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BUS 381 (50)
Lecture

BUS 381 - Chapter 11 (Week 9)

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Department
Business Administration
Course
BUS 381
Professor
Natalie Zhao
Semester
Fall

Description
By Mark Liangco | BUS 381 Chapter 11 (Week 9) – Strategic Pay Plans Total Rewards: - An integrated package of all rewards (monetary and non-monetary, extrinsic and intrinsic) gained by employees arising from their employment. Compensation: - The category included direct financial payments in the form of wages, salaries, incentives, commissions and bonuses. Benefits: - Includes indirect payments in the form of financial benefits like employer paid insurance and vacations. Work/life: - Relates to programs that help employees do their job more effectively such as flexible scheduling, childcare etc (ch 13) Performance and recognition: - This category includes pay for performance and recognition programs. Development and career opportunities: - Focuses on planning for advancement and changes in responsibilities to best suit individual skills, talents and desires. Tuition assistance, professional development, sabbaticals, coaching and mentoring services all fit into this categorty, Considerations in determining Pay 1) Legal considerations - Labour standards, human rights, worker’s compensation, employment insurance. 2) Union - Unions and labour relations laws have also influences how pay plan are designs - Wage rates, time off pay, income security, cost of living adjustments and pensions. - Collective bargaining agreement. 3) Compensation policies - Leader or follower in compensation. 4) Equity and its impact - Must have internal and external equity. - Internal – Pay within the organization is somewhat equal between same positions. - External – Pay across organizations is somewhat equal between same positions. Establishing Pay Rates: 1) Job Evaluation - A systematic comparison to determine the relative worth of jobs within a firm. - Purpose is to measure internal equity. Benchmark jobs - Jobs that are essential to the organization or are commonly found in other organizations. - Cashier, Entry-level Accountant, Secretary, Payroll Assistant. Compensable factors - A fundamental compensable element of a job - skill, effort, responsibility and working conditions. - Identifying these factors plays a pivotal role in job evaluation. - All jobs should be evaluated using the same factors. Job evaluation committee By Mark Liangco | BUS 381 - A committee consisting of a number of employees that have a different perspective regarding the nature of the job. Method of evaluation a) Job Classification method - Evaluates jobs based on class and grades - Which class does the job belong to base on subjective method o Class – Group of jobs that are similar to each other in terms of responsibility  Secretaries of all the different managers. o Grades – Group of jobs where it is similar in difficulty but otherwise different. b) Point method - The job evaluation method in which a number of compensable factors are identified, the degree tow which each of those factors is present in a job is determined, and an overall point value is calculated. - Quantitative method and legally defensible. - Widely used in private sector 2) Wage / Salary Survey - A survey aimed at determining prevailing wage rates. - A good salary survey provides specific wage rates for comparable jobs. - Format written questionnaire and surveys are the most comprehensive. 3) Combine the Job Evaluation and Salary Survey - Assigning pay rates to each pay grades. It is usually achieved by a wage curve o Wage curve  A graphic representation of relationship between value of the job and the average wage paid for the job. o Broad banding  Reducing the number of salary grades and ranges into just a few levels or “bands”. Each of them then contains a relatively wide range of jobs and salary levels.  Used in flatter organization or organization to encourage employees to participate in cross department Pay for Knowledge - Also known as competency based pay (For management and professional employees) and skill base pay (for manufacturing employees). - These plans pay employees based on the range, depth and types of knowledge that they are capable of using rather than for the job that they currently have. - should pay for knowledge, skills and abilities that directly lead to successful job performance (base pay) also use pay-for-performance plans Pay for executive and managerial jobs 5 Elements in compensation packages: a) Salary  Reduced emphasis b) Benefits c) Short term incentives  Increased emphasis d) Long term incentives  Increased emphasis e) Perquisites Pay for professional emplo
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