Bài giảng QUản trị nguồn nhân lực part 7 eng

Human Resource Management Session 7 DIRECT FINANCIAL COMPENSATION... Primary Determinants of Direct Financial Compensation Organization Compensation Policies Organizational Level Abili

Human Resource Management

Session 7 DIRECT FINANCIAL COMPENSATION

Primary Determinants of Direct Financial

Compensation

Organization

Compensation Policies Organizational Level Ability to Pay

Labor Market

Compensation Surveys

Expediency

Cost of Living

Labor Unions

Economy

Legislation

Employee

Job Performance

Skills

Competencies

Seniority

Experience

Organization Membership Potential

Political Influence

Luck Job Pricing Direct Financial Compensation Job Job Analysis Job

Descriptions Job Evaluation

Compensation Policies

• Pay leaders - Pay higher wages and salaries

• Market rate, or going rate - Pay what most

employers pay for same job

• Pay followers - Pay below market rate because poor financial condition or believe do not

require highly capable employees

Ability to Pay

Organization’s assessment of ability

to pay is important factor in determining pay levels

Compensation Surveys

• What are other firms paying?

• Geographic area of survey

• Specific firms to contact

• Jobs to include

Cost of Living

• When prices rise over a period of time and pay does not,

real pay is actually lowered

• Some firms index pay increases to inflation rate

The Economy

• Affects financial compensation

decisions

• Depressed economy generally increases labor supply

• Cost of living often rises as economy expands

Job Analysis and Job Descriptions

• Before organization can determine

relative difficulty or value of jobs, must first define content

• Done by job analysis/job descriptions

Factor Comparison Method

• Five universal job factors - Mental requirements, skills, physical requirements,

responsibilities, and working conditions

• Raters need not keep entire job in mind as they evaluate; instead, they make decisions on separate aspects or factors of job

Procedure for Establishing Point

Method of Job Evaluation

Select Job Cluster

Identify Compensable Factors

Determine Degrees and Define Each

Job Evaluation Worksheet

Job Evaluation Worksheet for Administrative 2 Position

The Hay Guide Chart-Profile Method

• Refined version of the point method

Job Pricing

• Placing dollar value on worth of job

• Pay grades - Grouping of similar jobs to

simplify pricing jobs

• Wage curve - Fitting of plotted points to create smooth progression between pay grades

• Pay ranges - Minimum and maximum pay rate with enough variance between to allow for

significant pay difference

Job Pricing (Cont.)

• Broadbanding - Collapses many pay grades

into few wide bands to improve effectiveness

• Single rate system - Pay ranges not appropriate for some workplace conditions such as some assembly lines

• Adjusting pay rates - Overpaid and underpaid jobs

Scatter Diagram of Evaluated Jobs Illustrating Wage Curve, Pay

Grades, and Pay Ranges

Pay Ranges for Pay

Grades

0- 99 1 $12.00 $13.30 $14.60 100-199 2 13.30 14.60 15.90 200-299 3 14.60 15.90 17.20 Evaluated Points Pay Grade Minimum Midpoint Maximum

Summary

Broadbanding and Its Relationship to Traditional Pay

Grades and Ranges

Employee as Determinant of Direct

Performance-Based Pay

level of performance as indicated in appraisal

performance One-time financial award based on

productivity

outstanding work or effort

Skill-Based Pay

Compensates on basis of job-related skills and knowledge

• Employees and departments benefit when

employees obtain additional skills

• Appropriate where work tends to be routine and less varied

• Must provide adequate training opportunities

or system becomes demotivator

• Length of time employee has been associated with company, division, department, or job

• Labor unions tend to favor

seniority

• Regardless of nature of job, very few

factors have a more significant impact

on performance than experience

• Dot-com world has changed attitude

with regard to experience

Team-Based Pay

If team is to function effectively, firms

should provide reward based on overall team

performance

Company-Wide Pay

• Profit sharing - Distribution of predetermined percentage of firm’s profits to employees

• Gainsharing - Bind employees to firm’s

productivity and provide incentive payment

based on improved company performance

• Scanlon plan - Reward to employees for

savings in labor costs resulting from

employees’ suggestions

Professionals Compensation

• Initially compensated for knowledge they bring to organization

• Maturity curves reflect relationship between professional compensation and years of experience

Sales Representative Compensation

• Straight salary

• Straight commission

• Endless variety of

salary, commission

part-combinations

Executive Compensation

Critical factor in attracting and

retaining best managers

Determining Executive Compensation

Firms typically prefer to relate salary growth for the highest-level

managers to overall corporate performance

Types of Executive Compensation

• Base salary

• Short-Term Incentives or Bonuses

• Stock option plans

• Performance-Based Pay

• Executive benefits (Perks)

• Golden parachutes

Short-Term Incentives or Bonuses

• Payment of bonuses reflects a managerial belief in their incentive value

• 90% of executives receive bonuses

Performance-Based Pay

• Trend toward more performance-based

compensation packages for executives

• Shareholders become increasingly disenchanted with high levels of executive compensation -

performance-based pay may gain in popularity

Golden Parachutes

• Perquisite that protects

executives in event another company acquires firm or executive is forced to leave firm for other reasons

• Attempts to rein in obscene

golden parachute plans

Trends & Innovations: Outrageous Severance

Pay Examples?

• Philip Purcell, Morgan Stanley, $113 million

• Stephen Crawford, Morgan Stanley, $32 million

• Harry Stonecipher, Boeing $600,000/year

• Carly Fiorina, Hewlett-Packard, $21 million

• Franklin Raines, Fannie Mae, $1.4 million/year

• Scott Livengood, Krispy Kreme, $46,000/month

• James Kilts, Gillette, $100 million

• Jack Welch, GE corporate $9 million annual pension plan payout, plus perks such as lifetime use of GE’s $80,000-per-month Manhattan

apartment with free food and free maid service; lifetime use of GE fleet of corporate jets, including Boeing 737 jet; new Mercedes plus limousine and driver; and assorted free sports and opera box tickets

A Global Perspective: Costs of

Expatriates

• Employers today know that

it is more expensive to send workers abroad

• Tokyo ranks as most expensive city for

expatriates, followed by

London, Moscow and Osaka, Japan