CRM 200 Lecture Notes - Lecture 13: Sea Cave, Job Sharing, Instrument Landing System Localizer
3 May 2018
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Chapter Thirteen - Compensation Budgets and Administration
Managing Labour Costs
Can play around with head and hours or how much you pay them( cash or benefits)
Heads & Hours
• Growth stage
o Get current employees to work more hours
o Hire additional full time employees: Experienced Hires versus New Grads
▪ All require selection and requirement etc but different level if base pay
▪ See which one works for the company
o Or hire additional contingent workers
▪ If short term growth (summer, winter etc)
▪ Once on the payroll = pay more and have lay off cost
• Decline stage
o Get current employees to work fewer hours
▪ Work-sharing – fed gov program to help companies prevent lay off and
have more leisure time. Need a[pproval
▪ Job sharing – take 1 job and splitting it for 2 ppl to do it – company can do
at any time
▪ Both the wages goes down
o Get rid of some contingent workers
o Get rid of some full time employees: those who have been with you for a long
time versus those who were just hired
▪ Who to let go? Need to figure out
• Ppl who has not been performing
• What are the things you can outsource
Controlling Salary Costs: Top Down
• Top management sets an estimated pay increase budget for the whole organization.
o How much they have spent and how much they can spend
• A typical approach is planned pay-level rise,
find more resources at oneclass.com
find more resources at oneclass.com
o the percentage increase in average pay.
o factors influencing size of increase:
▪ uet ea’s ise
• How much the payroll has gone up
• Beginning compare to end
▪ ability to pay
• How much you can pay
• How much you make
▪ competitive market rates
• Take to ppl
• What are other ppl giving
• Because attract and retain
▪ turnover effects, and
• When someone leaves, the replacement is usually at a cheaper
rate
• Older person usually more experience therefore paid more
▪ cost of living.
• Inflation
Controlling Salary Costs: Bottom Up
1. Give manager all the all the info and tell them to do salary planning
o See if can approve the recommendation (if say can only give 3% raise but then
recommend 10%) its possible but have to explain why
find more resources at oneclass.com
find more resources at oneclass.com
Embedded Controls
• Cotols o aages’ pa deisios oe fo those iheet i the desig of the
compensation system:
o Range maximums and minimums
▪ Range midpoints reflect the pay policy line in relation to external
competition.
o Broad bands- combine grades
o Compa-ratios
▪ To assess how pay relates to the midpoint, an index called a compa-ratio is
often used
▪ Compa-ratio = average rate actual paid / range midpoint
▪ A ratio less than 1 means below midpoint pay
▪ A ratio greater than 1 pays above the midpoint.
o Variable pay
▪ If don’t perform don’t get paid
▪ Employers like this
▪ Variable pay must be re-earned each period.
• The financial insecurity may affect employees.
▪ Costing out wage proposals is done prior to recommending pay increases.
• Software is available to analyze every aspect of compensation
information.
▪ Companies analyze the value added of pay decisions and influence on
revenues.
• Requires a shift in viewing compensation as an investment as well as
an expense.
o Analyzing costs
o Analyzing value added
Communication: Managing the Message
• Compensation communicates what is important and what is not.
• Two reasons for communicating pay information:
o Attract, retain, and motivate performance.
o Employees misperceive the pay system.
▪ Especially helpful for benefit information.
• Need to tell employee what our comp strategy is = because youre trying to attract,
retain employees
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Can play around with head and hours or how much you pay them( cash or benefits) Need to figure out: ppl who has not been performing, what are the things you can outsource. Top box = what we want all employees to know. But everyone wants to know different things when they are at different levels. Market data =only those who are your competitors. International mgt experience: fill managerial skills gap, fill technical skills gap, employee career development, participate in projects, assimilate new entities/ joint ventures, launch new initiatives. If i go, and come back with goal done, i want a promotion: when go overseas, standard of living should be maintained. Elements of expatriate compensation: salary, housing, tax equalization, allowances & premiums. The balance sheet approach: based on the premise that employees on overseas assignments should have the same spending power as they would in their home country the home country is the standard for all payments.
