© Prentice-Hall, Inc., 2001 Chapter One Compensation: A Component of Human Resource Systems

© Prentice-Hall, Inc., 2001 Figure 1-1 The Influence of Core Job Characteristics on Intrinsic Compensation and Subsequent Benefits to Employers Skill variety Task identity Task significance Core Job Characteristics Autonomy Feedback Experienced meaningfulness of the work Critical Psychological State Lower turnover Lower absenteeism Enhanced job performance Greater job satisfaction Benefit to Employers Experienced responsibility for work outcomes Gained knowledge of results from work activities

© Prentice-Hall, Inc., 2001 Table 1-1 Elements of Core Compensation l Base Pay »Hourly pay »Annual salary l How Base Pay is Adjusted Over Time »Cost-of-living adjustments »Seniority pay »Merit pay »Incentive pay »Pay-for-knowledge and skill-based pay

© Prentice-Hall, Inc., 2001 Table 1-2 Elements of Fringe Compensation (1 of 3) l Social Security Act of 1935 »Unemployment insurance »Retirement insurance »Benefits for dependents »Disability benefits »Medicare l State compulsory disability laws (Workers’ Compensation) l Family and Medical Leave Act of 1993 (12 weeks of annual unpaid leave)

© Prentice-Hall, Inc., 2001 Table 1-2 Elements of Fringe Compensation (2 of 3) l Discretionary Benefits »Protection Programs –Income protection programs –Health protection programs »Pay for time-not-worked –Holidays –Vacation –Sick leave –Personal leave –Jury duty –Funeral leave –Military leave –Cleanup, preparation, travel time

© Prentice-Hall, Inc., 2001 Table 1-2 Elements of Fringe Compensation (3 of 3) l Discretionary Benefits (cont.) »Services –Employee assistance programs (EAPs) –Family assistance programs –Tuition reimbursement –Transportation services –Outplacement assistance –Wellness programs

© Prentice-Hall, Inc., 2001 Figure 1-2 Relationship Between Strategic and Tactical Decisions Competitive strategy Human resource strategy Compensation strategy StrategicDecisions Recruitment Selection Performance appraisal Compensation Training Seniority pay Merit pay Incentive pay Pay-for-knowledge Discretionary benefits options Skill-based pay Broadbanding Two-tier pay structures GeneralTacticalHRDecisions SpecificTacticalHRDecisions(Comp.Examples) General Specific

© Prentice-Hall, Inc., 2001 Table 1-4 Laws That Influence Compensation (1 of 3) l Income Continuity, Safety, and Work Hours »Minimum wage laws —Fair Labor Standards Act of 1938 –Minimum wage –Overtime provisions l Portal-to-Portal Act of 1947 l Equal Pay Act of 1963 –Child labor provisions »Work Hours and Safety Standards Act of 1962 »McNamara-O’Hara Service Contract Act of 1965

© Prentice-Hall, Inc., 2001 Table 1-4 Laws That Influence Compensation (2 of 3) l Pay Discrimination »Equal Pay Act of 1963 »Civil Rights Act of 1964, Title VII »Bennett Amendment (1694) »Executive Order (1965) »Age Discrimination in Employment Act of 1967 (amended in 1978, ) »Executive Order (1964) »Civil Rights Act of 1991

© Prentice-Hall, Inc., 2001 Table 1-4 Laws That Influence Compensation (3 of 3) l Accommodating Disabilities and Family Needs »Pregnancy Discrimination Act of 1978 »Americans with Disabilities Act of 1990 »Family and Medical Leave Act of 1993 l Prevailing Wage Laws »Davis-Bacon Act of 1931 »Walsh-Healey Public Contracts Act of 1936