A Human Resource Management Approach

STRATEGIC COMPENSATION

Chapter 1

Strategic Compensation: A Component of Human Resource Systems

1-1

What Is Compensation?

Compensation represents the rewards employees receive for performing their job. They are either:
Intrinsic

Extrinsic

1-2

5 Core Job Dimensions Intrinsic Factors

Skill variety Task identity Task significance Autonomy Feedback

1-3

Elements of Core Compensation

Base Pay
Hourly pay Annual salary

Base pay adjustments

COLAs Seniority pay Merit pay Incentive pay Pay-for-knowledge/Skill-based pay
1-4

Four Compensable Factors

An employees skill level An employees effort An employees level of responsibility The severity of the working conditions

Courts will use these factors!

1-5

Discretionary Benefits
Three Broad Categories

Protection programs

Pay-for-time-not-worked
Services

1-6

Compensation Benefits Costs

Review the table on pages 9-10 What is the Total Compensation for a Registered Nurse on an hourly basis? Per hour, how much does an employer pay for Insurance in the construction industry? What would you estimate MY Paid Leave costs LTC on an hourly basis?

1-7

Legally-Required Benefits

Disability Unemployment

Federal Legislation Designed to: Promote worker safety and health Maintain family income Assist families in crisis Provide assistance in case of

1-8

Competitive Strategy

The planned use of company resources

Technology Capital Human Resources

2+ years time span

Choices
Lowest cost strategy

Differentiation strategy
1-9

Competitive Strategy Choices

Lowest Cost: Focus on being lowest cost producer/seller of goods or services Differentiation: Focus on offering unique goods or services

1-10

Lowest-Cost Strategy
Effective when Jobs:

Include predictable behaviors

Have a short-term focus Require autonomous activity Focus on quantity of output

1-11

Differentiation Strategy
Effective when Jobs:

Require highly creative behaviors Have a long-term focus Demand cooperation and independence Involve risk-taking

1-12

Human Resources Responsibilities

Recruitment
Selection

Career development
Labor- management relations Employment termination Ensuring legal compliance

Performance appraisal
Training

1-13

Employment Termination
Two Types:

Involuntary

Terminated

Laid-off

Voluntary

Quit Retired
1-14

Employment Legislation

Davis Bacon Act 1931 prevailing wage Fair Labor Standards Act of 1938 Equal Pay Act of 1963 Civil Rights Act of 1964 Pregnancy Discrimination Act of 1978 Americans with Disabilities Act of 1990 Family and Medical Leave Act of 1993
Recent amendments to both the ADA and the FMLA

1-15

Compensation Goals

Internal consistency Market competitiveness Recognizing individual efforts

1-16

Internal Consistency
Achieved when the value (qualifications, duties, responsibilities) of each job is clearly defined Represents:

Job structure Hierarchy

Achieved using:

Job analysis Job evaluation

1-17

Market Competitiveness

Compensation policies that fit with business objectives

Vital in attracting and retaining employees

Strategic analyses Compensation surveys

Are based on:

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