Human resource 1e by denisi griffin chapter 09

©
© 2012
2012 South-Western,
South-Western, Cengage
Cengage Learning,
Learning, Inc.
Inc.
All
All rights
rights reserved.
reserved.

Prepared
Prepared by
by Joseph
Joseph B.
B. Mosca,
Mosca, Monmouth
Monmouth University
University and
and
Marla
Marla M.
M. Kameny,
Kameny, Baton
Baton Rouge
Rouge Community
Community College
College

PowerPoint

PowerPoint Presentation
Presentation Design
Design by
by Charlie
Charlie Cook
Cook
The
The University
University of
of West
West Alabama
Alabama


Learning Objectives

After studying this chapter, you should be able to:

1. Describe the basic issues involved in developing a
compensation strategy
2. Discuss how organizations develop a wage and salary
structure
3. Identify and describe the basic issues involved in wage and
salary administration
4. Discuss the basic considerations in understanding benefit
programs
5. Identify and describe mandated benefits
6. Identify and describe nonmandated benefits
7. Discuss contemporary issues in compensation and benefits
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9–2


What Is Compensation?
The set of rewards that organizations
provide to individuals in return for their
willingness to perform various jobs and
tasks within the organization.

© 2012 South-Western, Cengage Learning, Inc. All rights reserved.

9–3


What are Benefits?

Purposes
Purposes of
of Benefits
Benefits

Rewards
Rewards

Incentives
Incentives

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Items
Items of
of Value
Value

9–4


Beyond the Book:

Components of the Compensation System

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9–5


Understanding the Basic
Purposes of Compensation
Developing
Developing aa
Compensation
Compensation
Strategy
Strategy
Internal
Internal Equity
Equity

External

External
Equity
Equity

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Pay
Pay Surveys
Surveys

9–6


Example of a Pay Survey

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9–7


Wages Versus Salaries
• Wages
 Is hourly compensation paid to

operating employees; basis for
wages is time.

• Salary
 Is income paid to an

individual on the basis
of time.

© 2012 South-Western, Cengage Learning, Inc. All rights reserved.

9–8


Strategic Options for Compensation

Which
Which pay
pay level
level is
is aa firm
firm on
on
the
the decline
decline likely
likely to
to choose?
choose?

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9–9


Job Evaluation:

Determining What to Pay

Job
Job Evaluation
Evaluation
Methods
Methods

Classification
Classification
system
system

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Point
Point
system
system

9–10


JobClassification
System

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9–11

Beyond the Book:

Linking Pay to Performance

Motivation
Motivation

Retention
Retention

Cost
Costsavings
savings

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Productivity
Productivity

Organizational
Organizational
objectives
objectives

9–12


Pay-for-Knowledge and Skill-Based
Pay

• Pay-for-Knowledge
 Compensating employees

for learning specific
information

• Skill-based Pay
 Rewards employees for

acquiring new skills

© 2012 South-Western, Cengage Learning, Inc. All rights reserved.

9–13


Wage and Salary
Administration
The ongoing process of managing a
wage and salary structure; managers
must be sensitive to these costs and
must be vigilant about managing them
properly.

© 2012 South-Western, Cengage Learning, Inc. All rights reserved.

9–14


Understanding Compensation

Wage
Wage and
and Salary
Salary
Administration
Administration Issues
Issues

Pay
Pay
Secrecy
Secrecy

Pay
Pay
compression
compression

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Pay
Pay
Inversion
Inversion

9–15


Types of Benefits
• Mandated Benefits

• Additional Benefits

 Unemployment Insurance

 Wellness programs

 Social Security

 Child care programs

 Workers’ Compensation

 Cafeteria-style benefits

• Non-Mandated Benefits
 Private pension plans



Defined benefit plans
Defined contribution plans

 Paid time off
 Health insurance

coverage
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9–16

Beyond the Book:

Benefits for U.S. Private Industry Workers

Child Care Assistance
Access to Paid Vacation
Acess to Paid Sick Leave
Access to Paid Holiday
Defined Contribution Plan
Defined Benefit Pension
0%

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20%

40%

60%

80%

100%

9–17


Minimum Annual Vacation by Law in Different

Countries

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9–18


Executive Compensation
Components
• Base Salary
• Incentive Payments
 Usually a bonus based on

company performance

• Perquisites

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9–19


Senior Executive
Perquisites in
Different
Countries

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9–20

Number of Executives Receiving a
Bonus of at Least $1 Million in 2008

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9–21


Legal Issues in Compensation
• Fair Labor Standards Act
 Includes provisions for the minimum wage,

overtime, and child labor
 HR managers must adhere to overtime
laws

• Vesting Rights
 Entitle employees to guaranteed rights to

receive pension benefits

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9–22


Evaluating Compensation Policies
• Organizations should provide reasonable

compensation and appropriate benefits to
its employees—employees should be
aware of them!
• It is in the best interests of stockholders
and other constituents of the organization
that the firm manages its resources wisely.

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9–23