BA-224 / Direct Financial Compensation / Chapter 9
1. Compensation – Total of all rewards provided employees in return for their services.
– Direct Financial Compensation
– Indirect Financial Compensation
– Non-Financial Compensation
2. Equity in Compensation
– Equity – Fair pay treatment for employees
– External Equity
– Internal Equity
• Financial Equity
• Employee Equity
• Team Equity
3. Determinants of Direct Financial Compensation
– Organization
– Labor Market
– Job
– Employee
4. The Organization
– Compensation Policies
• Pay leader / Pay follower
• Market rate
– Organization Level
– Organization’s Ability to Pay
5. Labor Market and Compensation
– Compensation Surveys
– Expediency – Info from recruiters
– Cost of Living
– Labor Unions
– The Economy
– Legislation
6. Fair Labor Standards Act-1938
– Minimum Wage
– 40 Hour work week
– Overtime for over 40 hours / week
– Child Labor Laws
7. Legal Considerations
– Union Regulation
– Equal Pay Act – 1963
– Title VII – Civil Rights Act – 1964
8. 3. The Job and Compensation
– Job Analysis and Job Descriptions
9. Job Evaluation
– A process that determines the relative value of one job in relation to another.
10. Job Evaluation Methods
– Ranking
– Classification
– Factor Comparison
– Point Method
– Hay Plan
– Compensable Factor – A fundamental compensable element of a job, such as
skills, effort, responsibility and working conditions
11. Job Pricing
– Pay Grade – A pay grade is comprised of jobs of approximately equal difficulty.
– Pay Ranges – Steps or levels within a pay grade usually based upon years of
service.
– Broadbanding – Collapsing many pay grades into a few wide bands to improve
organizational effectiveness.
– Single-Rate System – Jobs are routine – fixed rate for all employees
12. The Employee and Compensation
– Competency Based Pay
• Merit – Bonus – Skill-based – Piecework
– Seniority
• Longevity – Experience – Potential
– Organizational Politics
– Employee Categories
• Sales Employees & Professionals, etc.
– Luck
13. Compensation for Special Groups
– Teams
– Professionals
– Sales Employees
– Contingency Workers
– Executives
• Base Salary
• Stock Options / Bonuses / Severance
• Perks
14. Compensation Issues
– Executive Compensation
– Professional Employees
– Comparable Worth