1. Create a Compensation Package

2. Objectives Determine the amount of pay for employees.
Identify a benefits portion of a compensation package.

3. Types of Pay
Wages- payments for labor or services made on a hourly, daily, or per unit basis
Paycheck will vary based on hours worked or units produced
Salaries- payments for labor performed on an annual basis
Paycheck will remain constant no matter how many hours worked in that time period
Bonus- financial reward in addition to a regular wage or salary

4. Activity>>
Brainstorm a list of conditions for receiving an employee bonus for people working in the following companies:
Manufacturer of cardboard-
Retail furniture store-
Neighborhood hardware store-

5. Commission- percentage of a sale paid to a salesperson
Commission-based salary- varies from month to month depending on how much of a product or service is sold

6. Commission-Only Plan
Some employees may not want to accept a commission-only plan because they fear their income may rise and fall too much
Example: Lyn works entirely on commission. Last year Lyn sold $490,000 worth of electronic devices. She received 10 percent of her sales as commission. Her annual salary was $49,000.

7. Answer
Amount sold * Percent of commission = Amount of commission
490,000 * .10 = $49,000

8. Combination Plan Includes a base salary plus commission.
Employees feel more comfortable because they are guaranteed some payment each paycheck.
Example: Veronica sells men’s clothing at a local department store. She earns $6.75 an hour, plus 10 percent of whatever she sells. Last month, Veronica worked 158 hours and sold $11,500 worth of clothing. Her total monthly compensation was ___________.

9. Answer Hours * Hourly wage = Base wages 158 * $6.75 = $1066.50
Amount sold * Percent of commission = Amount of commission
$11,500 * .10 = $1,150
Base wages + Amount of commission = Total pay
$1, $1,150 = $2,216.50

10. Compensation Levels Pay Competitively
To offer competitive wages or salaries, you will have to find out how much:
similar businesses in your area are paying their employees
people with similar jobs and qualifications are making

11. Once you know the going wage or salary rate, you will have to decide if you want to offer more than, less than, or the same as competitors
Offering more than other businesses will attract the best employees

12. Checkpoint>>
Of the various kinds of pay described above, which would you like to work for and why?

13. Benefits
Benefits- employment rewards for service in addition to salary

14. Paid Leave
Represent costs to employers because employees are paid when they are not working
In order to avoid the abuse of paid leave, keep track of the paid leave employees take

15. Vacation
Many businesses offer one to two weeks paid vacation to new employees
The longer you work for a company, the more vacation time you gain
Some businesses allow employees to carry unused vacation days from one year to the next

16. Sick Leave
The number of days of sick leave provided varies from business to business
As little as five days to unlimited according to the sick leave policy

17. Insurance
Usually offered in large businesses rather than small businesses
Full-time employees are eligible
Sometimes offered to part-time employees

18. Health Benefits
Most Americans purchase medical insurance or join health maintenance organizations.
Members pay a monthly fee whether or not they are sick

19. Other Kinds of Insurance
Dental insurance- covers most dental and orthodontic expenses
Life insurance- intended to provide financial support for families after the income earner dies
Accident insurance- provides financial support to people who are in accidents

20. Pension Plan
Pension plan- employer and employee contribute money to a pension fund every month
Money is invested on behalf of the employee and used during retirement

21. Checkpoint>>
Which of the nonsalary benefits would influence you most when deciding to accept a position? Why?

22. Assignment
Thinking Critically
#1-3