COMPE ADMIN REVIEWER PDF

COMPE ADMIN REVIEWER TOPIC 1 Introduction to Compensation Administration Compensation administration is a crucial function in any organization. It involves the development, implementation, and management of pay and benefits for employees. Importance of Compensation Administration Compensation Admi...

COMPE ADMIN REVIEWER TOPIC 1 Introduction to Compensation Administration Compensation administration is a crucial function in any organization. It involves the development, implementation, and management of pay and benefits for employees. Importance of Compensation Administration Compensation Administration is crucial for organizations as it attracts and retains top talent, motivates employees, ensures internal equity, and supports business growth. Effective compensation administration promotes transparency, fairness, and trust, leading to improved employee morale, productivity, and job satisfaction. It also enhances organizational reputation, reduces labor costs and disputes, and informs data-driven business decisions. By aligning compensation with industry standards and regulations, organizations can achieve strategic objectives, minimize legal risks, and gain a competitive advantage. What is the difference between salaries and wages? Purpose and nature of compensation administration 1. To estabilsh & maintain an equitable reward system 2. Establishment & maintenance of an equitable compensation structure ex. Optimal balancing of conflicting personnel interests so that the satisfaction of employees and employers is maximized and conflicts minimized 3. Concerned with the financial aspects of needs,motivation and rewards \ 4.before employees or possible employees do anything, they look for a reward or pay-off. Two components of compensation * Indirect payment * Direct payment WAGE AND SALARY STRUCTURE BASE PAY - This is the core compensation, component, typically based on factors such as job title, experience, and performances VARIABLE PAY - This includes bonuses, commissions and other incentives that are based on individual or team performance. BENEFITS - This encompasses healthcare, retirement plans, and other parts that contribute to employee well-being. WAGE LEVELS External factor These include the overall market conditions, prevailing wage rates in the industry, and the cost of living in the region. Internal Factor These include the organization's financial health, its competitive strategy, and the value it places on different jobs. CONTRACT UNIONS Collective Bargaining Unions negotiate with employers to secure better wages, benefits, and working conditions for their members. Employee Rights Unions advocate for the rights of workers and ensure fair treatment in the workplace. Labor Disputes Unions may engage in strikes or other forms of industrial action to resolve disagreements with employers. UNDERSTANDING THE ROLE OF UNIONS CONTRACT Collective Bargaining Union contracts are the outcome of collective bargaining between employers and unions, representing workers' interests. Fairness and Consistency Contracts ensure fair and consistent treatment for all employees covered by the agreement, fostering a stable work environment. Legal Framework Union contracts are legally binding agreements that define the relationship between employers and employees ENSURING COMPLIANCE WITH UNION CONTRACT TERMS Employee Training Employees must be educated about their rights and responsibilities under the contract. Regular Monitoring Employers should regularly monitor compliance with contract provisions and document any issues. Audits and Reviews Periodic audits and reviews help ensure the contract is consistently applied and updated as needed. LEGISLATION AND MINIMUM WAGE LAW 1. Fair Labor Standards Act (FLSA) The FLSA establishes a federal minimum wage and overtime pay requirements for covered employees. 2. State Minimum Wage Laws Many states have their own minimum wage laws that may be higher than the federal minimum wage. 3. Wage and Hour Regulations The Department of Labor enforces compliance with wage and hour laws, including minimum wage, overtime, and child labor regulations. Equal Pay Act (EPA) is a federal law in the United States that prohibits employers from paying unequal wages to men and women who perform the same work, requiring equal pay for equal work. Civil Rights Act (CRA) refers to laws and regulations ensuring equal pay and non- discrimination in the workplace. Americans with Disabilities Act (ADA) is a federal law that prohibits discrimination against individuals with disabilities in employment, transportation, public accommodations, and government services. DETERMINANTS OF LABOR MARKET Supply and Demand The availability of qualified workers and the number of job openings influence wage levels. Economic Conditions Recessions or economic growth can impact job creation and wage growth. Government Policies Minimum wage laws, tax policies, and immigration regulations can influence the labor market. Conclusion and Key Takeaways Compensation administration is a complex and multifaceted process that requires careful planning and execution. By understanding the key determinants of wage levels, labor market dynamics, and the factors that affect the cost of labor, organizations can develop effective compensation strategies that attract and retain top talent while remaining financially sustainable. FACTORS THAT AFFECT THE COST OF LABOR Wages and Salaries The primary cost of labor, including base pay, bonuses, and commissions. Benefits Health insurance, retirement plans, and other perks provided to employees. Taxes and Payroll Costs Social Security, Medicare, unemployment insurance, and other payroll taxes. Training and Development Investing in employee training and development programs. Employee Turnover The cost of hiring and training new employees to replace those who leave. TOPIC 2 HISTORY OF WAGES Ancient Civilizations 3000 BCE - 500 CE - Wages paid in goods, services, or livestock. - Slavery and serfdom prevalent. Medieval Period 500 - 1500 CE - Wages paid in coins, but often in barter or trade. - Guilds emerged, regulating wages and working conditions. Industrial Revolution 1500 - 1800 CE - Standardized wages, cash payments. - Workers' rights movements emerged. 19th Century - Trade unions formed, advocating for fair wages and better conditions. - Minimum wage laws introduced. 20th Century - Collective bargaining widespread. - Social security and benefits introduced. PURPOSE OF WAGES  Compensation for Work - wages provide financial remuneration for the work performed by employees reflecting their skills, effort and time.  Standard of Living - wages determine individuals purchasing power, affecting their ability to afford necessities and improve their quality of life.  Economic Growth - higher wages can attract skilled workers and motivate employees to perform better.  Motivation and Productivity  Social Justice THE DIFFERENT THEORIES OF WAGES  Subsistence Theory of Wages (Iron Law of Wages)  Wage Fund Theory  Marginal Productivity Theory of Wages  Bargaining Theory of Wages  Human Capital Theory  Efficiency Wage Theory  Monopsony Theory of Wages  Surplus Value Theory of Wages (Marxist Theory) INCENTIVE SCHEME is a program that managers or other company leaders can use to motivate and retain team members. TYPES OF INCENTIVES  Financial incentive  Non financial incentive  Health incentives  Gift cards ADVANATAGE AND DISADVANTAGE Advantage 1. Incentive plans motivate workers for higher efficiency and productivity. 2. It can improve the work-flow and work methods. 3. The other benefits offered by incentive plans are reduced turnover, reduced absenteeism, and reduced lost time. 4. When employees are dedicated, supervision costs can be reduced 5. It helps workers improve their standard of living Disadvantage 1. Incentive plans can lead to disputes among workers, since some earn more than others. 2. Hunger for money among the workers forces them to overwork, which may affect their heath. 3. Some workers may involve in malpractices in order to earn more money. 4. For enhanced incentives, they may sacrifice quality. 5. It also leads to corruption by falsifying the production records. Why are Incentives Important?  Employee incentive allow companies to improve productivity, reduce employee retention, and lower production costs. What is Various Attitude of Workers to Incentive Plans Positive Attitude Neutral Attitude (In Different) Negative Attitude Competitive Attitude Collaborative Attitude Skeptical Attitude Confused or Unclear Attitude Fringe Benefits Financial and Non Financial