Compensating Employees Fairly Flashcards
*What are the types of compensation? Give examples.
1- Direct compensation
base salary, salary increases, cost of living, pay incentives (bonus - short term: team bonus for teamwork, profit sharing for motivation / long term: stock purchase for mobilization, stock options for increased market value)
= related to your paycheck
2- Indirect compensation
benefits (retirement plan, insurance plans - life, sickness, medical, dental, government plans), paid time off (civic holidays, vacation), employee services (rebates, daycare, gym, flexible workweek schedule)
= not related to your paycheck
*salary could be demotivation factor (not paid enough for this) manager needs to be able to give proper reasons to employees
*What are the 4 types of equity? Explain each of them.
(important objectives of building a compensation program)
1- Internal equity
equity with respect to salaries for similar jobs within organization
Steps: planning, job analysis (gather info about requirements and work conditions), job description (bring together that info), job evaluation (attributing worth of job based on qualifications, responsibilities / ranking jobs to determine salary differentials)
2- External equity
equity with respect to salaries for similar jobs in different organization
Steps: salary surveys (info about salaries in benchmark market companies), salary ranges (setting min and max salaries based on those results / distinguish people based on seniority, performance, competencies / decide to be in or behind benchmark salary or other benefits can be offered)
3- Individual equity
equity with respect to salaries for same job in same organization
Comparison criteria: individual performance, competency, seniority (unions), experience on the job market)
4- Collective equity
equity with respect to the compensation received by different groups of employees in the organization (us against them: people with Ph.D.’s paid the same as entry-level)
Consider: group’s contribution to success of the organization
*What are the 4 steps to establish the base salary?
Job analysis - job description - job evaluation = Internal equity
1- Choose benchmark:
choose type of organization to compare with / can be different depending on job position / consider what type of company may compete with organization / based on context
2- Salary survey:
info about wages supplied by companies in benchmark market / highest, lowest, average
3- Salary positioning:
lead, lag, or match salary / where you want to be in the market
4- Salary ranges:
job value (# points) - salary (linear) / higher you go, larger the overlay / overlay = less jobs available = grow in same section with experience
*What is the basis of the pay equity act? (4 factors)
Goal = equal pay for equal work
Factors:
1- Qualifications and experience required (degrees)
2- Responsibilities (budget, people that are supervised, possible consequences of doing your job poorly)
3- Intellectual and physical effort (scientists, risks, demand, night shifts)
4- Working conditions
*What are the HR indicators?
Effectiveness: 1- Perception of compensation equity 2- Increase in performance following pay incentive program 3- Employees' satisfaction regarding global compensation Efficiency: 1- Salary costs 2- Sales/full-time employee 3- Sales/salary mass
What are the 3 objectives of compensation?
1- Attract
2- Motivate
3- Retain employees
this, to meet your needs all while creating an enjoyable work climate
What are the manager’s roles?
Understanding and explaining compensation principles / possess adequate knowledge of the positions managed / ensure equity (important factor in compensation decisions)
Name some traps to avoid when evaluating job positions.
Assuming job descriptions are up to date, assuming job evaluation process is objective by default, assuming it is useless because market will demonstrate how much to pay, evaluating job considering current job holder, thinking job title = its value
