វិទ្យាស្ថានខ្មែរជំនាន់ថ្ែី
INSTITUTE OF NEW KHMER
មហាវិទ្យាល័យគ្រប់គ្រងពាណិជចកមែ និងទទ្យស្ចរណ៍
ការគ្រប់គ្រងធនធានមនុស្ស
Human Resources Managements
Lectured by: NOUV Brosh
Mobile Phone: 093640486 & E-mail: broshnouv@gmail.com
HRM By: NOUV Brosh
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Chapter 10:
Employee Compensation and
Benefits
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WHAT IS EMPLOYEE COMPENSATION?
Compensation refers to all forms of
financial returns and tangible
services and benefits employees
receive as part of an employment
relationship.
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Total Compensation
Direct Compensation
Wages
Salaries
Commissions
Bonuses
Gain-sharing
Fixed
allowances
Incentives
Indirect Compensation
Pay
for Time Not Worked
•Vacations
•Breaks
•Holidays
Insurance Plans
•Medical
•Dental
•Life
Security Plans
•Pension
•Disability Insurance
Employee Services
•Educational Assistance
•Recreational programs
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Components of a Total Reward System
1. Compensation
Wages, Commissions and Bonuses
2. Benefits
Vacations, Health Insurance
3. Social Interaction
Friendly Workplace
4. Security
Stable, Consistent Position and Rewards
5. Status / Recognition
Respect, Prominence Due to Work
6. Work Variety
Opportunity to Experience Different Things
7. Workload
Right Amount of Work (not too much, not too little)
8. Work Importance
Is Work Valued by Society
9. Authority / Control / Autonomy
Ability to Influence Others; Control Own Destiny
10. Advancement
Chance to Get Ahead
11. Feedback
Receive Information Helping to Improve Performance
12. Work Conditions
Hazard Free
13. Development Opportunity
Training to Learn New Knowledge / Skills / Abilities
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Compensation
Management
and other HRM
Functions
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OBJECTIVES OF PAY SYSTEM:
• Attract and retain employees
• Motivate performance
• Promote skills and knowledge development
• Shape corporate culture
• Reinforce and define structure
• Determine pay costs
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Pay-Design Process
• Before any new compensation program is
designed, there must be a clear
understanding by the organization of:
–its current values
–its structure
–its people
–its goals and vision for the future
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Goals of Strategic Compensation Policies
Motivating
Value of
Compensation
Pay-forPerformanc
e Standard
Linking
Compensation
to Organizational
Objectives
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Components of the Wage Mix
Conditions of
Labor Market
Compensation
Policy of
Organization
Area Wage
Rates
Cost of
Living
Worth of
Job
WAGE
MIX
Employee’s
Relative Worth
Collective
Bargaining
Employer’s
Ability to Pay
Legal
Requirements
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Job Evaluation Systems
Job Ranking
Job Classification
Common
Methods of Job
Comparison
Point System
Factor Comparison
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GENERIC TERMS USED IN COMPENSATION:
• Value-added compensation refers to evaluating the individual components of
the compensation program to see if they advance the needs of employees
and the goals of the organization.
• Pay-for-Performance Standard refers to the standard by which managers
tie compensation to employee effort and performance.
• Pay Equity refers an employee’s perception that compensation received is
equal to the value of the work performed.
• Hourly Work refers to work paid on an hourly basis.
• Piecework refers to work paid according to the number of units produced.
• Real Wages refers to wage increases larger than rises in the consumer
price index; that is, the real earning power of wages.
• Consumer Price Index (CPI) refers to the measure of the average change in
pricesover time in a fixed “market basket” of goodsand service.
• Escalator Clauses refers to clauses in the labor agreements that provide
for quarterly cost-of-living adjustments in wages, basing the adjustments
on changes in the consumer price index.
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Job Evaluation
Systematic process of determining
the relative worth of jobs in order to
establish which jobs should be paid
more than others within an
organization.
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COMMON METHODS OF JOB COMPARSION:
• Job Ranking System is the simplest and oldest system of job
evaluation by which jobs are arrayed on the basis of their
relative worth.
• Job Classification System is the system of job evaluation by
which jobs are classified and grouped according to a series of
predetermined wage grades.
• Point System is the quantitative job evaluation procedure that
determines the relative value of a job by the total points
assigned to it.
• Factor Comparison System is a job evaluation system that
permits the evaluation process to be accomplished on a factorby-factor basis by developing a factor comparison scale.
• Hay Profile Method is a job evaluation technique using three
factors – knowledge, mental activity, and accountability – to
evaluate executive andHRM
managerial
position.
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1: Paired-Comparison Job Ranking Table
Column Jobs
Row Jobs
Senior
Senior
Administrative
Secretary
Administative
Data-Entry
Operator
x
DataProcessing
Director
File
Clerk
System
Analyst
x
Programmer
x
Total
3
Secretary
Data-Entry
x
1
Operator
DataProcessing
x
x
x
x
x
5
Director
File Clerk
Systems
0
x
x
x
x
x
x
4
Analyst
Programmer
Direction: Place an X in the cell where the value of a row job is higher than that of a
column job.
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2 :Points Values for Job Factors of the American Association of Industrial Management
FACTORS
1ST
2ND
3RD
4TH
5TH
DEGREE DEGREE DEGREE DEGREE DEGREE
Skill
1. Job Knowledge
2. Experience
3. Initiative and ingenuity
14
28
42
56
70
22
14
44
28
66
42
88
56
110
70
Effort
4. Physical demand
10
20
30
40
50
5. Mental or visual demand
5
10
15
20
25
Responsibility
6. Equipment or press
5
10
15
20
25
7. Material or product
8. Safety of others
9. Work of others
5
5
5
10
10
10
15
15
15
20
20
20
25
25
25
10
20
30
40
50
5
10
15
20
25
Job Conditions
10. Working Conditions
11. Hazards
Source : Developed by the National Metal Trades Association. Reproduced with permission of the American
Association of Industrial Management, Springfield, Mass.
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Characteristics of Key Jobs
 Have importance
to employees and
organizations
 Vary in terms of job requirements
 Possess relatively stable job content
 Are used as important jobs in salary
surveys
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The Compensation Structure
Wage and Salary
Surveys
Issues Involved
in Setting
Compensation
Structures
Wage Curve
Pay Grades
Rate Ranges
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Wage and Salary Survey
Survey of the wages paid to
employees of other employers in
the surveying organization’s
relevant labor market
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How to conduct Wage and Salary Surveys?
Select key jobs.
Determine relevant labor market.
Select organizations.
Decide
on information to collect:
wages/benefits/pay policies.
Compile data received.
Determine wages and benefits to pay.
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COMPENSATION STRUCTURE - CONTINUE
 Wage Curve refers to the curve in a scattergram
representing the relationship between relative worth of
jobs and wage rates.
 Pay Grades refers to groups of jobs within a particular class
that are paid the same rate or rate range.
 Red Circle Rates refers to the payment rates above the maximum
of the pay range.
 Skill-Based Pay refers to pay based on how many skills
employees have or how many jobs they can perform.
 Comparable Worth refers to the concept that male and female
jobs that are dissimilar, but equal in terms of value or worth to
the employer, should be paid the same.
 Wage-Rate Compression refers to the compression of
differentials between job classes, particularly the differential
between hourly workers and their managers.
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What are the Universal Compensable Factors?
1. Skill: the experience, training, ability, and education required
to perform a job under consideration - not with the skills an
employee may possess
–
–
–
–
–
–
–
–
Technical Know-how
Specialized Knowledge
Organizational Awareness
Educational Levels
Specialized Training
Years of Experience Required
Interpersonal Skills
Degree of Supervisory Skills
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Universal Compensable Factors - CONTINUE
2. Effort: the measurement of the
physical or mental exertion needed
for performance of a job.
– Diversity of Tasks
– Complexity of Tasks
– Creativity of Thinking
– Analytical Problem Solving
– Physical Application of Skills
– Degree of Assistance Available
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Universal Compensable Factors - continue
• 3. Responsibility: the extent to which an
employer depends on the employee to perform
the job as expected, with emphasis on the
importance of job obligation.
• Decision-making Authority
• Scope of the organization under control
• Scope of the organization impacted
• Degree of integration of work with others
• Impact of failure or risk of job
• Ability to perform tasks without supervision.
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Universal Compensable Factors - CONTINUE
4.Working Conditions:
• Hazards, physical
surroundings of the job.
• Potential Hazards Inherent in
Job
• Degree of Danger Which Can
be Exposed to Others
• Impact of Specialized Motor or
Concentration Skills
• Degree of Discomfort,
Exposure, or Dirtiness in
Doing
Job Brosh
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WHAT IS EMPLOYEE BENEFITS?
EMPLOYEE BENEFITS: that part of
the total compensation package,
other than pay for time worked,
provided to employees in whole or in
part by employer payments (e.g., life
insurance, pension, workers’
compensation, vacation).
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Strategic Reasons for Offering Employee Benefits:
• Help attract employees
• Help retain employees
• Elevate the image of the organization
with employees and other
organizations
• Increase job satisfaction
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Strategic considerations
• Consistency of benefits package with longterm business strategy plans
• Consistency of benefits with objectives of
total compensation strategy
• Competitive costs of benefits package
• Meeting needs of company workforce
• Satisfaction of legal requirements
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Components of benefits package
• Security & health
• Pay for time not worked
• Employee services
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Payment For Time Not Worked
• Paid Vacations in Cambodia:
– 18 days per year in Cambodia
– 30 days mandatory
in Europe
• Paid holidays according to Prakas.
• 90 days paid maternity leave in Cambodia
• Sick leave
• Special leave of 7 days granted to an employee
in Cambodia.
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Employee Wellness Programs
Effort to raise overall health levels of all employees
Two types of programs:
•Passive
•emphasis on building awareness
•people identify own problems & take action
•physical fitness facility program
•Active
•emphasis on reinforcement & support
•example: outreach and follow-up model
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Flexible Benefits (Cafeteria) Plans
Advantages
– more appreciation of benefits offered
– better match between benefits and employee
preference
– cost reduction to employee
Disadvantages
– increased design and start-up costs
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Key Issues In Benefits Planning, Design, and
Administration
Modifying
Employee Benefits
Allowing for
Employee Input
Providing
Flexibility
Communicating
Benefits
Information
Establishing
Specific Objectives
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Managing Benefits
• Surveys and Benchmarks
• Cost controls
- Managed Care
- Co-insurance
- Employee wellness programs
• Workforce Demographics
• Communicating with employees
• Flexible Benefit (Cafeteria) Plans
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EXAMPLES OF EMPLOYEE BENEFITS:
Some examples of discretionary employee benefits include :
•
HEALTH CARE BENEFITS
DEATH BENEFITS
•
LIFE INSURANCE (could be mandatory or compulsory if
required by law)
•
PENSIONS
•
EDUCATIONAL ASSISTANCE
•
COMPANY LOANS
•
CHILD AND ELDER CARE
•
RECREATIONAL AND SOCIAL SERVICES
•
PAID VACATIONS
By: NOUV
Brosh
2 main concerns of managementHRM
regarding
EB are
: Costs and Legal.
35
Reading Cases
1. Case 10-1: The comparable Worth
Debate on page 322 to 324
2. Case 11-1: Customizing Bonus Pay
Plan on page 351 to 353
3. Case 12-1: Benefits are vanishing on
page 384 to 386
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