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Lecture

Chapter 9 Summary (Managing Compensation) including processes, definitions, and theories, all in point form.

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Department
Administrative Studies
Course
ADMS 2600
Professor
Indira Somwaru
Semester
Winter

Description
HRM2600-Managing Human Resources Chapter 9-Managing Compensation Compensation-statement of ee’s worth by an er & perception of worth by an ee •direct: wage/salary, bonus, commission, gainshare •indirect: benefits; insurance plans, time not worked, security, ee services Compensation Management & Other HRM Functions: Strategic Compensation Planning Explain ER concerns in Compensation of EE to enhance motivation and growth while aligning efforts with objectives, culture of organization plus specific function of the HR program in establishing a pay-for-performance standard. developing a strategic 1. Linking Compensation to Organizational Objectives compensation Value-added Compensation: evaluating individual components of compensation program to see if they program. advance the needs of EE & goals of organization. “How does the compensation practice benefit the org?” “Does the benefit offset the admin costs?” Common Strategic Compensation Goals: a. Reward EE’s past performance b. Remain competitive in the labour market c. Maintain salary equity among EE d. Mesh EE’s future performance with org goals e. Control compensation budget f. Attract new EEs g. Reduce unnecessary turnover >To achieve these goals, there are some strategic compensation policy concerns at hand: a. The rate of pay within the org & whether it is to be above, below or at the equivalent market rate. b. The ability of the pay program to gain EE acceptance while motivating EEs to perform to their best. c. The pay level at which EEs may be recruited & the pay differential between new & more senior EEs. d. The pay levels needed to facilitate the achievement of a sound financial position in relation to products offered. 2. The Pay-For-Performance Standard A standard by which managers tie compensation to EE effort and performance (merit-based, bonuses, individual/group incentives) •It is not easy designing this system because how to measure EE performance is difficult. 3. Motivating Employees through Compensation A direct bearing on standard of living plus status and recognition they may be able to achieve. 1 •Pay Equity:EE’s perception that compensation received is equal to value of performed work with a motivation theory (explains how people respond to situations in which they feel they have received less/more than they deserve). ^input/output : v comparison person’s input/output Determining Compensation—The Wage Mix Indicate the various Internal Factors factors thatEmployer’s Compensation Strategy: influence the•setting org compensation policy to lead, lag, or match competitor’s pay. setting of wages. Worth of a Job: •establishing the internal wage relationship among jobs and skill levels. Employee’s Relative Worth •rewarding individual EE performance though appraisal system
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