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Chapter 11: Establishing Strategic Pay Plans

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Shawn Komar

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Chapter 11: Establishing Strategic Pay Plans The Strategic Importance of Total Rewards Total rewards refers to an integrated package of all rewards (monetary and non monetary, extrinsic and intrinsic) gained by employees arising from their employment. The five components of total rewards 1. compensation, direct financial payments 2. benefits, this category included indirect payments 3. work / life programs, rewards relates to programs that help employees do their jobs effectively, such as flexible scheduling, telecommunication, childcare, and so on 4. performance and recognition, pay for performance and recognition programs 5. development and career opportunities, possibly tuition assistance, coaching, and mentoring Impact of Rewards purpose of rewards are to attract, retain, and motivate / engage employees. Engagements refers to a positive emotional connection to an employer and a clear understanding of the strategic significance of the job. Relational work experiences, such as work/life programs, performance and recognition are hard for other companies to duplicate. Basic Consideration in Determining Pay Rates Legal Considerations in Compensation Employment / Labor Standards Acts (Canada Labor Code) labor code laws set minimum standards regarding pay, including minimum wage, maximum hours of work, overtime pay, vacation, statutory holidays, termination, record keeping on termination. Pay Equity these laws apply to public-sector of employees only, except Ontario, Quebec, BC, and federal crown corps. Human Rights Acts prohibit discrimination on the basis of age, sex, color, race, religion, martial, and physical and mental disability. Canada / Quebec Pension Plan All employees and their employers must contribute to the Canada / Quebec Pension Plan Other Legislation Affecting Compensation The employment insurance act is aimed to protecting Canadian workers from the total economic destruction in the event of employment termination that is beyond their control. Union influences on Compensation Decisions The Canada Labor Relations Board and similar bodies in each province and territory oversee employer practices and ensure that employees are treated in accordance with their legal rights. Union Attitudes toward compensation decisions management has to ensure that its prerogatives – such as the right to use the appropriate job evaluation technique to assess the relative worth of jobs – are not surrendered. Compensation Policies basis for salary increases, promotion and demotion policies, overtime pay policies, probationary pay, miliary service, jury duty, and holidays. Equity and Its impact on Pay Rates Externally, pay must compare favorablt with rates in other organizations or an employer will find it hard to atract and retain qualified employees. Pay rates must also be equitable internally, each employee should view his or her pay as a “What the fuck...10 Chapters between HR and Marketing.....really annoyed ATM” equitable given other pay rates in the organization. Establishing Pay Rates Step 1: Determine the Worth of each job through job evaluation job evaluation, is aimed at determining a job relative worth. It is a formal and systematic comparison of jobs within a firm to determine the worth of one job relative to another, and it eventually results in a job hierarchy. Benchmark jobs is a critical to the firms operation or commonly found in other organizations that is used to anchor the employers pay scale and that acts as a reference point around which other jobs are arranged in order of worth. Compensable Factors compensable factor, is a fundamental, compensable element of a job, such as skill, effort, responsibility, and working conditions. Different job evaluation systems are used for different departments, employee groups, or business units. Preparation for Job evaluation The main steps involved include identifying the need for the program, getting cooperation, and choosing an evaluation committee. The committee is usually made up of about five members, pick benchmark jobs, pick compensable factors, and value each job. Ranking method of Job Evaluation 1. obtain job information 2. group the jobs to be rated 3. select compensable factors 4. rank jobs 5. combine rankings legislation requires that jobs be ranked across cluster or departments, not separately. Classification (or grading) Evaluation Method jobs are categorized into groups called classes, if they contain jobs or grades that are similar in difficulty but otherwise different classes, groups of jobs based on a set of rules for each class, such as amount of independent judgment, skill, physical effort, and so forth. 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, such as telemarketers, mechanics, and firefighters. Job classification, disadvantages is that employers usually classify jobs anyways, and jobs are already classified. And that it's difficult to write the class or grade descriptions and that considerable judgment is requires in apply them. However, many employers use this method with success. Point Method of Job evaluation The job evaluation method in which a number of compensable factors are identified the degree to which each of these factors is present in the job is determined, and the overall point value is calculated. 1. determine clusters of jobs to be evaluated 2. collect job information 3. select and define compensable factors 4. define factor degrees, a office worker versus miner would have two degrees of working conditions, less is better. 5. Determine factor weights, how much is physical requirements worth to
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