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Chapter 11 - Strategic Pay Plans

This document discusses strategic pay plans and compensation. It covers the importance of total rewards programs that include traditional pay as well as benefits, career development, and recognition. It outlines factors to consider in determining pay rates such as legal requirements, unions, and equity. It describes a three step process to establish pay rates: conducting a job evaluation, salary survey, and combining the results to set pay. Job evaluation methods like grading and points systems are presented. The document also discusses topics like broadbanding, pay for knowledge, executive compensation, and addressing the gender pay gap.

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76 views16 pages

Chapter 11 - Strategic Pay Plans

This document discusses strategic pay plans and compensation. It covers the importance of total rewards programs that include traditional pay as well as benefits, career development, and recognition. It outlines factors to consider in determining pay rates such as legal requirements, unions, and equity. It describes a three step process to establish pay rates: conducting a job evaluation, salary survey, and combining the results to set pay. Job evaluation methods like grading and points systems are presented. The document also discusses topics like broadbanding, pay for knowledge, executive compensation, and addressing the gender pay gap.

Uploaded by

时家欣
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER 11 –

STRATEGIC PAY PLANS


HUMAN RESOURCES MANAGEMENT – WINTER 2020
IMPORTANCE OF TOTAL REWARDS

• Employee compensation
• Direct financial payments – salaries, bonus
• Indirection financial payments – benefits, vacation

• Compensation plans should be designed to advance the organization’s


strategic goals
TOTAL REWARDS

• Include traditional pay, incentives and benefits but also offer more
challenging jobs, career development and recognition programs
• The most admired companies excel at taking a total rewards approach
• Purposes of rewards are to attract, retain, motivate, and engage employees
BASIC CONSIDERATIONS IN DETERMINING PAY
RATES

• Four basic considerations influence the formulation of pay


plans:
• Legal Requirements
• Union Issues
• Compensation Policy
• Equity
ESTABLISHING PAY RATES

• Three steps required to establish pay rates:


• Step 1: Conduct a Job Evaluation
• Step 2: Conduct Wage/Salary Survey
• Step 3: Combine Job Evaluation and Salary Survey to Determine Pay
Rates
STEP 1: PREPARING FOR JOB EVALUATION

A systematic comparison to determine relative worth of jobs


within a firm
• Compare the content of jobs in relation to each other (effort, skills,
working conditions)
• Focus on benchmark jobs – jobs critical to the firms operations
• Compensable factors – determine the definition of job content, establish
how jobs compare with each other and set the compensation paid for each
job
STEP 1: PREPARING FOR JOB EVALUATION

• Job Evaluation Methods


• Classification/grading method
• categorizes jobs into groups (officer level 1)
• Choose compensable factors and then develop grade/class description to
describe each class/grade
• Point method
• identify compensable factors (skill, effort, responsibility, working
conditions)
• determine the degree to which each factor is present in each job
STEP 2: CONDUCT A WAGE/SALARY SURVEY

• Employer may use surveys in 3 ways:


• Use data to determine pay rates for benchmark jobs
• Use data to determine market rates for jobs
• Collect data to determine benefits, work-life programs etc. to provide a
basis on which to make decisions regarding other rewards
STEP 3: COMBINE JOB EVALUATION AND SALARY
SURVEY INFORMATION TO DETERMINE PAY FOR JOBS

• Assign pay rates to the job


Wage curve
• depicts the value of the job in relation to the average wage paid for the job
Pay ranges
• a series of steps or levels within a pay grade, usually based on years of
service
BROADBANDING

Reducing the number of salary grades and ranges into just a few wide levels or
“bands”, each of which then contains a relatively wide range of jobs and
salary levels.
Advantage
Greater flexibility in employee compensation
Can assign more job duties, give more responsibility without changing
classification
PAY FOR KNOWLEDGE

• Systems that pay employees for the knowledge they are capable
of using rather than for the job they currently hold
• Competency-based pay
• Skills-based pay
COMPENSATING EXECUTIVES AND MANAGERS

Five elements:
1. Salary
2. Benefits
3. Short-term incentives
4. Long-term incentives
5. Perquisites (Perks)
COMPENSATING PROFESSIONAL EMPLOYEES

• engineers, scientists, accountants, lawyers, etc.


• compensable factors not easily measured: creativity, problem
solving
• market pricing approach commonly used
PAY EQUITY – MALE/FEMALE WAGE GAP

• Wage gap has narrowed but remains at 30%


• Reasons?

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