4-11 Copyright © 2015 Pearson Education, Inc. 11-1 Establishing Strategic Pay Plans.
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Transcript of 4-11 Copyright © 2015 Pearson Education, Inc. 11-1 Establishing Strategic Pay Plans.
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Copyright © 2015 Pearson Education, Inc.
11-1
Establishing Strategic Pay Plans
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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
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Learning Objectives
4. Explain how to price managerial and
professional jobs.
5. Explain the difference between
competency-based and traditional pay.
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List the basic factors determining pay
rates.
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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
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Legal Considerations in Compensation
• Fair Labor Standards Act (1938)
• Exempt/nonexempt
• Equal Pay Act (1963)
• Employee Retirement Income
Security Act (1974)
• Other legislation
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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
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Other Factors
• Union influences on
compensation decisions
• Pay policies
• Geography
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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
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Review
• Alignment with strategy
• Equity – external, internal
• Legal considerations
• Union influences
• Pay policies
• Geography
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Define and give an example of how to conduct a job evaluation.
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Job Evaluation Methods
• Compensable
factors
• Preparing for the
job evaluation
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Job Evaluation Methods: Ranking
1. Obtain job information
2. Select and group jobs
3. Select compensable factors
4. Rank jobs
5. Combine ratings
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• Job classification
• Point method
o “Packaged” point
plans
• Computerized job
evaluations
Job Evaluation Methods
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• Compensable factors
• Preparation
• Ranking
• Classification
• Point method
• Computer-based
Review
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Explain in detail how to establish
a market-competitive pay plan.
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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
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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?
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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
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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
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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
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Review
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Explain how to price managerial and
professional jobs.
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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
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• Executives
• Professionals
• Pay
Review
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Explain the difference between
competency-based and traditional pay.
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Contemporary Topics in Compensation
• Competency-based
pay
• What is it?
• Why use it?
• In practice
• The bottom line
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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
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• Broadbanding
• Actively managing
• Comparable worth
o The pay gap
• Board oversight
• Total rewards and
tomorrow’s pay
programs
Trends
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Review
• Broad banding
• Management
• Worth
• Boards
• Tomorrow
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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.
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Hotel ParisStrategyChapter 11
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