Microsoft PowerPoint - 5. Compensating EmployeesTotal
Compensation
Nonfinancial Financial
Case #2
Determinants of IndividualDeterminants of Individual Financial
Compensation
The OrganizationThe Organization
Individual Financial Compensation
Cost of Living Labor Union Society The EconomyThe Economy
Legislation
The Organization
Ability to Pay Compensation PoliciesCompensation Policies
Pay Leader Market Rate (Going Rate)Market Rate (Going Rate) Pay
Follower
Organizational PoliticsOrganizational Politics
The EmployeeThe Employee Pay for Performance SenioritySeniority
Experience O i ti M b hiOrganization Membership Potential Political
Influence Luck
Case #3
The Job
How Employers p y Establish Pay Rates
Conduct a salary surveyConduct a salary survey Determines the worth
of each job Group similar jobs into pay gradesGroup similar jobs
into pay grades Price each pay grade D l tDevelop rate ranges
Case #4
Compensation Systems
Broadbanding
Collapsing salaryCollapsing salary grades and ranges into just a
few wideinto just a few wide levels or bands, each of which
contains a relatively y wide range of jobs and salary levelsand
salary levels
Case #5
Incentive Programs
Bonuses
Awards
Gainsharing
Bonuses
Individual IncentiveIndividual Incentive Programs
Repeat PerformanceRepeat Performance Shape an individual’s goals
over time Help the firm achieve individual equity. Fit in with an
individualistic culture.
Case #7
T I ti PTeam Incentive Programs
They foster group cohesiveness. Th id f tThey aid performance
measurement.
Case #8
Plantwide Incentive Programs (Gainsharing)
Improve the productivityImprove the productivity Increase the level
of cooperation across workers and teams by giving everyone a common
goalg Subject to fewer measurement difficulties Easier both to
formulate bonus calculationsEasier both to formulate bonus
calculations and to achieve acceptance of these plans
Case #9
Corporatewide Incentive p Programs (Profit Sharing)
Financial flexibility for the firm. Increased employee
commitmentIncreased employee commitment. Tax advantages.
Case #10
ll i d fiLegally Required Benefits
Social SecuritySocial Security Workers’ Compensation Unemployment
Insurance Unpaid LeaveUnpaid Leave
Voluntary Benefits
H lth IHealth Insurance Retirement Benefits Insurance Plans Paid
Time OffPaid Time Off Employee Services
Case #11