Strategic Compensation
CHAPTER #1
A COMPONENT OF HUMAN RESOURCE
SYSTEMS
No longer just personnel management
 HR is a strategic partner
 Government regulations
 Compensation plays a huge role
Ability to attract and retain employees
 Facilitate success
 Merit pay
 Incentives
 Competitive base pay
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Strategic Vs. Tactical Decisions
 Strategic decisions guide the activities of firms.
 Tactical decisions support the fullfillment of the
strategic decisions.
 Look page #12
Class exersize
 Look up NAICS
 Read over home page and understand what
information is available.
 Click on New Code System
 Review information on this link
Compensation Professional Goals
 HR has staff function: idea to support line
 Recruitment
 Selection
 Performance apprasial
 Training
 Career development
 Labor-management functions
 Employee terminations
 Legal compliance
Compensation Managers must be able to
 Design and build pay plans that meet the needs
of the firm’s strategy.
 Teach managers how to use compensation tools
at the right time and place and in the right
situation.
What is Compensation ?
 Intrinsic
 Extrinsic
 Psychological States
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Skill Variety
Task Identity
Task significance
Autonomy
Feedback
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Core pay
Adjustments to core
Legally required
Discretionary
History of Pay Systems #9
 Scientific Management Systems
 Time and Motion Studies
 Welfare Practices
 Competitive advantages
Compensation Managers Goals
 HR is staff and supports the line.
 Compensation systems must support
 Recruitment and selection
 Performance appraisals
 Training
 Career Development
 Employment termination
 Legislation
 Internal consistency
 Market competitiveness
 Incentive pay
Stakeholders of the Compensation System
 Employees
 Line Managers
 Executives
 Unions
 US Government
North American Industry Classification System
Manual (NAICS)
 Class exercise:
 Type Strategic Compensation
What do you find?
 Click on a few sites.
 Click on NAICS
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DOL.gov
 Look under BLS
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How would you use this to check on external consistency?
 How would you use this to check on internal consistency?
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