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Commerce 4BE3
Compensation/Reward Systems
Fall 2014 Course Outline
Human Resources and Management Area
DeGroote School of Business
McMaster University
COURSE OVERVIEW
This course focuses on how best to manage employee compensation in today‘s organizations. Compensation
represents the rewards that employees receive for performing their jobs. It addresses the ways in which both
tangible (money, shares, and bonuses) and intangible (time-off, perks, etc.) forms of compensation may be used to
motivate and reward employee performance. Pay for performance issues will be addressed. Compensation issues
must be central to any strategy In order to attract and retain the talent required for organizations to compete
effectively. Compensation structures also directly impact the culture and financial viability of an institution. Ethical
implications of compensation systems and practices are constantly considered.
In this course we will explore all facets of compensation systems, including how to structure compensation
systems to reflect company strategy. As well, we will address the current issues on executive pay, including the
legal ramifications. Finally, you will gain some knowledge on how to determine your own pay and rewards.
INSTRUCTOR AND CONTACT INFORMATION
Dr. Eva Klein
Professor
Jingui Liu
Teaching Assistant
liuj46@mcmaster.ca
eklein@mcmaster.ca
Office: FHS-3H51
Office Hours: Mondays 1:30-2:30
Tel: (905) 525-9140 x28091
Office: TBD
Office Hours: TBD
Tel: (905) 525-9140 xTBD
Classes: Mondays 2.30pm – 5.20 pm, KTH/B105
Course Website: http://avenue.mcmaster.ca/
COURSE ELEMENTS
Credit Value:
Avenue:
Participation:
Evidence-based:
3
Yes
Yes
Yes
Leadership:
Ethics:
Innovation:
Experiential:
Yes
No
Yes
Yes
IT skills:
Numeracy:
Group work:
Final Exam:
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Yes
Yes
Yes
No
Global view:
Written skills:
Oral skills:
Guest speaker(s):
Yes
Yes
Yes
Yes
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COURSE OBJECTIVES
Business and society are taking an ever larger interest in compensation philosophies and practices. The
current problems in our economy are not only a consequence of corporate fraud and abuse; they are
also the symptoms of corporate compensation failures. This course explores compensation theories and
practices and how they to link them to company strategy. The major objectives are:
 Examine the specifics of compensation systems, including benefits and pension schemes.
 Examine the rationale and effectiveness of pay-for performance systems in total compensation,
 Gain expertise in how to structure compensation systems to recruit and retain the most
valued employees.
 Examine the implications of recent theoretical and research developments related to
compensation decisions.
 Offer an opportunity to develop competencies in making informed compensation decisions.
 Examine the ethical issues in compensation, including board and executive compensation
REQUIRED COURSE MATERIALS AND READINGS
Avenue registration for course content, lecture notes, readings and case materials:
 http://avenue.mcmaster.ca
Textbook
Milkovitch et al (2013) Compensation (Fourth Canadian Edition). McGraw-Hill Ryerson.
Text at PKG: COMPENSATION CDN ED W/ CONNECT ACCESS CARD at $124.00
Ebook: EBOOK/AC: EBOOK COMPENSATION CDN ED W/ CONNECT at $100.00
Students may purchase online http://www.bookstore.mcmaster.ca/cgimcm/ws/txhome.exe?wsgm=coursematerial
or in-store.
Cases
Harvard Business School Case #908-064: Name Your Price: Compensation Negotiation at WholeHealth Management (A).
Harvard Business School Case: “A Zero Wage Increase Again” by Karen MacMillan. Ivey Publishing:
September 7, 2011.
FastCat Cases in Compensation , Edition 11.1e, Milkovitch, Newman and Gerhart
Cost: $39.95 US + shipping/ group of 5. This will be collected by the TA.
Guest Speakers:
There are a number of guest speakers, whose practical experience will add to
the course as well as hopefully make it more enjoyable. Your active participation in challenging these
speakers is essential. Their bios are listed in Avenue.
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EVALUATION

Article for Review: There is a list of articles on Avenue. You need to pick one you want and critique it.
nd
The review is in 2 parts. The first section summarizes the article. The 2 section critiques the article, how
valid are the methods and conclusions in light of the course. Grading rubric will be available on Avenue.

FastCat Analysis 1: In groups of 5, you will look at sample jobs of FastCat and decide how to arrange
them into a structure. As a group, you will write a report recommending a Strategy and Objectives for
FastCat, an internal structure, implementation plan and Summary. Several groups will be asked to
present their reports.
nd
You will be assigned to teams in the 2 class or given the opportunity to form your own teams.

FastCat Analysis 2: In groups of 5,, you will design a competitive pay scale and establish a pay policy
line, taking into consideration the market pay line.

Case Analyses: In the same groups of 5, you will analyze two HBR cases and a few of the groups will
present their findings. How these groups will be chosen will be discussed in class.

Tests: There are two (2) in-class tests that will include true/false, multiple choice, short answer
questions and brief essays. Students will be responsible for materials covered in lectures, readings, guest
lecturers and class discussions.

Participation: Due to the nature of this course, class participation is essential. Students will be
expected to do the assigned readings on time and come prepared for class discussion.
Name cards and class pictures are used to help give credit for your participation. You must have a name
card with your full first and last name clearly written and displayed in front of you for every class.
Components and Weights
Deliverable
Class Participation (individual)
FastCat Project 1
Test 1
FastCat Project 2
Case 1 Analysis
Test 2
Case 2 Analysis
Critique of Article
Total
Due Date
Ongoing
September 29, 2014
October 6, 2014
October 27, 2014
November 3, 2014
November 10, 2014
November 17, 2014
December 1, 2014
Weighting
10%
15%
15%
15%
15%
10%
10%
10%
100%
NOTE: The use of a McMaster standard calculator (Casio FX-991) is allowed during examinations in
this course. See McMaster calculator policy at the following URL:
http://www.mcmaster.ca/policy/Students-AcademicStudies/examinationindex.html
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Conversion
The conversion of percentage marks to letter grades and grade points in this course follows the scale
recommended by the School of Business for use in Commerce courses, as follows:
LETTER GRADE
PERCENT
LETTER GRADE
PERCENT
A+
A
A-
90 - 100
85 - 89
80 - 84
C+
C
C-
67 - 69
63 - 66
60 - 62
B+
B
B-
77 - 79
73 - 76
70 - 72
D+
D
D-
57 - 59
53 - 56
50 - 52
F
00 - 49
Communication and Feedback
Students who are uncomfortable in directly approaching an instructor regarding a course concern may
send a confidential email to the respective Area Chair, Aaron Schat (schata@mcmaster.ca), or the
Associate Dean (adbusac@mcmaster.ca).
Students who wish to correspond with instructors or TAs directly via email must send messages that
originate from their official McMaster University email account. This protects the confidentiality and
sensitivity of information as well as confirms the identity of the student. Emails regarding course issues
should NOT be sent to the Area Administrative Assistants.
Instructors are required to provide evaluation feedback for at least 10% of the final grade to students
prior to Week #8 in the term.
Instructors may conduct an informal course review with students by Week #4 to allow time for
modifications in curriculum delivery.
Students who wish to have a course component re-evaluated must complete the following form:
http://www.mcmaster.ca/policy/Students-AcademicStudies/Form_A.pdf
In order for the component to be re-read:
 the component must be worth 10% or more of the final grade in the course
 students pay a fee of $50 in Gilmour Hall #209 (receipt is then brought to APO)
 the Area Chair will seek out an independent adjudicator to re-grade the component
 an adjustment to the grade for the component will be made if a grade change of three points or
greater on the 12 point scale (equivalent to 10 marks out of 100) has been suggested by the
adjudicator as assigned by the Area Chair
 if a grade change is made, the student fee will be refunded
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ACADEMIC DISHONESTY
You are expected to exhibit honesty and use ethical behaviour in all aspects of the learning process.
Academic credentials you earn are rooted in principles of honesty and academic integrity.
Academic dishonesty is to knowingly act or fail to act in a way that results or could result in unearned
academic credit or advantage. This behaviour can result in serious consequences, e.g. the grade of zero
on an assignment, loss of credit with a notation on the transcript (notation reads: “Grade of F assigned
for academic dishonesty”), and/or suspension or expulsion from the university.
It is your responsibility to understand what constitutes academic dishonesty. For information on the
various types of academic dishonesty please refer to the Academic Integrity Policy, located at
www.mcmaster.ca/academicintegrity.
The following illustrates only three forms of academic dishonesty:
1. Plagiarism, e.g. the submission of work that is not one’s own or for which other credit has
been obtained.
2. Improper collaboration in group work.
3. Copying or using unauthorized aids in tests and examinations.
STUDENT EVALUATION OF THE COURSE
In accordance with School of Business policy, a course evaluation will be administered near the end of
this course. Given the important uses to which the results of this evaluation are put, all students in the
course are expected to complete the questionnaire.
REQUESTING RELIEF FOR MISSED ACADEMIC TERM WORK
Students may request relief from a regularly scheduled midterm, test, assignment or other course
component in the following two ways:
a)
b)
for missed coursework worth less than 30% of the final grade (and/or absences
lasting less than 5 days); or
for missed coursework worth 30% or more of the final grade (and/or absences
lasting more than five (5) days
a) For missed coursework worth less than 30% of the final grade (and/or absences
lasting less than 5 days)
Students must use the MSAF (McMaster Student Absence Form) for their first incidence of missed
coursework worth less than 30% for each term. This is an on-line, self-reporting tool, for which
submission of medical or other types of supporting documentation is normally not required. Students
may use this tool to submit a maximum of one (1) request for relief of missed academic work per term
as long as the weighting of the component is worth 29% of the final grade or less. Students must follow
up with their course instructors regarding the nature of the relief within two days of submitting the
form. Failure to do so may negate the opportunity for relief. It is the prerogative of the instructor of the
course to determine the appropriate relief for missed term work in his/her course.
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If the value of the component is worth 30% or more, students must report to the APO to discuss their
situation and will be required to provide appropriate supporting documentation.
b) For missed coursework worth 30% or more of the final grade (and/or absences
lasting more than five (5) days
Students MUST report to the APO to discuss their situation and will be required to provide appropriate
supporting documentation. If approved, students will be given access to the MSAF system where they
will be required to enter the details of the missed coursework for which they were approved. Students
must follow up with their course instructors regarding the nature of the relief within two days of
submitting the form. Failure to do so may negate the opportunity for relief. It is the prerogative of the
instructor of the course to determine the appropriate relief for missed term work in his/her course.
Students who wish to submit more than one request for relief of missed academic work per term cannot
use the online MSAF tool without permission. They must report to the APO and discuss their situation
with an academic advisor. They will be required to provide supporting documentation and possibly
meet with the Manager.
The MSAF cannot be used during any final examination period.
Regarding Midterm Conflicts
Students unable to write a mid-term at the posted exam time due to the following reasons: religious;
work-related (for part-time students only); representing university at an academic or varsity athletic
event; conflicts between two overlapping scheduled mid-term exams; or other extenuating
circumstances, have the option of applying for special exam arrangements. Please see the DeGroote
Missed Course Work Policy for a list of conflicts that qualify for academic accommodation
http://ug.degroote.mcmaster.ca/forms-and-resources/missed-course-work-policy/
Such requests must be made to the Academic Programs Office at least ten (10) working days before the
scheduled mid-term along with acceptable documentation. Instructors cannot themselves allow
students to unofficially write make-up exams/tests. Adjudication of the request must be handled by the
Academic Programs Office.
If a mid-term exam is missed without a valid reason, students will receive a grade of zero (0) for that
component.
STUDENT ACCESSIBILITY SERVICES
Students who require academic accommodation must contact Student Accessibility Services (SAS) to
make arrangements with a Program Coordinator. Academic accommodations must be arranged for each
term of study. Student Accessibility Services can be contacted by phone 905-525-9140 ext. 28652 or email sas@mcmaster.ca . For further information, consult McMaster University’s Policy for Academic
Accommodation of Students with Disabilities.
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POTENTIAL MODIFICATIONS TO THE COURSE
The instructor and university reserve the right to modify elements of the course during the term. The
university may change the dates and deadlines for any or all courses in extreme circumstances. If either
type of modification becomes necessary, reasonable notice and communication with the students will
be given with explanation and the opportunity to comment on changes. It is the responsibility of the
student to check their McMaster email and course websites weekly during the term and to note any
changes.
Certified Human Resource Professional (CHRP)
This course can be used as one of the course requirements for obtaining the Certified Human Resource
Professional (CHRP) designation. CHRP is the professional designation offered by The Human
Resources Professionals Association, Canada’s premier association in the field. The courses offered in
the DeGroote Commerce program that contribute to CHRP requirements are: 2BA3 Organizational
Behaviour, 2BC3 Human Resource Management and Labour Relations, 4BB3 Personnel Selection, 4BC3
Collective Bargaining, 4BE3 Compensation/Reward Systems, 4BI3 Training and Development, 4BL3
Occupational Health and Safety, 4BM3 Strategic Human Resource Planning, 2AA3 Financial Accounting
I, 2AB3 Managerial Accounting I. More details are available on the Human Resource Professionals
Association website, http://www.hrpa.
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CLASS SCHEDULE & TOPICS:
Changes and Updates, as well as guest lecturers to this Schedule will be listed on Avenue
DATE
DETAILS
READINGS
September 8th
A Road Map to Effective Compensation—General Philosophic
Principles
Chapters 1&2
Job Analysis and Job Evaluation
Chapters 3,4,5 &6
Motivation and External Competitiveness
Chapter 7&8
Aligning Strategy with Pay Philosophy, External Competitiveness
Appraisal
Chapters 7 & 8
th
Benefits, Pensions and Severance
Chapter 9
th
Pay for Performance and Performance Appraisal
Chapter 10,11
th
Discussion of Fast Cat and Presentations
September
15th
September
nd
22
September
th
29
October 13
October 20
October 27
rd
Union and Labour
Chapter 12
th
Executive Considerations: Incentives, not for profit
Additional Reading, to be
assigned
th
Executive Compensation and ‘Say on Pay’ Legislation, etc.
November 3
November 10
November 17
th
November 24
December 1
st
Discussion of HBR Cases
Determining and negotiating your own pay package – what are
you worth?
Presentations and
Article reviews Summary
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