Human resrouce management 13th mathis jacson chapter 011

CHAPTER 11

Total Rewards and Compensation

SECTION 4 Compensation

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2011 Cengage
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PowerPoint
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Presentation by
by Charlie
Charlie Cook
Cook
The
The University
University of
of West
West Alabama
Alabama


Chapter Objectives

After you have read this chapter, you should be able to:

•

Identify the three general components of total rewards and give examples of each.

•

Discuss four compensation system design issues.

•

List the basic provisions of the Fair Labor Standards Act (FLSA).

•

Outline the process of building a base pay system.

•

Describe the two means of valuing jobs.

•

Explain two ways individual pay increases are determined.

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–2


Nature Of Total Rewards and Compensation

• Total Rewards
 Monetary and non-monetary rewards provided to attract, motivate, and retain employees.

• Rewards System Strategic Objectives:
 Legal compliance with all laws and regulations
 Cost-effectiveness for the organization

 Internal, external, and individual equity
 Performance enhancement for the organization
 Performance recognition and talent management
 Enhanced recruitment, involvement, and retention

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–3


Compensation Approaches

Traditional Approach

Total Rewards Approach

•

Compensation is primarily base pay

•

Variable pay used with base pay

•

Bonuses are for executives only

•

Annual/long-term incentives provided to all employees

•

Fixed benefits tied to long tenure

•

Flexible and portable benefits offered

•

Pay grade progression is based on organizational promotions

•

Knowledge-based broadbands determine pay grades

•

One organization-wide pay plan for all employees

•

Multiple pay plans consider job family, location, and business
units

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–4


FIGURE 11–1

Total Rewards Components

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–5


FIGURE 11–2
Continuum of Compensation
Philosophies

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–6


FIGURE 11–3

HR Metrics for Compensation

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–7


FIGURE 11–4

Typical Division of Compensation Responsibilities in HR

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–8


Compensation System Design Issues

Compensation Fairness
and Equity

External
Equity

Internal Equity
Pay Secrecy vs. Openness

Procedural Justice
Distributive Justice

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–9


Compensation System Design Issues (cont’d)

Market Competitiveness
and Compensation

“Meet the Market” Strategy

“Lag the Market”
Strategy

“Lead the Market” Strategy

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–10


FIGURE 11–5

Compensation Quartile Strategies

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–11

Competency-Based Pay System Design Issues

Identification of the required competencies

Progression and compensation of employees

Competency-Based Pay
Limitations on who can acquire more competencies

Systems
KBP/SBP

Training in the appropriate competencies

Certification and maintenance of competencies

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–12


Compensation System Design Issues (cont’d)

Individual versus Team Rewards

Team

Individual

How to develop compensation programs

How to compensate

that build on the team concept.

the individuals whose performance may
also be evaluated on team achievements.

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–13


FIGURE 11–6

Possible Components of Global Employee Compensation

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site, in whole or in part.

11–14


Global Compensation Issues

Compensating Expatriates

Balance-Sheet Approach

Global Market Approach

Tax Equalization Plan

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–15


Legal Constraints On Pay Systems

Fair Labor Standards Act
(FSLA)

Minimum
Wage

Child
Labor
Provisions

Exempt and Non-Exempt

Overtime

Statuses

Pay

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site, in whole or in part.

11–16


Categories of Exempt Employees

Executive

Administrative

Exempt Employees

Outside Sales

Professional

Computer Employees

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–17


FIGURE 11–7

Determining Exempt Status under the FLSA

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site, in whole or in part.

11–18


Compensation for Overtime Work

Common Overtime
Issues

Compensatory Time Off

Incentives for Non-exempts

Training

Travel

Time

Time

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site, in whole or in part.

11–19

Independent Contractor Regulations

Identifying Criteria for Independent Contractors

Behavioral Control

Financial

Relationship-Type Factors

Control

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site, in whole or in part.

11–20


Acts and Legislation Affecting Compensation

Compensation and the
Law

Davis-Bacon Act

Equal Pay Act

Walsh-Healy Act

of 1963 and

McNamara-O’Hara Act

Pay Equity

State and

Garnishment Laws

Local Laws

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–21


FIGURE 11–8
Compensation
Administration Process

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–22


Valuing Jobs with Job Evaluation Methods

• Job Evaluation
 The formal systematic means used to identify the relative worth of jobs within an
organization.

• Compensable Factor
 A job value commonly present throughout a group of jobs.
 Something for which an organization will compensate an employee.

© 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web
site, in whole or in part.

11–23


FIGURE 11–9

Examples of Compensable Factors for Different Job Families in a Hotel

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site, in whole or in part.

11–24


Job Evaluation Methods

Job Evaluation Methods

Point

Method

Ranking Method

Factor-Comparison

Classification Method

Method

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site, in whole or in part.

11–25