discussion

taylor222

20170204012507diss._ch.1.pptx

Home >Business & Finance homework help >Management homework help >discussion

Learning Objective 4

Name and summarize the goals of compensation professionals.

1-1

HR’s Role

A quotation from Jay Hannah of BancFirst Corporation:

“The HR department is the source and keeper of critical information, which is key in today’s workplace. With the information they provide, we in turn can build and design strategies to hire and retain the best workforce possible. And this may sound cliché, but it’s very true—the real competitive advantage is our company’s human resources.”

1-2

Human resource professionals are staff employees because they offer a wide variety of support services for line employees. In a nutshell, HR professionals promote the effective use of all employees in companies. Effective use means attaining work objectives that fit with the overall mission of the company.

Human Resources Practices

Recruitment

Selection

Performance appraisal

Training

Career development

Labor-management relations

Employment termination

Insuring legal compliance

1-3

In addition to compensation, HR professionals design and implement various HR practices such as recruitment, selection, performance appraisals, training, career development, labor-management relations, employment termination, and insuring legal compliance. With recruitment, and selection, HR departments try to attract job candidates. Companies attract candidates by providing career opportunities, training opportunities, reputation, and so forth. Performance appraisal is key to effective merit pay programs. Compensation rewards must be tied to attainment of performance goals and quality standards. Employees must perceive a strong relationship between performance standards and pay increases. Training is another important HR practice. Successful pay-for-knowledge plans depend upon a company’s ability to develop and implement systematic training programs. Employees’ careers develop in two ways, namely, as a lateral movement or upward movement. In lateral movement, employee moves across a company's hierarchy, and in upward movement, an employee focuses on one functional area and takes a greater responsibility in that area. Compensation is a key topic in labor-management relations. Unions bargain for COLAs and base pay on seniority pay. Employment termination is either involuntary or voluntary. In involuntary termination, companies may offer severance pay. Voluntary terminations are initiated by employees and usually occur when employees want to work elsewhere or retire. Laws were enacted to determine acceptable employment practices and protect employees’ rights.

Compensation Department’s Main Goals

Compensation professionals promote effective compensation systems by meeting three important goals:

Internal consistency

Market competitiveness

Recognition of individual contributions

1-4

The compensation department’s main goals include internal consistency, market competitiveness, and recognizing individual contributions. Each of these goals will be discussed in following slides.

Internal Consistency

Achieved when the value of each job is clearly defined

Represents

Job structure

Hierarchy

Achieved using

Job analysis

Job evaluation

1-5

Think about a series of jobs that progress in terms of duties and responsibilities, for example, a store associate, department manager, assistant store manager, and store manager.

Internal consistency refers to compensation systems that define the relative value of each job among all the jobs. It represents job structure or hierarchy. According to internal consistency, employees working at jobs that require greater qualifications, more responsibilities, and more complex job duties should be paid more. In order to achieve internal consistency, compensation professionals use job analysis and job evaluation.

Market Competitiveness

Compensation policies that fit with business objectives

Vital in attracting and retaining employees

Are based on:

Strategic analyses

Compensation surveys

1-6

Setting pay rates and benefits offerings is essential to recruiting and retaining the best employees. Companies make judgments about what is best based on the norms in companies with whom they compete for labor. They use strategic analysis (understanding who the competitors are) and compensation surveys (understanding what competitors pay).

Individual Contributions

Pay structures: pay is determined by employees’ credentials, job knowledge, and job performance

Pay grades: based on compensable factors and value

Pay ranges: builds on grades, uses midpoints, minimums, and maximums

1-7

Over time, it is important to recognize the contributions of employees for the purposes of retaining them.

There are three main methods such as pay structures, pay grades, and pay ranges. Pay structures are pay rate differences for jobs of unequal worth. Pay is determined by employees’ credentials, job knowledge, and job performance. Pay grades group jobs for pay policy application, and they are based on similar compensable factors and value. The last method is pay ranges and it builds on pay grades.

Pay Grades and Ranges

1-8