Managing Compensation Chapter 10 MGT 3513 Now is
- Slides: 39
Managing Compensation Chapter 10 MGT 3513 Now is the time to put away cell phones, etc.
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Questions on Compensation What are three components of total compensation? Explain each. How much of a cost does compensation represent to most firms?
Salary. com Http: //www. salary. com/category/salary/ Information on salary (national & local) Information about salary negotiation tactics (http: //www. salary. com/the-8 -most-common-salarynegotiation-tactics/slide/5/ )
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What is the median salary?
Go to the benefits tab
What is the base pay? What are the pay incentives? What are benefits worth?
Cost of Living Calculator http: //swz. salary. com/costoflivingwizard/l ayoutscripts/coll_start. aspx • It will compare salary & cost of living in two locations • It will tell you how much you would have to earn in a new location to maintain the same standard of living.
Cost of Living Calculator – enter median salary & 2 locations
What is the net change in income? What is the typical salary in location 1? What is the typical salary in location 2?
Figure 10. 2 in textbook is a useful outline for the chapter 1) 2) 3) 4) 5) 6) 7) 8) 9) Internal / External Fixed / Variable Performance / Membership Job / Individual Pay Egalitarianism / Elitism Below-Market / Above-Market Compensation Monetary / Nonmonetary Open / Secret Centralization / Decentralization of Pay Decisions
1) Internal / External How do we know if we are paid a fair amount? Equity ◦ internal equity ◦ external equity What happens if we decide that our pay is NOT fair?
1) Internal / External Distributive equity justice model of pay ◦ Input/outcome ratio Labor market model of pay equity ◦ Wage rate = intersection of supply & demand ◦ “going rate”
Practice Question �Kayla makes $20 an hour as a fitness instructor; however, she becomes frustrated to learn that an employee with less seniority is making $25 an hour. What type of equity comparison is she making ? Internal B. External A.
Practice Question My company is conducting a market survey to make sure their current pay rates are competitive. What type of equity applies to this situation? Internal B. External A.
2) Fixed / Variable What is fixed pay? What is variable pay? Which form (fixed or variable) do most U. S. companies use? Why?
3) Performance / Membership Performance-contingent ◦ What is a piece-rate plan? compensation What is membership-contingent compensation? ◦ In your opinion, what is potentially a major disadvantage of this type of compensation system?
4) Job / Individual Pay Skill-based approach – What is the ____ worth? Job-based approaches – What is the ______ worth?
5) Egalitarianism / Elitism What is an egalitarian pay system? What is an elitist pay system?
6) Above the market / below the market Above the market ◦ Quality of applicant = ______ ◦ Turnover = _____ Below the market ◦ Quality of applicant = ______ ◦ Turnover = _____
7) Monetary / Nonmonetary What are monetary rewards? What are nonmonetary ◦ Give examples rewards?
8) Open / Secret What is secret pay? What is open pay?
9) Centralization / Decentralization of Pay Decisions Contrast decisions centralized and decentralized pay
Compensation Tools Job-based approaches How does a company know what a job is worth? ◦ Achieving internal equity �Job evaluation = the process of evaluating the relative ______ or contribution of different jobs to an organization ◦ Achieving external equity �Market surveys =
Internal Equity - - Job Evaluation 1. 2. 3. 4. 5. Conduct _______ Write _____, including job specifications Rate worth of all jobs using a predetermined system Create a _______ Classify jobs by grade levels
Internal Equity – Rating the Worth of Jobs (Job evaluation) Point factor method Assigns points to jobs based on __________. Skill � Effort � Responsibility � Working conditions �
Internal Equity – Rating the Worth of Jobs (Job evaluation) Point factor method example Nurse Tree Climber Part-time Office Assistant Skill 200 100 Effort 200 150 Responsibility 200 100 50 Working Conditions 200 400 0 Total Points 800 300
Pay Structure $37, 000 $ P a y $32, 000 P a y R a n g e $27, 000 Pay Grade 1 _____ Pay Grade 3 __________ $30, 000 Pay Grade 2 $25, 000 $20, 000 200 -400 401 -600 Job evaluation points 601 -800
Terms to Know �Pay Structure �Pay Grade �Pay Range �Compensable factors �Job hierarchy
External Equity -- Market survey 1. Identify benchmark or key jobs Benchmark job = 2. Establish a pay policy Decision to pay _______________
FLSA �Fair Labor Standards �______________ �_______ �“exempt” Act vs. “nonexempt” employees
Mc. Donald’s: Hiring 50, 000 in one day �http: //money. cnn. com/video/news/2011/ 04/04/n_mcdonalds_hiring. cnnmoney/ � What is meant by the term “living wage”? ________________ � What is the estimated amount of money people need to earn each year to stay out of poverty? ________________
Questions on the FLSA �Minimum wage ◦ Why do some believe that it should be raised? ◦ Why do some argue that it should not be raised? ◦ Is it possible for employers to be required to pay a minimum wage that is higher than the federal minimum wage? If so, why?
Additional Information about the Minimum Wage �Current minimum wage = $7. 25 ◦ Oregon’s minimum wage = $9. 25 �Workers who receive tips ◦ Minimum wage = $2. 13 �Rate established in 1991
Questions on the FLSA (continued) �How many hours must a person work to receive overtime pay? �What pay? �Why is the minimum pay rate for overtime is overtime pay an attractive option to employers?
Common Exemptions from FSLA �https: //www. dol. gov/elaws/esa/flsa/scree n 75. asp
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