Supervisors

Corporate directors

Top management executives

Professional employees

Sales staff

Contingent workers

Tend to be strategically important to a company

Positions tend to have built-in conflict that arises because different factions place incompatible demands on members of group

Caught between demands of:Upper management in terms of

production and

Employees in terms of rewards, reinforcements, and counseling

Major challenge in paying supervisorsEquity

Provide incentives to entice nonexempt employees to accept challenges of being a supervisor

Pay strategies

Key base salaries of supervisors to an amount exceeding highest paid employee

Pay supervisors for scheduled overtime

Trend in supervisory compensation

Increased use of variable pay

More than half of all companies have a variable pay component for supervisors

Stockholders blame corporate directors for excessively high executive compensation Directors are much more active in decision

making and somewhat less prone to grant huge salaries to the CEO

Approximately two-thirds of boards now include more outside directors than inside directors

In exchange for meeting at least quarterly a typical director receives about $55,000 in cash and incentives and a total of about $150,000

Pay is linked to company performanceCompany performance exceeds industry

standards, big bonuses and stock payouts follow

Poor financial performance means much smaller pay packages

Ways to rein in executive compensationUse of tally sheet Increase government regulation

Stockholders can vote/ propose limits to compensation

Social comparisonsExecutive salaries bear a consistent relative

relationship to pay of lower-level employees Economic approach

Value of CEO should correspond to some measure of organizational success

Agency theory Incorporates political motivationsCEO compensation should be designed to

ensure executives focus on best interests of firm and stockholders

Base salary

Short-term (annual) incentives or bonuses

Long-term incentives and capital appreciation plans

Executive benefits

Perquisites

Incentive stock options

Non-qualified stock options

Phantom stock plans

Stock appreciation rights

Restricted stock plans

Performance share/unit plans

Physical exam Company car Financial counseling Company plane Income tax preparation First-class air travel Country club

membership Luncheon club

membership Estate planning

Personal liability insurance

Spouse travel Chauffeur service Reserved parking Executive dining room Home security system Car phone Financial seminars Loans at low or no

interest Legal counseling

Scientists and engineers are classified as professionals

Problems in designing pay

Salary plateaus due to knowledge obsolescence of mature professionals Dual-Career Ladder

Question of equity

Dual-career ladders Performance-based incentives

Profit sharingStock ownership

BonusesCompletion of projects on or before deadlinesPatentsPublicationsElections to professional societiesAttainment of professional licenses

Perks based on unique needs of professional employees

Often go for extended periods in field with little supervision

Challenges

Staying motivated

Continuing to make sales calls despite little supervision

Nature of people who enter sales profession Organizational strategy Market maturity Competitor practices Economic environment Product sold

Guaranteed base salary

Guaranteed base salary + commission

Guaranteed base salary + bonus

Guaranteed base salary + commission + bonus

Commission only

Combination plan

Types include a person who works

Through a temporary help agency

On an on-call basis

As an independent contractor

Typical salary arrangements

Workers in first two categories often earn less than workers in traditional arrangements

Independent contractors often earn more

Identify ways to deal with equity issues

View workers as pool ofcandidates for morepermanent hiring status

Champion idea ofboundary less careers