© Laura Portolese Dias 2011, published by Flat World Knowledge Human Resource Management By Laura Portolese Dias 6-1

© Laura Portolese Dias 2011, published by Flat World Knowledge This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 Unported License. To view a copy of this license, visit sa/3.0/or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA 6-2

© Laura Portolese Dias 2011, published by Flat World Knowledge Chapter 6 Compensation and Benefits 6-3

© Laura Portolese Dias 2011, published by Flat World Knowledge Learning Objective 1.Be able to explain the goals of a compensation plan. 6-4

© Laura Portolese Dias 2011, published by Flat World Knowledge Goals of a Compensation Plan A compensation package includes – Pay – Healthcare – Benefits WorldatWork Certifications in the area of compensation 6-5

© Laura Portolese Dias 2011, published by Flat World Knowledge Goals of a Compensation Plan A compensation plan should – Attract new candidates – Motivate people to stay with the organization – Improve morale, motivation, and satisfaction – Reward performance 6-6

© Laura Portolese Dias 2011, published by Flat World Knowledge Goals of a Compensation Plan Appropriate compensations plans also – Can create better customer service – Add to the bottom line, as fairly compensated employees – Provide indirect cost savings 6-7

© Laura Portolese Dias 2011, published by Flat World Knowledge Learning Objectives 1.Be able to explain the internal and external considerations of compensation package development. 2.Know how to develop a compensation philosophy. 6-8

© Laura Portolese Dias 2011, published by Flat World Knowledge Developing a Compensation Package Basic compensation questions to address – From the employee’s perspective, what is a fair wage? – Are wages too high to achieve financial health in your organization? – Do managers and employees know and buy into your compensation philosophy? – Does the pay scale reflect the importance of various job titles within the organization? 6-9

© Laura Portolese Dias 2011, published by Flat World Knowledge Developing a Compensation Package Basic compensation questions to address – Is your compensation good enough to retain employees? – Are state and federal laws being met with your compensation package? – Is your compensation philosophy keeping in line with labor market changes, industry changes, and organizational changes? 6-10

© Laura Portolese Dias 2011, published by Flat World Knowledge Developing a Compensation Package Compensation considerations – Regional factors – Lower or higher strategy? – Pay scales – Balance of salary and other rewards – Pay increases 6-11

© Laura Portolese Dias 2011, published by Flat World Knowledge Developing a Compensation Package Compensation strategies – Market compensation policy – Market plus – Market minus Reasons for choosing one strategy over another 6-12

© Laura Portolese Dias 2011, published by Flat World Knowledge Learning Objectives 1.Explain types of job evaluation systems and their uses. 2.Be able to define and discuss the types of pay systems and factors determining the type of pay system used. 3.Know the laws relating to compensation. 6-13

© Laura Portolese Dias 2011, published by Flat World Knowledge Types of Pay Systems Job evaluation systems – Paired comparison – Job classification system – Hay Profile Method 6-14

© Laura Portolese Dias 2011, published by Flat World Knowledge Types of Pay Systems Pay systems – Pay grade levels – Going rate model – Fit model – Other considerations 6-15

© Laura Portolese Dias 2011, published by Flat World Knowledge Types of Pay Systems Pay Theories – Equity theory – Expectancy theory – Reinforcement theory 6-16

© Laura Portolese Dias 2011, published by Flat World Knowledge Types of Pay Systems Desirable traits of incentive compensation plans – Communicated – Attainable but challenging – Easily understandable – Tied to company goals 6-17

© Laura Portolese Dias 2011, published by Flat World Knowledge Types of Pay Systems Laws relating to pay – Comparable worth – Equal Pay Act – Fair Standards Labor Act – Federal Unemployment Tax 6-18

© Laura Portolese Dias 2011, published by Flat World Knowledge Learning Objective 1.Explain the various types of benefits that can be offered to employees. 6-19

© Laura Portolese Dias 2011, published by Flat World Knowledge Other Types of Compensation Mandated compensation – Social Security – Medicare – Unemployment – Workers’ Compensation – COBRA 6-20

© Laura Portolese Dias 2011, published by Flat World Knowledge Other Types of Compensation Voluntary compensation – Incentive pay systems – Medical insurance – 401(k) plans – Paid time off 6-21