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Chapter 9

Chapter 9 – Compensation Management.docx

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School
Department
Business
Course
BUSI 2312U
Professor
Krasman
Semester
Winter

Description
Chapter 9Compensation ManagementCompensation is the cash and noncash rewards employees receive in exchange for their workEmployees are more likely to be satisfied and motivated to contribute to the achievement of organizational objectivesDissatisfaction arises because employee needs are affected by absolute and relative levels of payWhen the total or absolute amount of pay is too low employees cannot meet their physiological or security needsRelative pay which is an employees pay compared with that of other workers Objectives of Compensation AdministrationAcquire qualified personnel1Compensation needs to be high enough to attract applicants2Pay levels must respond to the supply and demand of workersRetain present employees1When compensation levels are not competitive some employees quit2Pay must be kept competitive with that of othersEnsure equity1Strive for internal and external equity2Internal equity requires that pay be related to the relative worth of jobsJobs of similar value get similar payAlso called internal consistency3External equity involves paying workers at a rate perceived to be fair compared to what the market paysReward Desired Behaviour1Good performance experience loyalty new responsibilities and other behaviours can be rewarded through an effective compensation planControl costs1Rational compensation program that helps an organization to obtain and retain its workforce at a reasonable costComply with legal regulations1Complies with all government regulations that affect employee compensationFurther administrative efficiency1Administrative efficiency should be a secondary consideration compared with other objectivesJob EvaluationAre systematic process of assessing job content and ranking jobs according to a consistent set of job characteristics and work traitsPurpose is to identify which jobs should be paid more than othersThe process of evaluation is subjective so it is conducted by a group of subjectmatter experts Beings with a review of job analysis information to learn about the duties responsibilities and working conditions that shape their evaluationThen the relative worth of jobs is determined by the points system as it is by far the most commonly used evaluation method Job Rankinga form of job evaluation in which jobs are ranked subjectively according to their overall worth to the organization1Can overlook important elements while unimportant items are weighted too heavily2These rankings do not differentiate the relative importance of jobs3Example janitor weighted 1 clerk waited 2 and CEO waited 3 The CEO is 10x more important than a clerk while a clerk can be 2x more important than a janitor Job Gradinga form of job evaluation that assigns jobs to predetermined job classifications according to their relative worth to the organization1Lack of precision can lead to inaccurate pay levels
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