Lecture Fundamentals of human resource management (11th Edition): Chapter 11

After reading chapter 11, you should be able to: Identify the kinds of decisions involved in establishing a pay structure, summarize legal requirements for pay policies, discuss how economic forces influence decisions about pay, describe how employees evaluate the fairness of a pay structure, explain how organizations design pay structures related to jobs.

Human Resource Management 11e

Chapter 11 Establishing

§ What is your biggest  motivator at work?

cost of living increase

labor market adjustment

profit sharing

time-in-rank

protection Program

pay for time not worked

services/

perks

assigned parking space

preferred assignments

business cards

own secretary

impressive title

Performance based

Explicit membership-based

Intrinsic

Intrinsic versus Extrinsic Rewards

§ Companies derive their compensation programs from job  evaluation, which defines the appropriate worth of each job.

§ An effective, fair compensation program attracts, motivates  and retains competent employees

Compensation Administration

Both employees and employerscan research compensation 

facts and issues atwww.salary.comhttp://salary.nytimes.com/

http://www.salaryexpert.com/

Equal Pay Act of 1963 requires that men and women  hired for the same job be paid the same.  

Compensation Administration

Job Evaluation and the Pay  Structure

• Indicates whether pay structure is logical.

§ Wage Structure

• Designates pay ranges for jobs of similar value. Results in a logical 

Job Evaluation and the Pay  Structure

Special Cases of Compensation

§ Incentives can be offered to groups, rather than individuals, when  employees' tasks are interdependent and require cooperation. 

Special Cases of Compensation

§ Direct employee efforts toward organizational goals (such as  cost reduction)

• Scanlon Plan ­ supervisor and employee committees 

suggest labor­saving improvements. 

§ See http://www.scanlon.org/ 

• IMPROSHARE ­ formula is used to determine bonuses  based on labor cost savings. 

§ See http://www.qualitydigest.com/jul/gainshre.html 

Special Cases of Compensation

§ Executive pay can run 400 times higher than that of the 

average worker

§ Competition for executive talent raises the price of hiring an  executive 

§ High salaries can be a motivator for executives and lower­

level managers 

§ Click here to see some of the highest paid executives

Executive Compensation Programs

• Compensate for the deferred compensation lost when 

Executive Compensation Programs

mortgage assistance

Supplemental Nonfinancial Compensation Perquisites 

perks may include

paid life insurance club memberships

postretirement consulting contracts

Executive Compensation Programs

International Compensation

1 _ rewards come from the job itself; _ rewards come

from outside the job

5 Using pre-set pay levels that determine what people are paid based on

their type and level of competency is called _

Broad-banding

6 _ protect executives when a merger or hostile takeover occurs by

providing severance pay or a guaranteed position

Golden parachutes