Chapter 01 One Compensation in a knowledge based

Chapter: 01 (One) Compensation in a knowledge based economy

Learning objectives: 1. The contribution of organizational compensation to the lifestyle opportunities of employees and their families. 2. Income levels that determine social-class structure for inhabitants of the unites states. 3. The relationship among levels of education, knowledge and skills and work -related income.

Capitalism and knowledge in a global economy ü With the fall of the soviet empire and a worldwide decline in communism, however, interest in capitalism has risen to an all time high. ü To gain appreciation of the influence of these worldwide events on the role of compensation professionals and managers, it is helpful to start with a brief expiation of capitalism and the dynamics that support it as a viable economic solution to global problems.

(cont’d) ü In the capitalistic world, employees must respect money and the challenges of their work to gain satisfaction from work performed. ü A major problem facing the United States and its leadership role in a capitalistic democratic world is an increasing and unacceptable difference between the income of the lower-paid and the higher-paid members of the workforce. ü The pay and compensation for those with acceptable levels of knowledge and skills will rise, whereas those with minimal levels of required knowledge and skill will see their income opportunities stagnate, or even decline.

(Cont’d) ü More Than ever before, the compensation professional must be to support all activities that will make the organization more successful. ü 1) 2) 3) 4) From the beginning of these organizational redesign efforts, compensation professionals have been called upon to identify; Job in which worker efforts can be combined, Unneeded jobs, Possibly jobs in which incompetent, obstacle, or unneeded employees are being hidden, and Jobs that can be outsourced. ü To assists their organizations in competing while functioning within these ü often conflicting requirements, compensation professionals have had to increase their knowledge and skills dramatically

Capitalism and Organizational Strategy ü To develop competitive advantage in a global economy, the compensation program of the organization must support totally the strategic plans and actions of the organization. ü For the human resource/compensation specialist, the assignment to ensure accomplishment of organization strategy begins with determining; 1) The work that must be performed by some work unit or individual. 2) The kinds and levels of knowledge and skill required. 3) The quality of people needed to promote organizational success. 4) The rewards the organization can offer to it members that promote a work culture that ensures accomplishment of organizational strategy.

Integrating knowledge and skill requirements, organization compensation, and employee income ü The ability of individual to interact with eve-changing technologies places boundaries on work assignments. ü The issues of work boundaries and work required knowledge and skills are a major part of the discussion in this book regarding the setting of base pay and the design of compensation systems. ü The major point presented in this chapter of compensation management is that work does pay off.

Cont’d ü Although organizations are searching constantly for ways to keep labor costs within acceptable limits, they must recognize that employee satisfaction relates directly to income obtained from work performed and the lifestyle opportunities made available to the workers and their families from this work-earned income. ü To gain an appreciation of the relationship between work- provided pay and employee work satisfaction, it is helpful to gain an understanding of social class, class lifestyle, and income in the United States.

Pay and Social Class ü Almost from its start, the United States has flourished within a democratic, middle -class environment. ü Today, with the continued prosperity, let alone survival, of the nation in peril, it is important to recognize the relationship among pay, earning and income, and social structure within in the country. 1. Social Structure and income 2. Establishing class Family Income Limits.

Continued 3. Lifestyle and social class in the United States. q. The poverty class. q. The Working poor. q. Lower Middle class. q. Middle-middle class. q. Upper-Middle Class. q. The Wealthy. q. The Ultra rich. 4. Tw-Wage-Earner-Family. 5. Workforce Demographics.

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