Compensation management Flashcards
Define compensation*
the human resource management function that deals with every type of reward individuals receive in exchange for performing organisational tasks
What does total compensation consist of*
- direct financial compensation=base pay+variable pay such as bonuses,commissions,productivity pay
- indirect financial compensation=benefits+services
- non-financial compensation=praise+recognition
Company make decisions about pay structure based on?
- pay level
2. job structure
what is pay level
the average amount the organisation pays for a particular job
what is job structure
the relative pay for different jobs within the organisation
What are the issues in developing a pay structure*
- legal requirements
- market/economic forces
- organisational goals
- principles of fairness
what are the legal requirements for pay policies
- equal employment opportunity
goal is equal pay for equal work
differences should not be base on non business related consideration such as age,gender,sex,race and other protected status. should be tied with business related considerations such as on job responsibilities or performance. - minimum wages
lowest amount that employers may pay under FLSA,stated as an amount of pay per hour.
sg dont have. cover overtime and child labour also.
3.overtime pay
work longer than normal working hours
excess of normal working hours be paid no less than 1.5 times basic hourly rate of pay.
within 14 days after the last day of salary period
what the economic influences of pay
1.product market
organisations that offer competing goods and services.
organisations must compete on price,quality and service.
cost of labour plays a significant part of organisation’s costs
2. labor market
organisations must compete to obtain human resources in labour market.
competing establishes a minimum that organisation needs to pay to hire an employee for a particular job.
e.g competitive wages and other perks to attract and retain staffs
What are different types of pay level
- pay at rate set by market
- pay at rate above market
- pay at rate below market
Method use to gather information about pay
benchmarking-a procedure that the organisation compares its own practices against those of successful competitors.
e.g pay surveys,professional groups,trade and industry groups
What are the 3 yardsticks that employees use to compare pay and contributions
people doing same job from other organisation
people doing same or different job within the same organisation.
How do employees evaluate fairness of a pay structure
- according to pay equity theory,employees think their pay relative to their inputs such as experience,effort and training.
- to decide whether their pay is equitable, they compare their outcome/input ratio with other people’s outcome/input ratio.
- they make comparisons against people following 3 yardsticks.
- if the employees concluded that their outcome/input is lower than comparison’s person’s ratio,they concluded they are under-rewarded. engage in behaviours to make up the differences in 3 ways:
- withdraw by resigning or refusing to cooperate
- find way to increase pay such as stealing
- put forth less effort reducing their inputs
employees belief about fairness influences their willingness to accept transfers or promotions
what are the compensable factors
5 characteristics of the job that the organisation values and chooses to pay for
- experience
- education
- complexity
- working conditions
- responsibility
job structure:relative value of the job
- compensable factors
2. job evaluation
what is job evaluation
administrative procedure for measuring relative internal worth of the organisation’s jobs