Lecture #9: Compensation Management & Employee Benefits (6&4pts)

Question 1

How do companies determine compensation levels for jobs?

Answer 1

Phases for creating compensation structures-

1. Set philosophy - lead, match or lag
   Lead (higher than market) Match (comparable rates) pr Lag (lower than the market)
2. Job analysis - Identify & study jobs (position/job descriptions, job standards)
3. Job evaluation & Salary surveys - determine relative level of pay for different jobs within an org.
   Methods: job ranking, job grading, point system
   Ex: salary surveys - research to understand external equity
4. Setting pay rates - Combines job evaluation, survey wage rates, & other considerations (e.g., pay policy). Create a comp structure. (job classes and rate ranges)

Question 2

What are some incentive plans that connect pay to performance and support different business strategies?

Answer 2

Competing values framework to comp plans

Question 3

What are some potential unintended consequences of incentive plans?

Answer 3

• Pros:
  Performance reinforced regularly
  Desired behaviors likely to continue
  Wages paid in proportion with performance
• Cons:
  Complex to administer
  May result in inequities
  Employees may not achieve standards due to uncontrollable forces
  Union resistance
  Employees may focus on only one aspect
• Examples:
  Team based production bonuses
  Merit increase (indiv)
  Variable reward (indiv)

Question 4

What is pay equity?

Answer 4

Employers must pay men & women the same wage or salary for jobs of comparable worth (except merits & seniority)

Question 5

What are some strategies to reduce the wage gap?

Answer 5

• Businesses should monitor and remedy pay inequities
• Businesses should remove barriers to reach higher-level leadership
• Businesses should establish an employment equity plan
• Businesses should provide influential mentors to increase social capital
• Govt should introduce pay equity legislation
• Govt should provide affordable childcare
• Women in lower paying occupations can consider unionizing (society)
• Men must get involved (society)

Question 6

What are the legally required and voluntary benefits?

Answer 6

Legally required benefits:
- Minimum wage
- Retirement
- Employment Insurance
- Workers Comp
- Vacation time/pay

Voluntary:
- Life & health insurance
- Salary continuation
- Additional paid time-off benefits
- Employee Services (ex: EAP, Financial & Social services)

Question 7

What is the difference between defined benefits and defined contribution pension plans?

Answer 7

Defined benefits pension plan:
Employers and employees both make contributions. It is managed by the employer and the fixed dollar amount available upon retirement is dependent on age and length of service. They may also receive a % of their highest salary for each year of service.

Defined contribution pension plan: (most common)
Employers and employees can both make contributions. If only the employer makes contributions it is called a noncontributory plan. When a portion of an employee’s paycheck goes toward the plan and the employer matches the contributions it is a contributory plan. Amount available upon retirement is based on contribution by the employee.

Question 8

What are some strategies for helping the ‘sandwich generation’ at work?

Answer 8

• Flexible work schedules or work options
• Flexible spending accounts or subsidies
• Child Care/elder care options
• Paid family care days
• On-site childcare