Compensation and Benefits Benefits of a Fair Effective

Compensation and Benefits • Benefits of a Fair, Effective, and Appropriate Compensation System – Helps attract and retain high-performance employees – Impacts on the strategic performance of the firm • Types of Compensation – – Base wage or salary Wage and salary add-ons Incentive payments Skill-based pay Chapter 11, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 39

Exhibit 11. 14 Factors That Influence Compensation and Benefits How long has employee been with company and how has he or she performed? How large is the company? How profitable is the company? Size of Company Profitability Kind of Job Performed Level of Compensation and Benefits Geographical Location Where is organization located? Does job require high levels of skills? Employee’s Tenure and Performance Management Philosophy What industry is job in? Kind of Business Unionization Labour- or Capital-Intensive What is management’s philosophy toward pay? Is business unionized? Is business labour- or capital-intensive? Sources: Based on R. I. Henderson, Compensation Management, 6 th ed. (Upper Saddle River, NJ: Prentice Hall, 1994), pp. 3– 24; and A. Murray, “Mom, Apple Pie, and Small Business, ” Wall Street Journal, August 15, 1994, p. A 1 Chapter 11, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 40

Public Sector Vs. Private Sector • Governments pay about 9% more compared to private sector. • Public sector employees: better benefit plans, likelihood of pension plans – Public sector pay rates: labour union equity initiatives – Private sector pay rates: “market wages” Chapter 11, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 41