Human Resource Management Chapter 11 PDF

Human Resource Management Sixteenth Edition Chapter 11 Establishing Strategic Pay Plans Copyright © 2020, 2017, 201...

Human Resource Management Sixteenth Edition Chapter 11 Establishing Strategic Pay Plans Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (1 of 2) 11.1 List the basic factors determining pay rates. 11.2 Define and give an example of how to conduct a job evaluation. 11.3 Explain in detail how to establish a market-competitive pay plan. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (2 of 2) 11.4 Explain how to price managerial and professional jobs. 11.5 Explain the difference between competency-based and traditional pay plans. 11.6 Describe the importance of total rewards for improving employee engagement. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objective 11.1: List the Basic Factors Determining Pay Rates Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Basic Factors in Determining Pay Rates Employee Compensation – Direct financial payments ▪ wages, salaries, incentives, commissions, and bonuses – Indirect financial payments ▪ employer-paid insurance and vacations Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Aligning Total Rewards with Strategy Aligned Reward Strategy – is creating a compensation package that produces the employee behaviors the firm needs to achieve its competitive strategy. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Equity and Its Impact on Pay Rates Equity Theory of Motivation – once a person perceives an inequity a tension or drive will develop that motivates him or her to reduce the tension and perceived inequity – Types of equity ▪ External ▪ Internal ▪ Individual ▪ Procedural Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Legal Considerations in Compensation Davis-Bacon Act (1931) Walsh-Healey Public Contract Act (1936) Title VII of the 1964 Civil Rights Act Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Other Important Legal Considerations in Compensation Fair Labor Standards Act (1938) Exempt / Nonexempt Inequity and the minimum wage Equal Pay Act (1963) Employee Retirement Income Security Act (1974) – Vesting & Portability Rights – Fiduciary Standards Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Other Legislation Affecting Compensation Age Discrimination in Employment Act American with Disabilities Act (1990) Family and Medical Leave Act Executive Orders Worker’s Compensation Laws Social Security Act of 1935 Garnishment Law Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Know Your Employment Law (1 of 2) The Workday Let’s take a look… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Know Your Employment Law (2 of 2) The Independent Contractor Let’s take a look… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Union Influences on Compensation Decisions National Labor Relations Act of 1935 – Wagner Act – Right to unionize – Right to bargain collectively – National Labor Relations Board (NLRB) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Pay Polices The employer’s compensation strategy will manifest itself in pay policies. – Geography ▪ How to account for geographic differences in cost of living Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Improving Performance: The Strategic Context Wegmans Food Markets Let’s talk about it… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Improving Performance: HR Practices Around The Globe Compensating Expatriate Employees Let’s talk about it… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objective 11.2: Define and Give an Example of How to Conduct a Job Evaluation Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Job Evaluation Methods Job Evaluation – Relative work – Results in a salary structure/hierarchy Market-Based Approach – conducting formal or informal salary surveys to determine what others in the relevant labor markets are paying for particular jobs Market-competitive pay plan – Internal and external equity Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Compensable Factors Compensable Factors – A fundamental, compensable element of a job, such as skill, effort, responsibility, and working conditions – Establish how jobs compare one to another Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Preparing for the Job Evaluation 1. Identify the need 2. Get employees’ cooperation 3. Choose evaluation committee 4. Perform the evaluation – Benchmark jobs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Job Evaluation Methods: Ranking (1 of 2) 1. Obtain job information 2. Select and group jobs 3. Select compensable factors 4. Rank jobs 5. Combine ratings 6. Compare current pay with what others are paying based on salary surveys 7. Assign a new pay scale Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Job Evaluation Methods: Ranking (2 of 2) Table 11-2 Job Ranking at Jackson Hospital Ranking Order Our Current Annual What Others Pay: Our Final Pay Scale Salary Survey Pay Assigned Pay 1. Office manager $43,000 $45,000 $44,000 2. Chief nurse 42,500 43,000 ​42,750 3. Bookkeeper 34,000 36,000 35,000 4. Nurse 32,500 33,000 32,750 5. Cook 31,000 32,000 31,500 6. Nurse’s aide 28,500 30,500 29,500 7. Orderly 25,500 27,000 27,000 Note: After ranking, it becomes possible to slot additional jobs (based on overall job difficulty, for instance) between those already ranked and to assign each an appropriate wage rate. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Job Evaluation Methods: Job Classification Figure 11-4 Example of a Grade Definition Grade Nature of Assignment Level of Responsibility GS-7 Performs specialized duties in a Work is assigned in terms of objectives, defined functional or program priorities, and deadlines; the employee area involving a wide variety of works independently in resolving most problems or situations; develops conflicts; completed work is evaluated information, identifies for conformance to policy; guidelines, interrelationships, and takes such as regulations, precedent cases, actions consistent with and policy statements require objectives of the function or considerable interpretation and program served. adaptation. Source: From “Grade Level Guide for Clerical and Assistance Work” from U.S. Office of Personnel Management, June 1989. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Job Evaluation Methods: The Point Method & Computerized Job Evaluations The point method A job evaluation method in which a number of compensable factors are identified and then the degree to which each of these factors is present on the job is determined Computerized job evaluations Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objective 11.3: Explain in Detail How to Establish a Market-Competitive Pay Plan Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved How to Create a Market-Competitive Pay Plan (1 of 4) 1. Choose Benchmark Jobs 2. Select Compensable Factors 3. Assign Weights to Compensable Factors 4. Convert Percentages to Points for Each Factor Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved How to Create a Market-Competitive Pay Plan (2 of 4) 5. Define Each Factor’s Degrees 6. Determine For Each Factor Its Factor Degrees’ Points 7. Review Job Descriptions and Job Specifications 8. Evaluate the Jobs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved How to Create a Market-Competitive Pay Plan (3 of 4) 9. Draw the Current (Internal) Wage Curve 10.Conduct a Market Analysis: Salary Survey 11.Draw the Market (External) Wage Curve 12.Compare and Adjust Current and Market Rates for Jobs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved How to Create a Market-Competitive Pay Plan (4 of 4) 13.Develop Pay Grades 14.Establish Rate Ranges 15.Address Remaining Job 16.Correct Out-of-Line Rates – Underpaid / Red circle Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Improving Performance: HR Tools for Line Managers and Small Businesses Developing a Workable Pay Plan Let’s talk about it… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objective 11.4: Explain How to Price Managerial and Professional Jobs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Pricing Managerial and Professional Jobs What Determines Executive Pay Compensating Executives – Base Pay – Short-term Incentives – Long-term incentives – Executive Benefits and Perks Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Compensating Professional Employees In compensating professionals, employers should first ensure that the person is actually a “professional” under the law. – The Fair Labor Standards Act Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Improving Performance Through HRIS: Payroll Administration Developing a Workable Pay Plan Let’s take a look… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objective 11.5: Explain the Difference Between Competency-Based and Traditional Pay Plans Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Contemporary Topics in Compensation Competency-based pay Broadbanding Comparable worth Board oversight of executive pay Total rewards Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Competency-Based Pay Competencies are demonstrable personal characteristics such as knowledge, skills, and personal behaviors. Competency-based pay means the company pays for the employee’s range, depth, and types of skills and knowledge, rather than for the job title he or she holds. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Broadbanding Figure 11-11 Broadbanded Structure and How It Relates to Traditional Pay Grades and Ranges Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Comparable Worth Comparable worth refers to the requirement to pay men and women equal wages for jobs that are dissimilar but of comparable value to the employer. – County of Washington v Gunther ersus Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Diversity Counts The Pay Gap Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Board Oversight of Executive Pay Government regulation/legislation – The Securities and Exchange Commission (SEC) – Dodd-Frank Law – The Sarbanes-Oxley Act Shareholder activism Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objective 11.6: Describe the Importance of Total Rewards for Improving Employee Engagement Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Employee Engagement Guide for Managers Total Reward Programs Total Reward and Employee Engagement – Total reward statements Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Trends Shaping HR: Digital and Social Media Recognition Rewards Let’s take a look… Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Chapter 11 Review What you should now know…. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved