Human Resource Management Paying Our Employees

Major HRM Activities Determining the Need Hiring, Firing, & Promoting Employees Performance Improvement & Conflict Management Determining Wages and Benefits

The Selection Process What must you consider when hiring an employee?  Education  Experience  Number of Hours  Skills  Physical Requirements  What else should you consider?

Other Considerations?  Fair Labor Act All must be paid at least minimum wage Must be 18 to work in hazardous environment Overtime must be paid for over 40 hours  Civil Right Act of 1964 Prohibits discrimination in hiring, firing, training and promotion  Equal Pay Act Prohibits unequal pay for men and women doing the same work.

Paying Employees Now you have selected the best applicant, how will you pay them? HR is responsible for determining each employees’… 1.Wages (Salary, Hourly, Commission) 2.Benefits (Vacation Days, Insurance Coverage, etc) The pay and other benefits an employee receives in exchange for their labor is referred to as compensation.

Paying Employees Many factors go into determining the type and amount of compensation received:  Difficulty of the job (responsibilities, skills)  Working conditions (environment, safety, hours)  Education and experience of the employee  Supply/demand of the type of worker (laborer, doctor)

Time-Based Plans Wages: Pay is determined on an hourly rate.  Usually given to part-time employees (Ex: $7.00/hr)  Work hours could be set hours (40 hours per week) or they could change from week to week. Salary: Pay is based on a time-frame other than hourly.  Weekly, Bi-weekly, or Monthly  Usually given to people without a fixed number of weekly work hours 40 hr/week = hr/week =

Performance-Based Plans Performance-Based Plans: Payment plans that base an employee’s wages on the worker’s performance level. Types of Performance Plans:  Commission Plan: Pays an employee a percentage of the volume of sales for which they are responsible.

Performance-Based Plans Example: A salesperson is paid 5% commission on their total sales. If that person makes sales worth $10,000 within one week, that salesperson would receive $500 for the week.

Performance-Based Plans Piece-Rate Plan: Pays the employee a fixed rate for each unit produced.  In this type of system the worker’s pay is based directly on the amount of work the employee produces.

Performance-Based Plans Example: An employee earns 50 cents for each unit produced during a shift. If that person produces 200 units per day, that person would earn $100 per day.  Used often in manufacturing companies to motivate workers to work hard.

Performance-Based Plans Combination Plans: Pay system that provides each employee a small wage/salary AND adds commission pay based on a person’s performance.  Also referred to as “Salary Plus Commission” or “Salary Plus”  Example: Employee receives $ per week and a commission rate of 5%. If the employee sold $5,000 of merchandise their pay for the week would be: (5,000 *.05) = $650.00

Paying Employees In addition to pay, employees often receive other valuable benefits from their employer as a part of their total compensation. Employee Benefits: All forms of compensation and services the company provides to employees  Paid vacations, sick days, insurance

Types of Investment Plans Common Benefit Package  Insurance Policies (most common): Health, Life, Dental, Disability  Profit-Sharing: Pays an employee a small percentage of the company’s profits at the end of the year.  Retirement Plans (Pension): Company makes monthly payments to the worker after they retire.  Investment Options: Company will contribute money to an investment plan each month.

Types of Investment Plans 401K/403B  Company sponsored (they determine the investment plan options for the employees)  Employees can have a portion of check go towards various investment plans. (mutual funds, stocks, bonds, etc)  Many employers have a matching system $1.00 to $1.00 (1 to 1 ratio) or $1.00 to $.50 (.5 to 1 ratio) IRA or Roth IRA Plan  Not company sponsored  Roth IRA takes out taxes PRIOR to investing (less taxes are taken out over time)

Types of Benefits Plans Hours of Work Benefits  Flextime: Lets employee choose their own work hours, within specific limits Example – you can make you own hours but you must work at least 6 hours/day and 40 hours/week  Job Sharing: Allows two people to share one full-time position. Each person works half the time.