4-11 copyright © 2015 pearson education, inc. 11-1 establishing strategic pay plans
TRANSCRIPT
4-
11
Copyright © 2015 Pearson Education, Inc.
11-1
Establishing Strategic Pay Plans
4-
Copyright © 2015 Pearson Education, Inc.
11-2
1. List the basic factors determining pay
rates.
2. Define and give an example of how to
conduct a job evaluation.
3. Explain in detail how to establish a
market-competitive pay plan.
Learning Objectives
4-
Copyright © 2015 Pearson Education, Inc.
11-3
Learning Objectives
4. Explain how to price managerial and
professional jobs.
5. Explain the difference between
competency-based and traditional pay.
4-
Copyright © 2015 Pearson Education, Inc.
11-4
List the basic factors determining pay
rates.
4-
Copyright © 2015 Pearson Education, Inc.
11-5
Basic Factors in Determining Pay Rates
• Aligning total rewards with strategy
• Equity and its impact on pay rates
• Equity theory of motivation
• Addressing equity issues
4-
Copyright © 2015 Pearson Education, Inc.
11-6
Legal Considerations in Compensation
• Fair Labor Standards Act (1938)
• Exempt/nonexempt
• Equal Pay Act (1963)
• Employee Retirement Income
Security Act (1974)
• Other legislation
4-
Copyright © 2015 Pearson Education, Inc.
11-7
IMPROVING PERFORMANCE:
HR as a Profit Center
• Wegmans Foods Uses
o Strategic compensation management
o A total rewards package
• Produces employee behaviors
• Achieves Wegmans’ strategic goals
4-
Copyright © 2015 Pearson Education, Inc.
11-8
Other Factors
• Union influences on
compensation decisions
• Pay policies
• Geography
4-
Copyright © 2015 Pearson Education, Inc.
11-9
IMPROVING PERFORMANCE: HR Practices Around the Globe
Compensating Expatriate Employees
• Home-based plan
o Transferee’s base salary tied to home
country’s salary structure salary
• Host-based plan
o Transferee’s base salary tied to the host
country’s salary structure
4-
Copyright © 2015 Pearson Education, Inc.
11-10
Review
• Alignment with strategy
• Equity – external, internal
• Legal considerations
• Union influences
• Pay policies
• Geography
4-
Copyright © 2015 Pearson Education, Inc.
11-11
Define and give an example of how to conduct a job evaluation.
4-
Copyright © 2015 Pearson Education, Inc.
11-12
Job Evaluation Methods
• Compensable
factors
• Preparing for the
job evaluation
4-
Copyright © 2015 Pearson Education, Inc.
11-13
Job Evaluation Methods: Ranking
1. Obtain job information
2. Select and group jobs
3. Select compensable factors
4. Rank jobs
5. Combine ratings
4-
Copyright © 2015 Pearson Education, Inc.
11-14
• Job classification
• Point method
o “Packaged” point
plans
• Computerized job
evaluations
Job Evaluation Methods
4-
Copyright © 2015 Pearson Education, Inc.
11-15
• Compensable factors
• Preparation
• Ranking
• Classification
• Point method
• Computer-based
Review
4-
Copyright © 2015 Pearson Education, Inc.
11-16
Explain in detail how to establish
a market-competitive pay plan.
4-
Copyright © 2015 Pearson Education, Inc.
11-17
How to Create a Market-Competitive Pay Plan
• Choose benchmark jobs
• Select compensable factors
• Assign weights
• Convert percentages to points
• Define each factor’s degrees
• Determine degrees and assign
points for job factors
4-
Copyright © 2015 Pearson Education, Inc.
11-18
How to Create a Market-Competitive Pay Plan
• Review job descriptions and
specifications
• Evaluate the jobs
o What is a market
competitive pay plan?
o What are wage curves?
4-
Copyright © 2015 Pearson Education, Inc.
11-19
How to Create a Market-Competitive Pay Plan
• Draw current (internal) wage curve
• Conduct market analysis: salary
surveys
o Commercial, professional, and
government
• Using internet to do compensation
surveys
4-
Copyright © 2015 Pearson Education, Inc.
11-20
How to Create a Market-Competitive Pay Plan
• Draw market (external) wage curve
• Compare and adjust
• Develop pay grades
• Establish rate ranges
• Address remaining jobs
• Correct out-of-line rates
4-
Copyright © 2015 Pearson Education, Inc.
11-21
IMPROVING PERFORMANCE: HR Tools for Line Managers and Entrepreneurs
• International Stockhouse.com has
global based employees
• Uses the Web for determining salaries
and trends
• Request salary data from professional
groups
• Monitors rates viewing job boards
4-
Copyright © 2015 Pearson Education, Inc.
11-22
Review
4-
Copyright © 2015 Pearson Education, Inc.
11-23
Explain how to price managerial and
professional jobs.
4-
Copyright © 2015 Pearson Education, Inc.
11-24
Pricing Managerial and Professional Jobs
• Compensating executives and
managers
• What determines executive pay?
o Elements of executive pay
o Managerial job evaluation
• Compensating professional
employees
4-
Copyright © 2015 Pearson Education, Inc.
11-25
• Executives
• Professionals
• Pay
Review
4-
Copyright © 2015 Pearson Education, Inc.
11-26
Explain the difference between
competency-based and traditional pay.
4-
Copyright © 2015 Pearson Education, Inc.
11-27
Contemporary Topics in Compensation
• Competency-based
pay
• What is it?
• Why use it?
• In practice
• The bottom line
4-
Copyright © 2015 Pearson Education, Inc.
11-28
IMPROVING PERFORMANCE: HR Practices Around the Globe
JLG’s Skill-Based Pay Program
• Supplies access equipment such as
aerial work platforms and mast booms
o Pay increases based on skill
acquisition
o Productivity has increased
4-
Copyright © 2015 Pearson Education, Inc.
11-29
• Broadbanding
• Actively managing
• Comparable worth
o The pay gap
• Board oversight
• Total rewards and
tomorrow’s pay
programs
Trends
4-
Copyright © 2015 Pearson Education, Inc.
11-30
Review
• Broad banding
• Management
• Worth
• Boards
• Tomorrow
4-
Copyright © 2015 Pearson Education, Inc.
11-31
Translating Strategy into HR Policies and Practices
• What would you tell Lisa if she asked, “How do I set up a new compensation plan for the Hotel Paris?”
• Devise a ranking job evaluation system for the Hotel Paris’s non-managerial employees (housekeepers, front-desk clerks) and use it to show the worth of these jobs relative
to one another.
4-
Copyright © 2015 Pearson Education, Inc.
11-32
Hotel ParisStrategyChapter 11
4-
Copyright © 2015 Pearson Education, Inc.
11-33