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Chapter11TotalRewardsandCompensation.pptx

TOTAL REWARDS AND COMPENSATION

CHAPTER 11

LEARNING OBJECTIVES

Identify the three elements of total rewards and give examples of each.

Explain the major laws governing employee compensation.

Outline the steps in developing a base pay system.

Define pay ranges and pay grades.

Identify four measures used to determine the effectiveness of compensation systems.

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NATURE OF TOTAL REWARDS AND COMPENSATION

Total rewards: Monetary and nonmonetary rewards provided by companies to attract, motivate, and retain employees.

Strategic decisions can guide the design of compensation practices

Compliance with all applicable laws and regulations

Cost-effectiveness for the organization

Internal and external equity for employees

Performance enhancement for the organization

Performance recognition and talent management for employees

Enhanced recruitment, involvement, and retention of employees

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ELEMENTS OF TOTAL REWARDS

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LAWS GOVERNING COMPENSATION

Fair Labor Standards Act

Minimum wage

Child labor provisions

Overtime provisions

Equal Pay Act

Lilly Ledbetter Act

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STRATEGIC COMPENSATION DECISIONS (1 of 2)

Firms need to manage their compensation philosophy to ensure that employees believe they are being treated fairly.

Entitlement philosophy is at one end of the continuum, and performance philosophy is at the other end.

Entitlement philosophy: Assumes that individuals who have worked another year with the company are entitled to pay increases with little regard for performance differences.

Pay-for-performance philosophy: Assumes that compensation decisions reflect performance differences.

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STRATEGIC COMPENSATION DECISIONS (2 of 2)

Communicating pay philosophy

Helps employees recognize the value of the total rewards package and how their work performance, tenure, and raises can affect their compensation

Administrative responsibilities

H R specialists develop and administer the compensation system and ensure that pay practices comply with all legal requirements

Managers help employees see the connections between their individual performance and the expected rewards

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MARKET COMPETITIVE COMPENSATION

Lag-the-Market Strategy

Match-the-Market Strategy

Lead-the-Market Strategy

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DEVELOPING A BASE PAY SYSTEM

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PAY STRUCTURES

Pay Grades – groupings of individual jobs that have approximately the same value to the organization.

Pay Ranges – defined as a set boundary for compensation which identifies the minimum and maximum amount of a specific pay grade.

Individual Pay (red/green circled employees).

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HUMAN RESOURCE METRICS AND COMPENSATION

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THE END

Questions.

Comments.

Concerns.

Proceed to and complete assignments related Chapter 11.

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