Employee
Compensation
and Benefits
Copyright © Texas Education Agency, 2013. All rights reserved.
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Copyright © Texas Education Agency, 2013. All rights reserved.
Compensation
• Compensation- the total amount of the
monetary and non-monetary pay
provided to an employee by an
employer in return for work performed
as required by the organization.
• Benefits- refers to compensation other
than an hourly wage or salary.
Copyright © Texas Education Agency, 2013. All rights reserved.
3
Goals of Compensation
• The package should be good enough
to attract the best people for the job.
• It also needs to stay competitive
enough to motivate employees to
stay with the organization. It’s not
the only component in motivating
people to stay, but it is certainly a key
component.
• Compensation can be used to
increase morale, motivation, and
satisfaction among employees.
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4
Developing a Compensation Package
• A compensation plan needs to assist in the
development of a compensation strategy that meets
the goals of the organization; it also needs to be in
line with the organization’s strategic plan.
Copyright © Texas Education Agency, 2013. All rights reserved.
5
Internal and External Pay Factors
Internal Pay factors
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Market compensation policy
Market Plus philosophy
Market Minus philosophy
Employer’s ability to pay
Type of industry
Value of the employee
and the job to the organization
External Pay Factors
• Current economic state
• Inflation and cost of living
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6
Job Evaluation
• Job evaluation is a formal approach to
analyzing jobs and categorizing them
in regard to their relative worth in an
organization to determine pay
structure.
• The value of a job is a major factor
when determining pay.
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7
Performing a Job Evaluation
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Job ranking system
Paired comparison
Job classification
Point factor system
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8
Pay Systems
• Pay Grading - the process of setting the pay
scale for specific jobs or types of jobs
• Delayering and Banding – gives more
flexibility
• Going rate model – analyzing the going rate
to determine what employees should be paid
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9
Other Types of Pay Options
• Skill based pay - salary levels are based on the
employee’s skills as opposed to the job title.
• Competency based pay - approach looks at the
employee’s traits or characteristics as opposed to a
specific skills set.
• Broadbanding - similar to a pay grade system, except all
jobs in a particular category are assigned a specific pay
category.
• Variable pay - provides employees with a pay basis but
links the attainment of certain goals or achievements
directly to their pay.
Copyright © Texas Education Agency, 2013. All rights reserved.