LIR 825
COMPENSATION AND BENEFIT SYSTEMS
School of Labor and Industrial Relations
Michigan State University
Fall 2003
Professor Michael L. Moore
424 S. Kedzie Hall
Office: 432-2801
Compensation practices are major tools in achieving organizational strategies. These practices can be
designed to attract high-talent employees and managers, encourage dedication to the organization, reward
excellence, and even to support organization-wide visions of effectiveness. Accordingly, compensation
practices receive considerable attention from top executives as well as human resources professionals.
Obviously, all employees scrutinize the pay practices of their own employers and also try to discover
information about pay levels and features in other organizations. Thus, compensation professionals must
constantly be aware of the balance between external equity (what others pay), internal equity (job
relationships in the organization), and individual equity (self-perceptions of worth and relative contribution.
Good compensation specialists and managers are always in demand because their critical problem-solving
and analytical skills apply to all strategic situations faced by firms such as start-up, turnaround, steady
growth, rapid growth, and downsizing.
Course Content
This course deals with compensation and benefits administration as generic processes and as major
subsystems applicable to any organized effort. The focus, however, will be upon basic concepts of pay
planning and administration in large-scale organizations, particularly those which employ hourly and salaried
employees and have a wide range of line and staff activities. Emphasis will be placed on (a) diagnostic,
policy-making approaches; (b) administrative techniques and practices; (c) application of relevant behavioral
science theory and research; and (d) legislation having important impacts on pay planning and
administration.
The specific subject matter coverage of this course will typically encompass an institutional perspective.
Areas of inquiry will include compensation concepts, objectives, and programs; strategic planning in
compensation systems job data and analysis; internal equity and job evaluation; surveys and external equity;
compensation structures and administration; performance appraisal and merit pay systems; motivation
theories, incentive programs; benefits; legislation; and compensation of special groups.
Two topics are of special interest to me in 2003. These are: (1) the shifts between the focus on external vs.
internal equity and, (2) the dramatic changes in the design and delivery of employee benefits.
This course focuses on the theoretical, legal, and administrative dimensions of compensation, system design,
administration, and maintenance. It deals with the realities of direct and indirect compensation with an
emphasis on application. This is not a "pay" course which is motivation theory-driven and is taught as a
variation of a psychology course.
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Objectives
This course provides an opportunity for the analysis and study of compensation planning and
administration. The objectives are:
a.
to analyze the goals, strategies, and the external and internal considerations that affect
planning and administering compensation in large sized, pace-setting organizations;
b.
to review and appraise incentive payment plans and other forms of direct and indirect
compensation for employees at all levels;
c.
to perform actual tasks involved in compensation processes. Upon completion of this
course, together with your MLRHR degree, you should be able to qualify for work in an
entry-level professional compensation position such as job analyst, wage/salary
administrator, benefits administrator, compensation consultant, and the like. Thus, LIR 825
can be viewed as providing preparation for persons who want to master the techniques
applicable to pay administration and benefits administration and design together with
relevant theoretical and empirical foundations.
Prerequisite
LIR 824 or equivalent graduate-level course in Human Resource Management.
Format of the Course
This graduate course meets every Monday and Wednesday morning from 10:20 to 11:40 AM in
Room 133 of North Kedzie Hall.
Required Texts
Everyone is expected to purchase a copy of each of the following books which are required
reading:
Milkovitch, George & Newman, Jerry. Compensation, Seventh Edition. Homewood: Irwin, 2002.
Milkovitch, George; Newman, Jerry; Milkovitch, Carolyn. Cases in Compensation--Student Manual,
9th Edition, Ithaca NY: Compensation, 2003.
Lawler, Edward E. III. Rewarding Excellence. San Francisco: Jossey Bass, 2000.
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Group Project
Compensation System Development through Cases: The New Fast Cat Case
This project is designed to give you the opportunity to integrate and apply the knowledge that you
are learning. For this project, teams of about 4 class members will be established. Each team will
serve as compensation experts who have been hired by the firm to develop an integrated
compensation plan. Since it is a group project, it will be graded as such. All team members will
receive the same grade irrespective of the level of effort invested. These assignments should be
word-processed and footnotes are necessary when materials are taken directly from a book or
article.
Group Projects
th
Each group will utilize the "integrated cases" in the Cases in Compensation (9 Edition) text. For
this term, the required cases' due dates are:
Phase I
Phase II
Phase III
September 29, 2003
October 27, 2003
November 26, 2003
One report per team should be submitted on the appropriate due date. A grade will be assigned to
each phase for each team. All team members will receive the same grade regardless of the level of
individual contribution.
Each phase builds uniquely on your answers to prior phases. As you work on the cases, I will
provide you with additional data based on your answers in the prior phase. Accordingly, late cases
are a disaster both to student and instructor because the effects of delays are multiplicative. I am
committed to a rapid turnaround of case reports so that work can continue and have blocked out
specific days of grading time. Late papers will disrupt this schedule and prove extremely
aggravating to all concerned. Get organized quickly and stay on schedule!
Each report should be written as recommendations to top management (the professor). One
approach to developing the report is to identify and discuss decisions that must be made to meet
the phase objectives. Each decision should be supported with a rationale that is logical and based
in the content presented in your texts. For this course, references to scholarly literature are
encouraged. Identify plausible alternatives to your decisions, and discuss possible problems that
may be encountered. Each phase should be summarized in a one-page executive summary at the
front of the report. A Table of Contents is also required for each phase.
The case is a wonderful learning device but only if your team develops its own unique logic and
follows it for all three "phases."
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Group Process Suggestions
Working together on the three LIR 825 Phases presents the opportunity for a team experience of
unique depth because 60% of each student's grade is related to his/her sustained cooperation and
effort over a 13 to 14 week period. Each group will have to set norms and expectations, plan
meetings and case writing project work well in advance, and motivate and encourage each other
so that being part of a case consulting team produces satisfying learning and social outcomes.
Advice from previous groups includes assessing all group resources early on, allowing member
strengths to emerge on the tasks of each case, focusing conflicts on professional issues rather than
personalities, avoiding major digressions during meetings unless everyone is in the mood, stepping
up to leadership if a void develops, allowing enough time (at least a day) for case packaging and
logistics. Remember to use office hours with Dr. Moore as part of your overall approach.
Group Process Paper
I would like each of you to write a short paper discussing your group processes in creating the New
Fast Cat Phase Reports. Discuss your role in the group and the relative accomplishments of other
members. This paper is due at the time of your final exam on December 11, 2003.
Research Paper - A Focus on Benefits - December 3, 2003
As a learning experience, each student is expected to prepare a graduate-level research paper,
choosing from among the topics listed in the syllabus or others approved by the professor. The
objective of this paper is to create a research-based critical analysis of a single benefit such as a
health care, pension, insurance, dental, vision, legal care, etc. program. Discuss the role this
benefit plays in a compensation program strategy anchored in 2000 and beyond. Use only current
scholarly and practitioner sources. Describe the benefit thoroughly noting legal issues and current
controversies surrounding this benefit. Offer a critical analysis of the future trajectory of this
benefit in practice. Let me know your topic by November 3, 2003.
Although length is no criterion of quality, papers should be a total of 8-10 pages (double spaced),
not including footnotes and bibliography. Longer or shorter papers are not acceptable. At least
five scholarly sources should be listed in the bibliography, and at least two of these should be
heavily used in writing the paper. Evidence of use should be reflected in properly cited footnotes.
The style of the paper (footnotes, tables, bibliography, etc.) should be in accord with the American
Psychological Association's Manual of Style or any other leading style manual. Papers should focus
upon aspects of the topic not covered in the text(s) for the course and course materials. Papers
should be tightly reasoned, analytical, and well written. Your own thinking should be made clear
and must be included in the paper. To help you write this paper, you may wish to start with the
following sources:
1.
Reading relevant chapters from the Milkovitch and Lawler texts.
2.
Listing of topics appropriate for this paper.
(If you wish to select a different topic, be sure to check with the professor.)
3.
Listing of journals which examine compensation and human resource management issues.
4.
Work-related, psychological, and/or periodical abstracts.
This paper must be illustrative of your highest level skills as a library researcher and writer. It is
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worth 20% of your grade. Begin thinking about a topic early in this semester.
Utilizing papers previously written for this or other classes is discouraged. Students should know
that the papers are retained for the instructor’s files. This provides the instructor with the
opportunity to check papers that look familiar with those previously written. This benefits
research paper is due on December 3, 2003.
Quality Requirements of Written Reports
All submitted written papers should reflect the best effort of the student. The papers should be
proofread and spell-checked prior to submission. "Sloppy" papers indicate lack of professionalism
and will be graded as such. Written reports should be word-processed double-spaced with 1.5inch margins on both sides to allow for written comments.
Feedback on Written Reports
Unless otherwise indicated, all written reports will be returned to students within a week after the
submission date. Papers are due in class at the time indicated above.
Each student should ideally choose a topic not selected by any other student. Check with the
professor if you have doubts.
Complete the last page of this course syllabus no later than November 3, 2003, and
submit it to the professor for his approval.
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LIR 825
COMPENSATION AND BENEFIT SYSTEMS
Instructor:
Dr. Michael L. Moore
Room 424 South Kedzie Hall
Office Hours:
Wednesday afternoons (and other dates as scheduled)
1:30 – 3:30 PM
(Please aim for a 10-15 minute visit.)
Office Phone:
E-Mail:
432-2801
Home Phone: 349-9308
mooremm@msu.edu
Attendance
Attendance is extremely important. Missing more than two sessions should be avoided.
Attendance will be used as a grading criterion in "benefit of the doubt" situations.
Final Exam: Motivation Theory and Programs
The final exam is scheduled on Thursday, December 11, 2003, from 10:00 to 12:00
noon in Room 133 North Kedzie Hall. The final exam will cover all materials discussed in class
and in the required texts that relate to motivational programs, motivation theory and incentives
subject matter. The format of the exam may take on the form of definition of terms, short essay
questions, short case analyses, or some combination thereof.
Grading
The course grade will be determined in the following manner:
Case Analysis:
Research Paper
Final Examination
Grade Translations
3.7 and above
3.4 - 3.7
3.0 - 3.4
2.5 - 3.0
2.0 - 2.5
Phase I
Phase II
Phase III
=
=
=
=
=
20%
20%
20%
20%
20%
100%
4.0
3.5
3.0
2.5
2.0
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Journals/Periodicals
The following are journals, which carry articles on direct and indirect compensation:
*ACA Journal
*ACA News
Academy of Management Executive
Academy of Management Journal
Academy of Management Review
Administrative Science Quarterly
*Benefits and Compensation Solutions
Business Horizons
California Management Review
*Compensation and Benefits Review
Harvard Business Review
*HR Magazine
Human Resource Management
Human Resource Planning Journal
Industrial and Labor Relations Review
Industrial Relations
Journal of Applied Behavioral Science
Journal of Applied Psychology
Journal of Management Studies
Monthly Labor Review
Occupational Psychology
Organizational Behavior
and Human Performance
Organizational Dynamics
*Pension World
Personnel
*Personnel Journal (Now Workforce since 1997)
Personnel Psychology
Psychological Bulletin
Public Personnel Management
Public Personnel Review
Training and Development Journal
*WorldatWork Journal (Formerly ACA Journal until 2000)
*Workspan (Formerly ACA News)
Underlined periodicals indicate scholarly focus
*Benefits focus
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Additional Information
There are several periodicals carrying articles on direct and indirect compensation which you may
consider purchasing on a subscription basis. These include:
Workspan and WorldatWork Journal
American Compensation Association
P.O. Box 29312
Phoenix, AZ 85038-9312
Compensation and Benefits Review (quarterly)
American Management Associations, Inc.
135 West 50th St.
New York, NY 10020
Pension World formerly Pension and Welfare News (monthly)
Communication Channels, Inc.
461 Eighth Avenue
New York, NY 10001
Monthly Labor Review (monthly)
Superintendent of Documents
U.S. Government Printing Office
Washington, DC 20402
Professional Association
The professional association to which compensation specialists belong is rapidly growing and has
over 25,000 members in the U.S. and Canada. It is:
The World at Work Association
P.O. Box 29312
Phoenix, Arizona 85038-9312
(602) 922-2020
Write to the National World at Work Association for further information on regional meetings and
current organizational structure and officers, if you are interested in more information.
Membership is open to practitioners and others who are students of compensation.
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LIR 825:
Course Schedule
Fall 2003
Topics
Session/Date
1. 8/25/03
Course Introduction
2. 8/2703
Strategic Pay
Chapter
Assignments in
Milkovitch &
Newman
Chapter
Assignments in
Lawler
1
1,2
1,2
3
Case Project Issues
3. 9/1/03
Labor Day – No Class
4. 9/3/03
Strategic Issues
2
5. 9/8/03
Internal Consistency
3
6. 9/10/03
Job Analysis
4
8
Job Descriptions
7. 9/15/03
Point Plans
5
8. 9/17/03
Comparable Worth
17
9. 9/22/03
Change Management
5
8
Job Evaluation
10. 9/24/03
Knowledge-Based Pay
11. 9/29/03
Hay Plans/Administration
6
Defining Competitiveness
5,7
Phase I Due
12. 10/1/03
External Equity
7
Software Lesson
13. 10/6/03
Pay /Surveys
8
14. 10/8/030
Pay Structures
8
15. 10/13/03
Grades and Ranges
8
16. 10/15/03
Pay Administration
18
17. 10/20/03
Employee Contributions
9
9
4,5
18. 10/22/03
Team Work Sessions
19. 10/27/03
Performance Management
11
5
11
6
Merit Pay
Phase II Due
20. 10/29/03
Performance Management
Merit Pay
21. 11/3/03
Pay theory
9
22. 11/5/03
Individual Incentive Plans
10
4
23. 11/10/03
Group Incentive Plans
10
7
24. 11/12/03
Government’s Role in
Compensation
17
25. 11/17/03
Introduction to Indirect
Compensation
12
10
26. 11/19/03
Legally Required Benefits
13
12
27. 11/24/03
Health Benefits
13
10,12
28. 11/26/03
Pensions
14
13,15
14,16
14
Phase III Due
29. 12/1/03
Executive Compensation
30. 12/3/03
Sales & International Comp
Research Paper Due
31.
12/11/03
Final Exam
133 N. Kedzie Hall
Thursday
10AM-12Noon
Group Process Paper
(1-2 pages)
Due at Final Exam
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LIR 825
BENEFITS RESEARCH PAPER TOPIC
Student: _________________________________________________________
I prefer writing on the topic of:
_________________________________________________________________
_________________________________________________________________
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LIR 825 - Michael L. Moore
The New Fast Cat Case 2003
1.
(Basic Requirements in addition to syllabus)
Follow all Fast Cat case requirements and…
2.
Propose a knowledge-based pay (KBP) system for Technicians only.
•
•
•
•
Senior Technician
Technical Analyst A
Technical Analyst B
Technician
3.
Identify knowledge/skill blocks for each job.
4.
Identify a curriculum of required courses/on-the-job experiences and elective course
deemed sufficient to fully master each job and thus to prepare the employee for promotion
to the next higher job.
5.
I recommend assigning a group member to focus on these tasks for Phase I and Phase II.
(This KBP system does not apply to Phase III.)
6.
Good Luck!
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