1 The World of Pay and Compensation l Seventy percent (70%) of all jobs in the USA are in the service sector. l Service-sector jobs tend to be labor intense. l Service-sector companies typically spend 40 to 80 cents of each revenue dollar on employee compensation. l Wage competition in service-sector companies tends to be more intense.

2 The Compensation Program l Base Wages and Salaries After-tax amount on the paycheck l Wage and Salary Add-ons Premiums an Differentials l Incentive Payments Payment for specified outputs l Benefits and Services Retirement, Savings, Medical, (39% of payroll)

3 Reasons for the Differences in Pay and Compensation for Different Employees l Kinds and Levels of Required Skills l Kind of Business l Union and Nonunion Status l Capital Vs. Labor Intense Industries l Size of Business l Philosophy of Management l Total Compensation Package l Geographic Location Factors That Determine Rates of Pay

4 Average Hourly Earnings November 1995 Specified Production Workers l Eating and Drinking Places l Apparel and Accessory Stores l General Merchandise Stores l Apparel and Other Textile Products l Food Stores l Leather and Leather Products l Misc. Retail Establishments l Amusement and Recreation l Building Materials and Garden l Textile Mill Products $ Lowest Paid

Average Hourly Earnings November 1995 Specified Production Workers l PIPELINE except NATURAL GAS l PETROLEUM and COAL PRODUCTS l TOBACCO PRODUCTS l COAL MINING l ELECTRIC, GAS, and SANITARY SERVICES l METAL MINING l TRANSPORTATION EQUIPMENT l LEGAL SERVICES l COMMUNICATIONS l CHEMICAL and ALLIED PRODUCTS $ Highest Paid

6 Hourly Rates (1994) for Production Workers Five Highest 1)Michigan $ )Ohio )Delaware )Indiana )Connecticut Five Lowest 50) S.Dakota$ ) Mississippi ) S.Carolina ) Arkansas ) N.Carolina 10.67

7 Reasons For The Differences In Pay And Compensation For Different Employees l Supply and Demand of Labor l Profitability of the Firm l Employment Stability l Gender Difference l Employee Tenure and Performance Other Factors That Determine Rates Of Pay

8 A World in Transition l More Intense Global Competition l Slower Growth l More Rapid Change l Reordering of Traditional Businesses l Organizational Restructuring l Deregulation, Takeovers, and Mergers l Wage Depression and Revenue Escalation

9 Global Variations In Compensation Practices l Direct Compensation l Tax System l Social Security l Benefit Entitlements l Regulatory Environment l Employment Law