses, Profit Sharing, Merit Pay Stock Options Travel/Meal/Housing Allowance Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes...
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Total Compensation
The package of quantifiable rewards an employee receives for his or her labors. Includes three components: base compensation, pay incentives, and indirect compensation/benefits
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Base Compensation
Pay Incentives
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Compensation Tools
While
Compensation Tools
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Compensation Tools
Job-based Approaches
Includes traditional and widely used type of compensation programs These plans assume that work gets done by people who are paid to perform well-defined jobs All jobs not equally important Important jobs attract better compensation Employees paid according to Grade
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Compensation Tools
Skill-based Approaches
Far less common Assumes that workers should be paid according to how flexible or capable they are at performing multiple tasks Greater the variety of job-related skills workers possess, the more they are paid
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Technology is stable Jobs do not change often Employees do not need to cover for one another frequently Much training is required to learn a given job Turnover is relatively low Employees are expected to move up through the ranks over time Jobs are fairly standardized within the industry
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Individual-based Compensation
The firm has a relatively educated workforce with both the ability and the willingness to learn different jobs The companys technology and organizational structure change frequently Employee participation and teamwork are encouraged throughout the organization Opportunities for upward mobility are limited Opportunities to learn new skills are present The costs of employee turnover and absenteeism in terms of lost production are high
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