HFT 2220HFT 2220

Chapter 10Chapter 10

CompensationCompensation

Two Kinds of CompensationTwo Kinds of Compensation

• Direct– Immediate– Deferred

• Indirect– Immediate– Deferred

Factors on the Rates of Factors on the Rates of CompensationCompensation

• Economic conditions– Company– Labor Market

• Employee perceptions of pay

• Union and governmental influences

• Employee satisfaction and motivation

Influences on Compensation PlansInfluences on Compensation Plans

• COLA• Labor Market Influences• Union Influences• Government Influences

– FLSA– Davis Bacon Act– Social Security Acts

• Retirement 1935• Income to family of deceased worker 1939• Disability 1956• Medicare 1965

– Equal Pay Act

Motivating Employees by Motivating Employees by CompensationCompensation

• Content theories– All people are motivated by certain common

needs

• Process theories– Identify the factors in any given situation that

determines whether an individual will become motivated or not

• Expectancy theory• Equity theory• Reinforcement theory

Content TheoryContent Theory

• Maslow’s Hiearchy of Needs– Physiological– Safety and security needs– Social needs– Esteem needs– Self actualization (Fulfillment needs)

Expectancy TheoryExpectancy Theory

• Employees perception of three factors– Expectancy– Instrumentality– Valence

Equity TheoryEquity Theory

• What do I receive in return for what I give?

• What do others receive in return for what they give?– Internal equity – fellow employees in the

company– External equity – Workers in similar positions

in other companies

Reinforcement TheoryReinforcement Theory

• Positive reinforcement

• Negative reinforcement

• Extinction

• Punishment

Determining Job WorthDetermining Job Worth

• Job Wage Surveys

• Ranking Methods– Paired comparison

• Classification Methods

• Point Methods

• Factor Comparison Method

Current Issues in Compensation Current Issues in Compensation AdministrationAdministration

• Pay secrecy

• Wage compression

• Wage expansion

• Comparable worth

• Wage and Hour audits

Wage and Hour Audits – What Wage and Hour Audits – What They Look ForThey Look For

• Exempt / Non-Exempt Classifications

• Time Period – Overtime

• Hours Worked – Clock Procedures

• Compensable Time

• Calculation of Overtime

• Employees Working more than one job

• Gratuity / Service Charges

• Tip Credit Wages

Wage and Hour Audits – What Wage and Hour Audits – What They Look ForThey Look For

• Tip pooling• Pay discrimination• Policies and

handbooks• Recordkeeping

• Independent contractors

• Training time• Payment procedures

upon termination• I-9 documentation