Upload
arief-zahir
View
241
Download
0
Embed Size (px)
Citation preview
7/31/2019 3240 chap10
1/17
10ManagingCompensation
2001 by Prentice Hall 10-1
7/31/2019 3240 chap10
2/17
2001 by Prentice Hall 10-2
Goals of Compensation System
Internal Equityassure that jobs are objectivelyand consistently valued in relation to oneanother
External Equityassure that the company is
able to attract and retain the knowledge andskills needed to meet its objectives
Individual Equityassure that individualemployees are compensated in a manner that isfair in relation to the work they do and value
they bring to the organization Strategic impactmaximize productivity and
effectiveness in achieving organizationsstrategic goals
7/31/2019 3240 chap10
3/17
2001 by Prentice Hall 10-3
Challenges
Identifythe compensation policies and practices that aremost appropriate for a particular firm.
Weigh the strategic advantages and disadvantages of the
different compensation options. Establish a job-based compensation scheme that is
internally consistent and linked to the labor market.
Understand the difference between a compensationsystem in which employees are paid for the skills they use
and one in which they are paid of the job they hold. Make compensation decisions that comply with the legal
framework.
7/31/2019 3240 chap10
4/17
2001 by Prentice Hall 10-4
Total Compensation
The package of quantifiable
rewards an employee receives forhis or her labors. Includes threecomponents: base compensation,
pay incentives, and indirectcompensation/benefits
7/31/2019 3240 chap10
5/17
2001 by Prentice Hall 10-5
The Elements of Total
Compensation
Total
Compensation
PayIncentives
Indirect
Compensation/Benefits
BaseCompensation
7/31/2019 3240 chap10
6/17
2001 by Prentice Hall 10-6
The Nine Criteria for Developing aCompensation Plan
1. Internal versus External Equity Will the compensation planbe perceived as fair within the company, or will it beperceived as fair relative to what other employers are paying
for the same type of labor?2. Fixed versus Variable Pay Will compensation be paid
monthly on a fixed basis through base salaries or will itfluctuate depending on such preestablished criteria asperformance and company profits?
3. Performance versus Membership Will compensationemphasize performance and tie pay to individual or groupcontributions, or will it emphasize membership in theorganization logging in a prescribed number of hourseach week and progressing up the organizational ladder?
7/31/2019 3240 chap10
7/17 2001 by Prentice Hall 10-7
The Nine Criteria for Developing aCompensation Plan (cont.)
4. Job versus Individual Pay Will compensation be based onhow the company values a particular job, or will it be basedon how much skill and knowledge an employee brings to
that job?5. Egalitarianism versus Elitism Will the compensation plan
place most employees under the same compensationsystem (egalitarianism), or will it establish different plans byorganizational level and/or employee group (elitism)?
6. Below-Market versus Above-Market Compensation Willemployees be compensated at below-market levels, atmarket levels, or at above-market levels?
7/31/2019 3240 chap10
8/17 2001 by Prentice Hall 10-8
The Nine Criteria for Developing aCompensation Plan (cont.)
7. Monetary versus Nonmonetary Awards Will thecompensation plan emphasize motivating employeesthrough monetary rewards like pay and stock options, or
will it stress nonmonetary rewards such as interesting workand job security?
8. Open versus Secret Pay Will employees have access toinformation about other workers compensation levels and
how compensation decisions are made (open pay) or will
this knowledge be withheld from employees (secret pay)?9. Centralization versus Decentralization of Pay Decisions Will
compensation decisions be made in a tightly controlledcentral location, or will they be delegated to managers of thefirms units?
7/31/2019 3240 chap10
9/17 2001 by Prentice Hall 10-9
The Key Steps in Creating Job-BasedCompensation Plans
1998 by Prentice Hall
1. Job AnalysisJob Evaluation forInternal Equity
2. Job Descriptions
Identify
Compensable Factors
3. Job Specifications
4. Rate Worth of All Jobs
Using a PredeterminedSystem
5. Job Hierarchy
7. Establish Final PayPolicy
Individual PayAssignment
6. Classify Jobs by
Grade Levels
1. Check Market Value
Using Benchmark or KeyJobsMarket Surveys forExternal Equity
Within-Pay-RangePositioning Criteriafor Individual Equity
Criteria for PayPositioning WithinRange for Each Job Experience
Seniority Performance 2001 by Prentice Hall 10-9
7/31/2019 3240 chap10
10/17 2001 by Prentice Hall 10-10
Hierarchy of Clerical Jobs, Pay Grades, and WeeklyPay Range for a Hypothetical Office
1Points
2Grade
3Weekly Pay Range
300298290230
225220175170165160
125120120115958080
60
5
4
3
2
1
$500-$650
$450-$550
$425-$475
$390-$430
$350-$400
Customer Service Rep.Executive Secretary/Admin. Asst.Senior SecretarySecretary
Senior General ClerkCredit and CollectionAccounting ClerkGeneral ClerkLegal Secretary/AssistantSenior Word Processing Operator
Work Processing OperatorPurchasing ClerkPayroll ClerkClerk-TypistFile ClerkMail ClerkPersonnel Clerk
Receptionist
7/31/2019 3240 chap10
11/17 2001 by Prentice Hall 10-11
Market Salary Data for SelectedBenchmark Office Jobs
Weekly Pay Percentile
1. Customer Service Rep.2. Credit and Collection Clerk3. Accounting Clerk4. Word Processing Operator5. Clerk-Typist
25thWeekly Pay
Average
$400$400$370$380$330
50th 75th
$500$450$425$390$350
$650$550$475$430$400
$495$455$423$394$343
Benchmark Jobs
7/31/2019 3240 chap10
12/17
7/31/2019 3240 chap10
13/17 2001 by Prentice Hall 10-13
Pay Structure of a Large RestaurantDeveloped Using a Job-Based Approach
Jobs
Number ofPositions Pay
GRADE 6GRADE 5
GRADE 4
GRADE 3
GRADE 2
GRADE 1
ChefManagerSous-ChefAssistant Manager
Lead CookOffice ManagerGeneral CookShort Order CookAssistant to Lead CookClerkServer
HostessCashierKitchen HelperDishwasherJanitorBusserSecurity Guard
2112
215221
45
4423262
$20.00-$31.00/hr.$11.50-$21/hr.
$7.50-$12.00/hr.
$6.50-$8.00/hr.
$6.00-$7.00/hr.
$5.50-$6.25/hr.
7/31/2019 3240 chap10
14/17 2001 by Prentice Hall 10-14
Pay Schedule of a Large Restaurant DesignedUsing a Skill-Based Approach
Skills
5
4
3
Create new items for menu Find different uses for leftovers
(e.g., hot dishes, buffets)
Coordinate and control work of all employeesupon managers absence Cook existing menu items following recipe Supervise kitchen help Prepare payroll Ensure quality of food and adherence to
standards Schedule servers and assign workstations Conduct inventory Organize work flow on restaurant floor
$23.00/hr.
$17.00/hr
$10.50/hr
PaySkill Block
7/31/2019 3240 chap10
15/17 2001 by Prentice Hall 10-15
Pay Schedule of a Large RestaurantDesigned Using a Skill-Based Approach (cont.)
Skills2
1
Greet customers and organize tables Take orders from customers Bring food to tables
Assist in kitchen with food preparations Perform security checks Help with delivery Use dishwashing equipment Use chemicals/disinfectants to clean
premises
Use vacuum cleaner, mop, waxer, and othercleaning equipment
Clean and set up tables Perform routine kitchen chores
(e.g., making coffee)
$7.50/hr.
$6.00/hr.
PaySkill Block
7/31/2019 3240 chap10
16/17 2001 by Prentice Hall 10-16
Suggestions for ImplementingJob-based Compensation Plans
Think strategically in making policy decisionsconcerning pay.
Secure employee input.
Increase each jobs range of pay while expandingits scope of responsibility.
Expand the proportion of employees pay that isvariable (bonuses, stock plans, and so forth).
Establish dual-career ladders for different types ofemployees so that moving into management ranksor up the organizational hierarchy is not the onlyway to receive a substantial increase in pay.
7/31/2019 3240 chap10
17/17 2001 by Prentice Hall 10 17
Example of a Dual-Career LadderManagerial Individual ContributorBand
PresidentExecutiveVice PresidentVice PresidentAssistant
Vice PresidentDirectorSenior ManagerManager
1312
1110
98765
43
2
1
Nurse Anesthetist
Clinical Nurse Specialist
Senior Staff NurseStaff NurseLPN
CNA