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Agenda

Choice for book review due today

Articles reviews regarding Chapter 3 - Communication

Test Your Knowledge Chapter 3 – page 68 of the Competency Guide

Chapter 4: Managing Compensation

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Article Reviews

Chapter 3: Communication

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Review Your Learning

Page 68 of the Competency Guide

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Managing Compensation

Hospitality and Restaurant Management

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Chapter Learning Objectives

Establish a policy and procedure for determining employee compensation.

Establish guidelines for merit increases.

Maintain confidentiality of payroll information.

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Compensation—Interested Stakeholders

Employees Want maximum compensation

Owner(s) Concerned about profit, which is reduced when labor

costs are higher

Manager Caught in the middle—wants employees to be well-

paid but must deliver profits for the owner

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Think about it…..

If you are presently working in the foodservice industry, how do you feel about the relationship between your pay and the operation’s profit?

What factors influence your feelings?

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Compensation

All types of wages combined with other rewards or benefits the employee receives as part of a package.

“Wage” refers specifically to the pay received and is a subcategory to compensation.

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Compensation Policies and Procedures Must Be Fair

They must be fair to the employee, employer, and management.

They must be fairly administered.

They must be open and known to all concerned.

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Compensation Control Process

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Factors Affecting Compensation

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Factors Affecting Compensation continued

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Factors Affecting Compensation continued

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Factors Affecting Compensation continued

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Think about it….

Unfairness can take many forms in a business. It is one of the most destructive activities in a business. What does a manager need to do to ensure an organization is fair, pleasant, and successful place to work.

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How Would You Answer the Following Questions?

1. Compensation policies and procedures must be _______.

2. Labor costs are (controllable/noncontrollable).

3. Overtime (one and one-half the hourly rate) must be paid when more than _______ hours are worked weekly.

4. The Equal Pay Act prohibits compensation differences based on _______.

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Merit Pay

Objective—to improve performance and increase productivity

Specific guidelines are required.

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Merit Increases—Consider Performance

Performance standards (benchmarks) should be measurable to determine the quantity and quality of employees’ work.

Some measurement factors may be more important than others.

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Merit Increases—Consider Accomplishments

Some employees do more than “just meet company standards.”

Special accomplishments should be recognized.

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Merit Increases— Consider Current Pay Rate

Where does the employee fall in the pay range for his/her position?

What is the employee’s pay compared to that paid by the competition?

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Merit Increases— Consider Business Goals

Business goals address merit increases from the company’s view.

Some companies increase merit pay when financial expectations are exceeded.

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Think About It….

Are you aware of guidelines for merit increases where you work?

Do you know how they are administered?

What is the attitude toward merit pay in your organization?

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Exceptions to Merit Policies

What about

Employees at the top of a pay range?

Cost of living increases for staff not meeting standards?

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Management Compensation

Managers should be held accountable for achieving standards and attaining reasonable goals.

Managers are often rewarded with a performance bonus rather than a merit increase.

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Performance and Pay Reviews

Performance review cycles are meetings that are scheduled on a regular basis between the employee and the employer to discuss the employee’s job performance.

Performance and pay reviews are typically done annually.

Merit increases should be discussed at the same time.

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Payroll Information Is Confidential

Payroll information should be kept private and confidential.

Restrict access to payroll information.

Each staff member should be counseled to keep pay rates confidential.

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How Would You Answer the Following Questions?

1. The objective of merit pay plans should be to improve _______ and increase _______.

2. The best performance standards should be _______.

3. Persons at the top of a pay range (can/cannot) receive merit pay.

4. Payroll data should be kept _______.

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Key Term Review

Bonuses

Collective bargaining agreement

Commissions

Compensation

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Key Term Review continued

Controllable costs

Fair Labor Standards Act (FLSA)

Merit pay

Noncontrollable costs

Payroll standards

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Key Term Review continued

Performance review cycles

Performance standards

Salaries

Semivariable costs

Wage

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Chapter Learning Objectives—What Did You Learn?

Establish a policy and procedure for determining employee compensation.

Establish guidelines for merit increases.

Maintain confidentiality of payroll information.

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Next Week

Article and review due on Chapter 4: Managing Compensation

Read Chapter 5: Managing Terminations