Presented by Julie Caspar
Cris Wildermuth, Ed.D., SPHR
Assistant Professor
Drake University
Adult Learning &
Organizational Performance
cris.wildermuth@drake.edu
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Julie Caspar
President, HR Hotline
Ankeny, Iowa
(515) 635-0180
julie@hrhotlineinc.net
www.hrhotlineinc.net
• Welcome
• Defining Compensation
• Business Strategy and Compensation
Philosophy
• Compensation Specialties
• Additional Strategic Considerations
• Cases
• End Session
• TRUE or False:
– Compensation is cash provided
by an employer for services
rendered
Answer
TRUE
• TRUE or False:
– At the beginning of the 20th
century the focus of
compensation was pay for
work; by the end of the 20th
century the focus of
compensation was more on
pay for results.
Answer
TRUE
At its most
fundamental
level…
Compensation
is pay for work
Compensation Evolution
Domestic
Competition
Development
Ongoing
Legislation
e.g. Lilly
Ledbetter
Work-Life Balance
Pay for
Work
1900
Passage of
Fair Labor
Standards Act
(1938)
Davis-Bacon Act
1931
Equal Pay Act
(1963)
Benefits
Merit
(Compensation)
American
Compensation
Association
(1955)
Equity
Market Based
Total Rewards
2012
Longer Term
Strategy
Achievement & Pay
Drive
Performance
Pay for Results
Global
Competition
ACA
American
Compensation
Association
WAW
WorldatWork
TR Model: Created by WorldatWork © 2007
Compensation is …
Cash provided by an employer to an
employee for services rendered. Cash is
comprised of ….
Base Pay
• Wages
• Salaries
Variable Pay
• Bonuses
• Incentives
• Stock Options
“At Risk”
Focus of compensation today?
MARKET-BASED
INTERNALLY EQUITABLE
PERFORMANCE DRIVEN
Where Compensation and the
Business Imperative Meet
Vision & Mission
Goals
Strategically Aligned Compensation
Objectives
• Legal compliance
• Cost effective
• Internally, externally, and
individually equitable
• Drives performance and results
Compensation Philosophy
Compensation Philosophy
Continuum
Entitlement
•
•
•
•
Seniority Basis
Across-the-board raises
Pay scales raised annually
Industry comparisons of
compensation only
• Holiday Bonuses
Performance
• No raises for length of service
• No raises for longer service
poor performers
• Market adjusted pay
structures
• Broader industry comparisons
• Bonuses tied to performance
results
Mathis, R.L. & Jackson, J.H. (2006). Human resource management 11th edition. Mason: Thomson South-Western.
• What is your
compensation
philosophy like?
Compensation Goals
Market Positioning
Market Positioning
At Market
Lag
Lead
Compensation programs are valued within
close proximity to market.
Compensation programs are at an affordable level
for organization. Takes advantage of abundant
supply of potential employees in a loose labor
market.
Paying for higher qualified, more productive
workers by positioning pay above market.
Compensation Mix
Performance Based
Alignment
Decision Making
Communications
Changes
Compensation Philosophy
Should include….
Pay level position against
competitors (or market)
Amount of fixed vs. variable pay
Balance between external
vs. internal equity
Link to business strategy
• At what market level
does your organization
position your
compensation programs?
Surveying the Market
Compensation
Specialties
•
•
•
•
International
Sales
Executive
General
o Base
o Incentive
Additional Compensation
Considerations
Competency Based Pay
Individual vs. Team Rewards
Pay Openness vs. Secrecy
Equity
Job Leveling / Pay Structures
Compensation
Programs
“Fitting” into the bigger picture
Case 1
Research milestone achievements
Case 2
Power Company
Skilled Worker Retention
Take Aways
• Compensation is cash provided by
an employer to an employee for
services rendered.
• Compensation is one of multiple
variables of what may drive a
business strategy based on the Total
Rewards Philosophy.
• A clear depiction of company
mission, vision, and goals need to
be made before a strategic
compensation plan / program can
be developed.
• A compensation philosophy is
critical to the successful alignment
of the business strategy.
• Organizations need to decide
whether their compensation
programs are to be more
entitlement or performance based
and how either will advance the
business strategy.
• There are multiple and various
considerations to be made in
determining compensation
programs that will ultimately
lead to business achievement.
Julie Caspar
President, HR Hotline
Ankeny, Iowa
(515) 635-0180
julie@hrhotlineinc.net
www.hrhotlineinc.net
• Presenter: Jennifer Soma
• Title: Career Development and Happenstance
• Date: December 12, 2012
• Time: 12:00 PM - 1:00 PM CST
• Register:
https://www3.gotomeeting.com/register/176
333630