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CMS 2 > A12 - Managing the Compensation Process > Flashcards

A12 - Managing the Compensation Process Flashcards

1
Q

legislation that guarantees the same pay for men and women doing substantially similar work in terms of skill, effort, responsibility and working conditions

A

Equal Pay Act

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2
Q

denying qualified women and minorities opportunities for jobs, promotions or training opportunities

A

access discrimination

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3
Q

legislation that prohibits executives from retaining bonuses or profits from selling company stock if they mislead the public about the financial health of the company

A

Sarbanes-Oxley Act

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4
Q

minimum wage that must be paid for work done on covered gov’t projects or puchases

A

prevailing wage

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5
Q

pay classification that provides an income floor for workers in society’s least productive jobs

A

minimum wage

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6
Q

legislation that created time-and-a-half overtime pay

A

Fair Labor Standards Act

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7
Q

Davis-Bacon Act 1931

A
  • requires that mechanics and laborers on public construction projects be paid the “prevailing wage” in an area
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8
Q

Securities Exchg. Act 1934

A
  • Created the SEC
  • requires companies that have more than $10m. in assets and whose securities are publicly traded and held by more than 500 owners to periodically report info, which is available to the public
  • includes disclosure of the comp. rec’d by CEO, CFO and the 3 other highest paid execs.
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9
Q

Walsh-Healey Public Contracts Act 1936

A
  • extends prevailing-wage concept to manufacturers or suppliers of goods for gov’t contracts
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10
Q

Fair Labor Standards Act 1938

A
  • Sets min. wage, hrs of work, OT premiums
  • prohibits child labor
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11
Q

Equal Pay Act 1963

A
  • Equal pay req’d for men and women doing ‘substantially simliar’ work in terms of skill, effort, responsibility, and working conditions
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12
Q

Title VII of Civil Rights Act of 1964

A
  • prohibits discrim. in all employment practices on basis of race, sex, color, religion, or nat’l orig.
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13
Q

Exec. Order 11246 1965

A
  • prohibits discrim. by fed’l contractors and subcontractors in all employment practices on basis of race, sex, color, religion, or nat’l origin
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14
Q

Age Discrim. in Employment Act (ADEA) 1967

A
  • protects EEs age 40 and over against age discrim.
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15
Q

Pregnancy Discrim. Act 1978

A
  • pregnancy must be covered to same extent that other med. conditions are covered
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16
Q

Americans w/ Disabilities Act. 1990

A
  • Requires that “essential elements” of a job be called out
  • if a person w/ a disability can perform these essential elements, reasonable accommodation must be provided
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17
Q

Civil Rights Act of 1991

A
  • incr’s border of proof on ERs to rebut some discrim. claims
  • stronger remedies available in cases of internat’l discrim.
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18
Q

Family and Med. Leave Act of 1993

A
  • req’s ERs to provide up to 12 weeks’ unpaid leave for family and med. emergencies
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19
Q

Mental Health Act 1997

A
  • Mental illness must be cov’d to same extent that other med. conditions are cov’d
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20
Q

Worker Economic Opp. Act 2000

A
  • income from most stk plans need not be included in calculating OT pay
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21
Q

Sarbanes-Oxley Act 2002

A
  • Execs. cannot retain bonuses or profits from selling company stk if they mislead the public about the fin. health of the company
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22
Q

2004 - FASB Stmt 123R

A
  • value of all EE stk options must be expensed at estimates of FV on fin. stmts
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23
Q

2006 - SEC rule chg on exec. comp. disclosure

A
  • adopts enhanced exec. copm. disclosure requirements
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24
Q

2009 - Lilly Ledbetter Fair Pay Act

A
  • ERs can be liable for current pay differences that are a result of discrim. (as defined under existing laws such as Title VII of CRA) that occurred many yrs earlier
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25
Q

2009 :

Troubled Asset Relief Program (TARP)

American Recovery and Reinvestment Act (ARRA)

A
  • Fin. instits. receiving funds from TARP have restrictions on comp.
  • prohibits use of several comp. programs, inlcuding, but not limited to bonuses, retention awards, and incentive pay, except where part of a preexisting employment contract, during the period TARP funds are received
  • restricted stk is permitted if 1/3 or less of annual comp.
  • if firms receiving the largest TARP assistnace, restrictions cover senior execs. and the next 20 highest paid EES
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26
Q

FAIR LABOR STANDARDS ACT OF 1938

A
  • fed’l law
  • covers all EEs of companies engaged in interstate commerce or in the prod. of goods for interstate commerce
  • cornerstone of pay reg. in U.S.
  • Major Provisions:
    • min. wage
    • hrs of work
    • child labor
    • EE records requirements including hrs worked and pay
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27
Q

FAIR LABOR STANDARDS ACT OF 1938

Minimum Wage

A
  • provide an income floor for workers in society’s least productive jobs
  • last set in 2009 - $7.25
  • (44) states have own min wages to cover jobs omitted from fed’l legislation
    • if state and fed’l laws cover the same job, the higher rate prevails
    • several states have mins higher than fed’l rate
  • effect of raising the min. wage goes beyond the # of ppl who actually are being padi the min.
    • as legis. forces pay rates at the lowest end of the scale to move up, pay rates above the min. often incr. in order to maintain differentials
  • not all industries are affected if there is a chg in the level
    • if the min that the industry is already paying is already higher than the min wage, then there will be little affect on that industry
  • concern for increases??
    • resulting higher labor costs for affected firms may lead them to decr. their demand for workers and/or their hrs worked
    • a higher min. wage, which is intended to help low wage workers, runs the risk of reducing employment opps for those workers
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28
Q

FAIR LABOR STANDARDS ACT OF 1938

“Living wage”

A
  • not part of FLSA min. wage provs, but very similar
  • a push that provides min. wage tailored to living costs in a specific area
    • pay legis. in some cities that req’s wages above fed’l min. wage level
    • often applies only to city gov’t EEs
  • usually covers only base wages, but they have req’d health ins., vacs., sick, job security, and provide incentives to unionize
  • Maryland was first to adopt this practice in 2009
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29
Q

FAIR LABOR STANDARDS ACT OF 1938

OT and Hrs of Work

A
  • OT provision of FLSA req’s pmt at 1 and a 1/2 times the standard for working more than 40 hrs per week
    • law’s obj. is to share available work by making the hiring of addtional workers a less costly option than the scheduling of OT for current EEs
    • some state laws go beyond the FLSA requirements
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30
Q

FAIR LABOR STANDARDS ACT OF 1938

OT and Hrs of Work

Exemptions

A
  • Wage and Hour Division of DoL enforces FLSA
    • provides strict criteria that must be met in order for jobs to be exempt from min-wage and OT provs.
  • ERs have tried to get around this OT requirement by classifying EEs as exec, even though the work of these ‘execs’ is only slightly diff. from their co-workers
  • DoL cares more on the nature of the job (not the job title)
  • another challenge: evolving, always-on workplace where EEs routinely put in extra hrs and shoot off e-mails late at night from mobile devices, when the workday begins and ends has become an issue for ERs
  • impact of this depends importantly on the degree to which they are enforced
  • unpaid OT in JAP is major prob
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31
Q

Exemptions under FLSA

to qualify for Exec. Exemption, all of the following tests must be met:

A
  • EE must be comp. on a slry basis ( as defined in the regs) at a rate not less than $455 per week
  • EE’s primary duty must be managing the enterprise, or managing a customarily recognized dept or subdivision of the enterprise
  • EE must customarily and regularly direct the work of at least 2 or more other FT EEs or their equivalent
  • EE must have the authority to hire or fire other EEs, or the EE’s suggestions and recommendations as to the hiring, firing, advancement, promo, or any other chg of status of other EEs must be given particular weight
32
Q

Exemptions under FLSA

to qualify for Admin. Exemption, all of the following tests must be met:

A
  • the EE must be comp. on a slry or fee basis (as defined in the regs) at a rate not less than $455 per week
  • EE’s primary duty must be the perf. of office or non-manual work directly related to the mgmt or gen. bus. ops of the ER or the ER’s custs
  • EE’s primary duty includes the exercise of discretion and independent judgment w/ respect to matters of significance
33
Q

Exemptions under FLSA

to qualify for learned Prof. Exemption, all of the following tests must be met:

A
  • EE must be compensated on a slry or fee basis (as defined in the regs) at a rate not less than $455 per week
  • EE’s primary duty must be the perf. of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment
  • advanced knowledge must be in a field of science or learning
  • advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction
34
Q

Exemptions under FLSA

to qualify for creative Prof. Exemption, all of the following tests must be met:

A
  • EE must be compensated on a slry or fee basis (as defined in the regs) at a rate not less than $455 per week
  • EE’s primary duty must be the perf. of work requiring invention, imagination, origninality or talent in a recognized field of artistic or creative endeavor
35
Q

Exemptions under FLSA

to qualify for Computer Employee Exemption, all of the following tests must be met:

A
  • the EE must be comp. on a slry or fee basis (as defined in the regs) at a rate not less than $455 per week or if compensated on an hrly basis, at a rate not less than $27.63 an hour
  • EE must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing duties below
  • EE’s primary duty must consist of:
    • app. of systems analysis techniques and procedures, including consulting w/ users, to determine hardware, software or system functional specifications
    • the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications
    • design, doc. testing, creation or modification of computer programs related to machine operating systems
    • a combo of the before duties, the perf. of which requires the same level of skills
36
Q

Exemptions under FLSA

to qualify for Outside Sales Exemption, all of the following tests must be met:

A
  • EE’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or cust
  • EE must be customarily and regularly engaged away from the ER’s place or places of bus.
37
Q

Exemptions under FLSA

to qualify for Highly Compensation EEs Exemption, all of the following tests must be met:

A
  • HCEs performing office or non-manual work and paid total ann. comp. of $100,000 or more (which must include at least $455 per week paid on a slry or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt exec., admin, or prof. EE ID in the standard tests for exemption
38
Q

FAIR LABOR STANDARDS ACT OF 1938

OT and Hrs of Work

NOT exempted

A
  • blue-collar workers
  • police, fire fighters, paramedics, and other first responders
  • they are not exempt, but rather covered by the FLSA
39
Q

FAIR LABOR STANDARDS ACT OF 1938

OT and Hrs of Work

What time is cov’d?

A
  • counting the hrs of work has beomce a contest
  • law is also relevant to “on-call EEs” you must be avilable to respond outside the usual workday
    • carry pager
    • don’t need to be paid unless paged
    • if they are req’d to stay ‘on premises’, then they are obligated to be paid for that time even if not working
40
Q

FAIR LABOR STANDARDS ACT OF 1938

OT and Hrs of Work

What Income is Cov’d?

A
  • in 1999, Wage and Hr Div. stated that ERs had to include bonus, gain-sharing and stk pmts in calculating OT time
  • in 2000, Worker Econ. Opp. Act, amended FLSA to allow stk options and bonuses to be exempt from inclusion in OT pay calcs.
  • gifst or special-occasion bonuses have never needed ot be included - at ER’s discretion
41
Q

FAIR LABOR STANDARDS ACT OF 1938

OT and Hrs of Work

Compensatory Time Off

A
  • chg’g nature of the workplace and of pay systems has led to calls to reform FLSA to allow for more flexible scheduling and easier admin of variable pay plans
  • Fed. legis. has been proposed that would give EEs and ERs the option of trading OT pay for time off
    • EE would get more time to deal with personal matters and it would save ER money
42
Q

FAIR LABOR STANDARDS ACT OF 1938

Child Labor

A
  • generally -
    • persons under 18 cannot work in hazardous jobs such as meat packing and logging
    • persons under 16 cannot be employed in jobs involving interstate commerce except for nonhazardous work for a parent or guardian
  • gov’t guidelines exist to help monitor child labor in employment practices of subcontractors producing goods for the U.S. mkt
43
Q

EMPLOYEE OR INDEPENDENT CONTRACTOR?

A
  • U.S. ER’s are not obligated to pay legally req’d or additional benefits to indep. contractors
  • determining whether or not you are an EE or an indep. contractor can have signif. cost implications for the ER
  • decision requires careful attention to compliance issues
    • both tax law (IRS) and ERISA (DOL)
    • most widely used - IRS
  • (2) general criteria - behavioral and financial control
    • the more control a firm is able to exercise, the more likely it is that the IRS will see the worker as an EE rather than an indep. contracto
    • also what type of relationship it is (is it permanent)
44
Q

PREVAILING WAGE LAWS

A
  • legis. that provides for a gov’t-defined prevailing wage as the min. wage that must be paid for work done on cov’d gov’t projs. or purchs.
    • set pay for work done to prod. goods/services contracted by the fed’l gov’t
  • to comply - contractors must determine the ‘going rate’ for construction labor in an area
    • in practice, these prevailing rates have been union rates paid in various geographic areas
  • prevents contractors from using their size to drive down wages
  • one effect is to distort mkt wages and drive up the cost of gov’t-financed projs.
  • main prevailing-wage laws:
    • Davis-Bacon Act
    • Walsh-Healey Public Contracts Act
    • Service Contract Act
    • Nat’l Foundation for the Arts and Humanities Act
  • *
45
Q

PAY DISCRIMINATION

A
  • (2) types of discrim. recognized by law:
    • access discrim - denial of particular jobs, promos, or training opps. to qualified women or minorities
      • most often make the news
    • valuation discrim - looks at the pay women and minorities receive for the jobs they perform
      • hinges on the standard of equal pay for equal work
46
Q

Comparable Worth

A
  • policy that women performing jobs judged to be equal on some measure of inherent worth s/b paid the same as men, excepting allowable differences, such as seniority, merit, prod.-based pay plans, and other non-sex-related factors
  • obj. is to eliminate use of the mkt in setting wages for jobs held by women
    • equal pay for work of comparable worth (also called pay equity or gender pay equity)
47
Q

EQUAL PAY ACT 1963

A
  • forbids wage discrim. on the basis of gender if EEs perform equal work in the same establishment
    • jobs considered equal if they require equal skill, effort, and responsiblity and are performed under similar working conditions
  • differences b/w men and women performing same work are legal if these differences are basd on any 1 of 4 criteria (affirmative defense)
    • seniority
    • merit or quality of perf.
    • quality or quantity of prod.
    • some factor other than sex
48
Q

EQUAL PAY ACT 1963

Definition of Equal

Schultz v. Wheaton Glass 1970

A
  • maintained (2) job classes for selector-packers in its prod. dept.: male and female
  • female job class carried a pay rate 10% below tha of the male job class which was b/c male job class had additional tasks such as shoveling, opening doors, doing heavy lifting to justify pay diff.
  • court decided that they were not equal and that it was o.k. that the female class was paid less
    • ruled that the equal work standard req’d only that jobs be substantially equal, not identical
49
Q

EQUAL PAY ACT 1963

Definitions of Skill, Effort, Responsiblity, Working Conditions

A
  1. *Skill: * Experience, training, educ., and ability as measured by the perf. requirements of a particular job
  2. *Effort: * mental or physical - the degree of effort (not type of effort) actually expended in the perf. of a job.
  3. Responsibility: the degree of accountability req’d in the perf. of a job
  4. *Working Conditions: * the phys. surroundings and hazards of a job, including dimensions such as inside vs. outside work, heat, cold, and poor ventilation
    • time of day doesn’t constitute dissimilar working conditions
50
Q

EQUAL PAY ACT 1963

Factors other than Sex

A
  • prompted most court cases
  • include:
    • shift differentials
    • temp assignments
    • bona fide training programs
    • differences based on ability, training, or experience
    • other reasons of “bus. necessity”
  • ER is req’d to justify the bus. relatedness of the practice
    • focus on “pattern of practices” instead of a specific practice
  • since most cases have been decided outside of court - no legal clarification of this has ever been provided
    • does seem that pay diffs. for equal work can be justified for demonstrably bus.-related reasons
    • but what the means has not been decided
51
Q

EQUAL PAY ACT 1963

**“Reverse” Discrim. **

A
  • still discrim even if it is against ‘white males’??
  • the design of any pay systems to fight off discrim. must incorporate a policy of equal pay for substantially equal work in order to fight off the chances of reverse discrim.
52
Q

TITLE VII OF THE CIVIL RIGHTS ACT OF 1964

A
  • prohibits discrim. on the basis of sex, race, color, religion, or nat’l origin in any employment condition, inlcuidng hiring, firing, promo, transfer, comp, admission to training programs
  • amended in 1972, 1978, 1990
  • typically focus on diff. in pay, promo, pay rasies, and perf. reviews
  • litigation cases are very costly for the company in terms of legal expenses, unfavorable publicity, EE relations, and the allocation of time away from the core bus.
53
Q

AGE DISCRIM IN EMPLOYMENT ACT (ADEA) 1967

A
  • prohibited discrim. based on age
  • compliance w/ the ADEA is typically a key concern in workforce reductino programs
  • not only to age-related diff. in pay and employment outcomes, but in addition, it was amended in 1990 to include the Older Workers Benefit Protection Act (OWBPA) that detailed rules regarding how separation agreements involving older workers were used (exp = early retirement incentives)
54
Q

TITLE VII OF THE CIVIL RIGHTS ACT OF 1964

(2) theories of discrim. behavior

A
  1. disparate treatment:
    • unequal treatment that applies diff. standards to diff. EEs
    • mere fact of unequal treatment may be taken as evidence of the ER’s intention to discrim. under U.S. law
  2. disparate impact:
    • whether ER intended to discrim or not is irrelevant
    • personnel decision can, on its face, seem neutral, but if its results are unequal, the ER must demonstrate that the decision is work-related
55
Q

EXECUTIVE ORDER 11246

A
  • enforced by Off. of Fed’l Contracts Compliance Programs (OFCCP) and DoL
  • prohibits discrim. on the basis of race, color, religion, sec, or nat’l origin
  • req’s cov’d gov’t contractors to file AAPs: (3) parts
    • utilization analysis compares the contractor’s workforce to the available external workforce
    • goals and timetables are developed for achieving affirmative action
    • action steps are developed for achieving these goals and timetables
56
Q

PAY DISCRIM. AND DISSIMILAR JOBS

Gunther v. County of Washington (1981)

A
  • determined that pay diff. for dissimilar jobs may reflect discrim. and therefore can be brought to courts for Title VII discrim. for jobs that are dissimilar
    • 4 jail matrons claimed that their work was comparable to that performed by male guards
    • matrons also were assigned clerical duties, b/c guarding the smaller # of female prisoners did not occupy all of their time
    • lower courts said that the matrons didn’t have grounds b/c the jobs didn’t meet the equal work reqmnt of EPA
    • Supreme Court said that Title VII pay case was not bound by the difinitions in EPA
    • didn’t say that Wash. Co had discrim’d, but did say that a claim of wage discrim. could also be brought under Title VII for situations where the jobs were not the same
57
Q

PAY DISCRIM. AND DISSIMILAR JOBS

Proof of Discrim: Use of Mkt Data

A
  • courts continue to updold use of mkt data to justify pay differenceds for different jobs
58
Q

PAY DISCRIM. AND DISSIMILAR JOBS

Proof of Discrim: Jobs of Comparable Worth (job eval)

A
  • find a standard by which to compare the value of jobs (job evals)
    • 1st - must permit jobs w/ dissimilar content to be declared equal or “in some sense comparable”
    • 2nd - must permit pay diffs. for dissimilar jobs that are not comparable
  • AFSCME v. State of Washington
    • state commissioned a study of the concept of comparable worth and its projected effect on the state’s pay system
    • found that basing wages on the ext. mkt, state was paying women approx. 20% less than it was paying men in jobs deemed of comparable value to the state
    • state took no action to fix stating that they couldn’t afford to adjust wages, so AFSCME sued the state since it knew of the adverse effect of this present policy and that failure to chg the policy constituted discrim.
    • appeals court ruled that the state was not obligated to correct the disparity
  • this case has led many public ERs to undertake in ‘pay equity studies’ to assess the ‘gender neutrality’ of pay systems
59
Q

EARNINGS GAPS

sources of earnings gaps

A
  • work/occup. diffs:
    • responsibilities
    • effort req’d
    • skill/knowledge req’d
    • working conditions
  • qualifications diffs:
    • educ.
    • experience
  • work-related behavior
    • career/life tradeoffs
    • turnover
    • perf.
    • hrs of work
  • labor mkt diffs:
    • demand/supply for specific skills
  • firm/industry diffs:
    • size tech
    • pay strat
  • Union diffs
    • power interests
  • discrim
60
Q

EARNINGS GAPS

sources of earnings gaps: diffs in occupations and qualifications

A
  • evidence that women of all ethnic groups are more likely than men to seek PT and flex. work arrangements that they are more likely than men to interrupt their careers due to family responsiblities
  • evidence that there are still gender diffs. in occupational choices
  • evidence of incr’d levels of occupational attainment doesn’t automatically mean tha the wage gap will close
  • relatively small wage gap among younger corhorts (recent grads) tends to incr. as the cohort ages
    • perhaps b/c women tend to drop out of the labor force at some point for family reasons
    • OR due to barriers to continued advancement become more substandtial at higher levels in the job hierarchy
  • level of schooling and work-related experience appear to be primary sources of the pay gaps among both block and hispanic men and women
61
Q

EARNINGS GAPS

sources of earnings gaps: diffs in industries and firms

A
  • also affect earnings diffs. among men and women and among race/ethnic groups
  • diffs in the firm’s comp. policies w/in a specific industry
  • diffs in policies for different jobs may even exist w/in firm
  • size of firm is systematcially related to differences in wages
62
Q

COMPARABLE WORTH

A
63
Q

COMPARABLE WORTH

(4) basic steps involved in establishing a comparable worth plan

A

*

64
Q

COMPARABLE WORTH

A Proactive Approach…

A

*

65
Q

MANAGING, CONTROLLING LABOR COSTS

A
  • fin. planning is integral to managing comp.
    • updating pay structure, incr’g merit pay, or instituting gain sharing are critical
    • creating comp. budget req’s tradeoffs - how much of an incr. s/b allocated according to EE contribs. vs. across-the-board incr’s
  • req’s understanding the potential returns gained from the allocation
    • not only influence on labor costs, but through its influence in helping incr. revs or returns
  • (3) main factors to control in order to manage labor costs
    • employment (# of workers and the hrs they work)
    • avg. cash comp (wages, bonuses)
    • avg. benefit costs
66
Q

MANAGING, CONTROLLING LABOR COSTS

Controlling employment

A

*

67
Q

MANAGING, CONTROLLING LABOR COSTS

controlling avg. cash comp.

A

*

68
Q

CONTROL SLRY LEVEL: TOP DOWN

A
  • begins w/ estimate from top mgmt of the pay incr. budget for the entire org.
  • then allocated to each mgr, who plans how to distrib. it among subordinates
  • several approaches to top-down budgeting
    • typical - planned pay-level rise = the %age incr. in avg. pay for the unit that is planned to occur
69
Q

CONTROL SLRY LEVEL: TOP DOWN

Planned pay-level rise

Several factors that influence the decision on how much to incr. the avg pay level for the next period:

A
  • current yr’s rise
    • %age by which the avg. wage chg’d in the past yr
  • ability to pay
    • any decision to incr. avg. pay level is in part a function of the org’s fin. circumstances
      • are they fin. healthy or not? Can they stay competitive in the mkt
  • competitive mkt
    • determining the firm’s competitive position in the mkt
    • using benchmarks to determing going mkt rate for a job
  • turnover effects
    • when ppl leave (any way), they typically are replaced by EEs who earn a lower wage
  • cost of living
    • EEs compare their pay incr’s to chgs in their living costs
70
Q

CONTROL SLRY LEVEL: TOP DOWN

Cost of Living Distinctions - (3) related concepts:

A
  • EE’s Cost of Living - determined by personal exp budget
    • most difficult to measure b/c it is dependent on indiv. EE’s expectations
  • chgs in prices in the product and service mkts - determined by CPI
    • many critics that point out that if you depend on the CPI, you basically are paying for inflation rather than perf. or mkt chgs
  • chgs in wages in labor mkts - determined by pay surveys
    • chgs are incorp’d in to the system through mkt adjmnts in the budget and updates of the policy line and range structure
71
Q

CONTROL SLRY LEVEL: BOTTOM UP

A
  • begins w/ mgrs’ pay incr. recommendations for the upcoming plan yr
72
Q

CONTROL SLRY LEVEL: BOTTOM UP

Comp. Forecasting Cycle Steps:

A
  1. Instruct mgrs in comp. policies and techniques
  2. distrib. forecasting instructions and workshts
  3. provide consultation to mgrs
  4. check data and compile rpts
  5. analyze forecasts
  6. review and revise forecasts and budgets w/ mgmt
  7. conduct feedback w/ mgmt
  8. monitor budgeted vs. actual incr’s.
73
Q

EMBEDDED CONTROLS

controls on mgrs’ pay decisions come from (2) diff. aspects of the comp process:

A
  1. formal budgeting process - helps to ensure that future fin. expenditures are coord. and controlled
    • involves forecasting the total expenditures req’d by the pay system during the next period as well as the amt of the pay incr’s
    • bottom up and top down
  2. controls that are inherent in the design of the techniques - includes range maxs and mins, compa-ratios, variable pay and cost analyses (and other)
    • regulate mgrs’ pay decisions by guiding what mgrs can and cannot do
    • controls are built into these techniques to direct them toward the pay system objs.
74
Q

EMBEDDED CONTROLS

Range Maxs and Mins

A
  • set max/min $s to be paid for specific work
  • important for cost control - max
    • reps highes value the org. places on the output of work
  • Red Circle Rates = if EEs are paid above the range max
    • most ERs “freeze” red circle rates until the ranges are shifted upward by mkt update adjmnts so that the rate is back w/in the range again
  • mins are put on the min. value paced the on the work
    • often, rates are set below min for trainees
  • broad bands = offer mgrs greater flexibility compared to grade-range design
    • accompanied by ext. mkt ‘reference rates’ and ‘shadow range’ that guide mgrs’ decisions
    • bands may be more about career mgmt thn pay decisions
    • control of slry budget is givent to mgrs
75
Q

EMBEDDED CONTROLS

Compa-Ratios

A
  • an index that helps assess how mgrs actually pay EEs in relation to the midpoint of the pay range established for jobs
  • estimates how well actual practices correspond to intended policy
  • calc’d as avg. rates actually paid divided by range midpoint
  • compa-ratio of less than 1: on avg, EEs in a range are paid below the midpoint
    • mgrs are paying less than intended policy
    • reasons - may be new or recent hires; poor performers; promo. may be so rapid that few EEs stay in the job long enough to get into the high end of the range
  • compa-ratio greater than 1: rates are exceeding intended policy
    • reasons - high seniority, high perf., low turnover, few new hires, or low promo rates
  • may be calc’d for indiv. EEs, for each range, for org. units, or for functions
76
Q

EMBEDDED CONTROLS

Variable Pay

A
  • can be used as a cost-control device since it is not added to base pay and must be re-earned every period
  • gives org. more flexibility in managings its labor costs, but is less appealing to EEs
77
Q

EMBEDDED CONTROLS

Analyzing Costs

A
  • costing out wage proposals is commonly done prior to recommending pay incr’s, especially for coll. bargaining

CMS 2 (13 decks)

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