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Managing Human Resources Bohlander  Snell  Sherman

Managing Human Resources Bohlander  Snell  Sherman. Chapter 9 Managing Compensation. Learning Objectives. Explain employer concerns in developing a strategic compensation program. Identify the various factors that influence the setting of wages.

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Managing Human Resources Bohlander  Snell  Sherman

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  1. ManagingHuman ResourcesBohlander Snell Sherman Chapter 9 Managing Compensation Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  2. Learning Objectives • Explain employer concerns in developing a strategic compensation program. • Identify the various factors that influence the setting of wages. • Discuss the mechanics of each of the major job evaluation systems. • Explain the purpose of a wage survey. Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  3. Learning Objectives, cont. • Define the wage curve, pay grades, and rate ranges as parts of the compensation structure. • Identify the major provisions of the federal laws affecting compensation. • Discuss the current issues of equal pay for comparable worth, pay compression, and low wage budgets. Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  4. Presentation Slide 9-1Total Compensation • Pay for Time Not Worked • Vacations • Breaks • Holidays • Insurance Plans • Medical • Dental • Life • Security Plans • Pension • Disability Insurance • Employee Services • Educational Assistance • Recreational programs • Wages • Salaries • Commissions • Bonuses • Gainsharing Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  5. Presentation Slide 9-2Compensation Management and other HRM Functions Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  6. Goals of Strategic Compensation Policies Motivating Value of Compensation Pay-for- Performance Standard Linking Compensation to Organizational Objectives Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  7. Value-Added Compensation Evaluating the individual components of the compensation program to see if they advance the needs of employees and the goals of the organization Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  8. Pay-for-Performance Standard Standard by which managers tie compensation to employee effort and performance Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  9. Pay Equity An employee’s perception that compensation received is equal to the value of the work performed Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  10. Hourly Work Work paid on an hourly basis Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  11. Piecework Work paid according to the number of units produced Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  12. Nonexempt Employees Employees covered by the overtime provisions of the Fair Labor Standards Act Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  13. Exempt Employees Employees not covered by the overtime provisions of the Fair Labor Standards Act Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  14. Presentation Slide 9-3Components of the Wage Mix Conditions of Labor Market Compensation Policy of Organization Area Wage Rates WAGE MIX Worth of Job Cost of Living Employee’s Relative Worth Collective Bargaining Employer’s Ability to Pay Legal Requirements Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  15. Consumer Price Index (CPI) Measure of the average change in prices over time in a fixed “market basket” of goods and service Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  16. Escalator Clauses Clauses in labor agreements that provide for quarterly cost-of-living adjustments in wages, basing the adjustments on changes in the consumer price index Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  17. Real Wages Wage increases larger than rises in the consumer price index; that is, the real earning power of wages Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  18. Job Evaluation Systems Job Ranking Job Classification Common Methods of Job Comparison Point System Factor Comparison Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  19. Job Evaluation Systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  20. Job Ranking System Simplest and oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  21. Job Classification System System of job evaluation by which jobs are classified and grouped according to a series of predetermined wage grades Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  22. Point System Quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  23. Factor Comparison System Job evaluation system that permits the evaluation process to be accomplished on a factor-by-factor basis by developing a factor comparison scale Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  24. Presentation Slide 9-4Characteristics of Key Jobs • Have importance to employees and organizations • Vary in terms of job requirements • Possess relatively stable job content • Are used as important jobs in salary surveys Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  25. Hay Profile Method Job evaluation technique using three factors – knowledge, mental activity, and accountability – to evaluate executive and managerial positions Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  26. Wage and Salary Surveys Wage Curve Pay Grades Rate Ranges The Compensation Structure Issues Involved in Setting Compensation Structures Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  27. Wage and Salary Surveys • Select key jobs. • Determine relevant labor market. • Select organizations. • Decide on information to collect: wages/benefits/pay policies. • Compile data received. • Determine wages and benefits to pay. Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  28. Wage and Salary Survey Survey of the wages paid to employees of other employers in the surveying organization’s relevant labor market Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  29. Wage Curve Curve in a scattergram representing the relationship between relative worth of jobs and wage rates Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  30. Pay Grades Groups of jobs within a particular class that are paid the same rate or rate range Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  31. Presentation Slide 9-5Components of the Wage Structure Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  32. Presentation Slide 9-6Elements of the Rate Range Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  33. Red Circle Rates Payment rates above the maximum of the pay range Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  34. Skill-Based Pay Pay based on how many skills employees have or how many jobs they can perform Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  35. Davis-Beacon Act of 1931 Walsh-Healy Act of 1936 Fair Labor Standards Act of 1938 Presentation Slide 9-7Federal Wage Laws Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  36. Equal Pay Pay Compression Low Wage Budgets Significant Compensation Issues Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  37. Comparable Worth The concept that male and female jobs that are dissimilar, but equal in terms of value or worth to the employer, should be paid the same Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

  38. Wage-Rate Compression Compression of differentials between job classes, particularly the differential between hourly workers and their managers Managing Human Resources,12e, by Bohlander/Snell/Sherman (c) 2001 South-Western/Thomson Learning

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