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MHR523 Chapter #11 and #12 Notes.doc

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Human Resources
MHR 523
Pat Sniderman

Chapters #11 and #12: Compensation Total Rewards an integrated package of all rewards (monetary and non-monetary, extrinsic and intrinsic) gained by employees arising from their employment aligned with business strategy Impact of Rewards To attract, retain and motivate/engage employees Engagement refers to the positive emotional connection to the employers and a clear understanding of the strategic significance of the job which results in discretionary effort on the part of the employee Five Components of Total Rewards 1. Compensation includes direct financial payments in the form of wages, salaries, incentives, commission, and bonuses 2. Benefits includes payments in the form of financial benefits, like employer-paid insurance and vacations and employee services 3. Work-life programs rewards relates to programs that help employees do their jobs effectively, like flexible scheduling, telecommuting, childcare 4. Performance and Recognition pay-for-performance and recognition programs 5. Development and career opportunities tuition assistance, professional development, sabbaticals, coaching and mentoring opportunities, succession planning, and apprenticeships to enhance your career Establishing Pay Rates: Basic Considerations Legal Considerations in Compensation Employment and Labour Standards Act Set minimum wages, maximum hours of work, overtime pay, paid vacation, paid statutory holidays, termination pay, record keeping of pay information Pay Equity Acts Redress the undervaluation of women work by providing equal pay for work of equal value performed by men and women Employers are required to identify male and female-dominated jobs and then use a gender neutral job evaluation system based on specific compensable factors like skill, effort, responsibility, and working conditions Human Rights Acts Protect Canadians from discrimination on a number of grounds in employment and other areas Prohibit discrimination on the basis of age, sex, colour, race/place of origin, religion/creed, marital/family status, and physical or mental disability Canada/Quebec Pension Plan Must contribute to the this plan throughout the employees working life Based on average earnings are paid during retirement Workers Compensation Laws To provide a prompt, sure, and reasonable income to victims of work-related accidents and illnesses Employment Insurance Act Protecting Canadian workers from total economic destitution in the event of employment termination that is beyond their control Maternity leave, parental leave, and compassionate care leave benefits Union Influences on Compensation Decisions The Canada Labour Relations Board; oversee employer practices and ensure that employees are treated in accordance with their legal rights Union workers have to have an input in their compensation because they know the value of their job Manipulative device of using a compensable method of degree of responsibilities for restricting or lowering the pay of workers To gain cooperation of union members is to evaluate the worth of jobs through getting their active involvement and assigning fair rates of pay Compensation Policies Provide important guidelines regarding the wages and benefits that it pays Number of factors are overlooked like if the organization wants to be a leader or a follower regarding pay, business strategy, and the cost of different types of compensation Important policies include the basis for salary increases, promotion and demotion policies, over time pay policy, and policies regarding probationary pay and leaves for military service, jury duty, and holidays Equity and Its Impact on Pay Rates Determining pay rates that is needed for equity External equity pay must compare favourably with rates in other firms or an employer will find it hard to attract and retain qualified employees Internal equity each employee should view his or her pay as equitable given other pay rates in the firm Establishing Pay Rates: 3 Stages STAGE 1: Job Evaluation determine the worth of jobs within the organization through job evaluation to ensure internal equity and group jobs with similar worth into pay grades Job Evaluation - A systematic comparison to determine relative worth of jobs within a firm o formal and systematic comparison of jobs o compare the content of jobs in relation to one another Benchmark Job - job that is critical to the firms operations or commonly found in other organizations o Have large number of incumbents o Are clear and well known in the industry o Stable and easily understood by all employees o Results are used as reference points around which other jobs are arranged in order of relative work Compensable Factor - fundamental, compensable element of a job, such as skill, effort, responsibility, and working conditions o Ranking method - very hard to defend to employees or other who may not agree with the resulting job hierarchy Job Evaluation Committee is established to ensure the representation of the points of view of various people who are familiar with the jobs in question, watch of whom may have a different perspective regarding the nature of the jobs o the committee may include employees, HR staff, managers, and union representatives o first ones to evaluate the worth of each job and use the classification method and point method Classification Method o A method for categorizing jobs into groups o Classes groups of jobs based on a set of rules for each class, such as amount of independent judgement, skill, physical effort, and so forth Classes are usually contain similar jobs like all secretaries o Grades groups of jobs based on a set of rules for each grade, where jobs are similar in difficulty but otherwise different Grades often contain dissimilar jobs, like secretaries, mechanics and fire fighters o Grade/Group Description a written description of the level of compensable factors required by jobs in each grade Used to combine similar jobs into grades or classes o Put jobs into classes based on the descriptions o Classifying rules for each class like the amount of independent judgement, skill, physical effort o Advantages; most employers usually end up classifying jobs anyway, regardless of the job evaluation method that they use They do this to avoid having to work with and develop pay rates for an unmanageable number of jobs; with the job classification method All jobs already grouped into several classes o Disadvantages; it is difficult to write the class or grade descriptions and that consider able judgement is required in applying them Point Me
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