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COMM 211 > Day 15- Guest Lecture- Compensation > Flashcards

Day 15- Guest Lecture- Compensation Flashcards

1
Q

Compensation Management

Phase I

A

Job Analysis

  • initial job analysis
  • Identify and study jobs
  • -Job descriptions
  • -Job Standards

Understand what the performance standards are of the job

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2
Q

Compensation Management

Phase II

A

Job Evaluation

  • Determine relative worth or value of jobs
  • Provides for internal equity
  • Job evaluation methods
  • –job ranking
  • –job grading
  • –points systems

Job size is involved in ALL compensation systems

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3
Q

Compensation Management

Phase III

A

Salary Surveys

  • Discover what other employers are paying for specific key jobs
  • Provide for external equity
  • Sources of data:
  • -HRSDC
  • -Consultants
  • -Employer Associations
  • -Professional Associations

Look at what other people are paying for the same jobs

Reliability issue: Cant always be sure if all the companies are completely comparing apples to apples

Points Systems are really useful to help create more accurate matches within the Survey Data.

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4
Q

Compensation Management

Phase IV

A

Pricing Jobs

  • Establishing the pay level for each job
  • -Combines job evaluation rankings, survey wage rates, and other considerations
  • -wage-trend line developed
  • Creating compensation structure
  • -Job classification

Determining exactly how much each job should be paid

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5
Q

Job Evaluation

A

The systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization.

Establish some sense of internal equity
-logical and rational- to employees as well.

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6
Q

Job Ranking System

A

Oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth.

Disadvantages:

  • Does not provide a precise measure of each jobs worth
  • Final job rankings indicate the relative importance of jobs, not the extent of differences b/t jobs
  • Method can used to consider only a reasonably small number of jobs. (Hard is amount of employees is in the hundreds)
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7
Q

Job Classification or Grading System

A

A system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades.

Successive grades require increasing amounts of job responsibility, skill, knowledge, ability, or other factors selected to compare jobs.

Note:
Establish grades
Jobs are then slotted into each grade
Better than ranking, b/c it helps show the difference b/t positions

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8
Q

Point System

A

A quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it.

Permits jobs to be evaluated quantitatively on the basis of factors or elements—compensable factors—that constitute the job.

Note:

  • Most precise, but most difficult to do and implement
  • try to assign points to different aspects of the job
  • usually determined through a committee
  • 3 or 4 areas of the job that are usually rated.
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9
Q

Hay Profile Method

A

Know-how:

  • depth and range of technical know-how
  • management breadth
  • human relations skills

Problem Solving:

  • thinking environment
  • thinking challenge

Accountability:

  • freedom to act
  • nature of impact
  • area of impact

These aspects create the total job size

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10
Q

The Wage Curve

A

Wage Curve

-Curve in a scattergram representing the relationship b/t relative worth of jobs and wage rates

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11
Q

Wage Curve:

Pay Grades

A

Groups of jobs within a particular class that are paid the same rate

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12
Q

Wage Curve:

Rate Ranges

A

A range of rates for each pay grade that may be the same for each grade or proportionately greater for each successive grade

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13
Q

Wage Curve:

Red & Green Circle

A

Payment rates above the maximum (red circle) or below the minimum (green circle) of the pay range

Red circle- happens when there are jobs that are very very unique on the market

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14
Q

Types of Incentive Plans

Individual

A

Piecework
Bonuses
Commission
Nonmonetary Awards

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15
Q

Types of Incentive Plans

Group

A

Team Results

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16
Q

Types of Incentive Plans

Enterprise

A

Profit-Sharing
Employee Stock Ownership
Cost Reduction

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17
Q

Piecework

A

Employees receive a certain rate for each unit produce (straight piecework)

Or a premium if production exceeds a set standard

18
Q

Piecework

Benefits

A

Direct relationship between compensation and productivity
Simple to compute
Labour costs predicted accurately

19
Q

Piecework

Problems

A

Rate busting
Quality may suffer
Difficult to establish/change benchmarks
Reduce cooperation

20
Q

Bonuses

A

Incentive payment that is supplemental to the base wage

May be determined based on cost reduction, quality improvement, or other performance criteria

21
Q

Bonuses

Benefits

A

Can be an effective motivator if large enough
Can be tied to performance
Given out at the end of the year once overall performance is known

22
Q

Bonuses

Problems

A

Can become expected
Employee may not understand how they are tied to performance
spot bonuses may improve upon this

23
Q

Commissions

A

Compensation plan based on percentage of sales

Can be combined with base pay

24
Q

Commissions

Benefits

A

Maximum incentive
Easy to compute and understand
Flexible
Good in highly aggressive industries

25
Q

Commissions

Problems

A

Stressing high priced products
Customer service may suffer
Employee earnings can fluctuate greatly

26
Q

Non-monetary Rewards

A

Let employees know that they are valued and appreciated

Can be tied to seniority

27
Q

Non-monetary Rewards

Benefits

A

Often less costly
Non-taxable for employees
Can be more effective than money as a motivator
Can allow choice in rewards

28
Q

Non-monetary Rewards

Problems

A

Need to recognize generational differences

If they are not valued, they can become a joke

29
Q

Team or Group Incentives

A

All team members receive an incentive bonus payment when production or service standards are met or exceeded

30
Q

Team or Group Incentives

Benefits

A

Encourage teamwork and collaboration
Desirable when individual performance difficult to measure
Encourages employee involvement

31
Q

Team or Group Incentives

A

Free riders
Individuals not sure how their efforts contribute to success (but better than profit-sharing)
Payout formulas are usually complex

32
Q

Profit Sharing

A

Paying employees special current or deferred sums based on the profits of the enterprise

33
Q

Profit Sharing

Benefits

A

Create culture of ownership

Simple to understand

34
Q

Profit Sharing

Problems

A

Profits determined by factors outside of employees’ control

Immediate reinforcement is low (i.e., high temporal discounting)

35
Q

Employee Stock Ownership

A

Stock options, employee ownership

36
Q

Employee Stock Ownership

Benefits

A

Create culture of ownership
Options reduce need for cash payouts, allowing company to invest money instead
Employees can become rich through ESOPs

37
Q

Employee Stock Ownership

Problems

A

Stock price determined by factors outside of employees’ control
Employee ownership can be risky
Managers need to allow employee involvement in decision-making

38
Q

Cost Reduction

A

Employees receive a bonus based on reducing costs

Bonus is often tied to amount of cost reduction

39
Q

Cost Reduction

Benefits

A

Employees may have more control over cost reduction than profits
Can help create cohesion and promote ownership mentality

40
Q

Cost Reduction

Problems

A

Still subject to free rider problems
Employees may be less focussed on innovation
Requires a high degree of employee investment—may reduce productivity

41
Q

Successful Incentive Plans

A

Standards relate to strategic objectives.
Employees are encouraged to participate.
Employees see a clear connection between the incentive payments they receive and their job performance.
Standards are challenging but achievable.
Payout formulas are simple and understandable.
Fair and transparent.
Constantly communicate the value of the program!

COMM 211 (21 decks)

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