Employee Compensation and Benefits Copyright © Texas Education Agency, All rights reserved.

“Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee. Call TEA Copyrights with any questions you have.

Compensation Compensation- the total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required by the organization. Benefits- refers to compensation other than an hourly wage or salary. Copyright © Texas Education Agency, All rights reserved. 3

Goals of Compensation The package should be good enough to attract the best people for the job. It also needs to stay competitive enough to motivate employees to stay with the organization. It’s not the only component in motivating people to stay, but it is certainly a key component. Compensation can be used to increase morale, motivation, and satisfaction among employees. Copyright © Texas Education Agency, All rights reserved. 4

Developing a Compensation Package A compensation plan needs to assist in the development of a compensation strategy that meets the goals of the organization; it also needs to be in line with the organization’s strategic plan. Copyright © Texas Education Agency, All rights reserved. 5

Internal and External Pay Factors Internal Pay factors Market compensation policy Market Plus philosophy Market Minus philosophy Employer’s ability to pay Type of industry Value of the employee and the job to the organization External Pay Factors Current economic state Inflation and cost of living Copyright © Texas Education Agency, All rights reserved. 6

Job Evaluation Job evaluation is a formal approach to analyzing jobs and categorizing them in regard to their relative worth in an organization to determine pay structure. The value of a job is a major factor when determining pay. Copyright © Texas Education Agency, All rights reserved. 7

Performing a Job Evaluation Job ranking system Paired comparison Job classification Point factor system Copyright © Texas Education Agency, All rights reserved. 8

Pay Systems Pay Grading - the process of setting the pay scale for specific jobs or types of jobs Delayering and Banding – gives more flexibility Going rate model – analyzing the going rate to determine what employees should be paid Copyright © Texas Education Agency, All rights reserved. 9

Other Types of Pay Options Skill based pay - salary levels are based on the employee’s skills as opposed to the job title. Competency based pay - approach looks at the employee’s traits or characteristics as opposed to a specific skills set. Broadbanding - similar to a pay grade system, except all jobs in a particular category are assigned a specific pay category. Variable pay - provides employees with a pay basis but links the attainment of certain goals or achievements directly to their pay. Copyright © Texas Education Agency, All rights reserved.