1013_Employee Compensation_1_webct

1013_Employee Compensation_1_webct - Employee Compensation...

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Unformatted text preview: Employee Compensation I COMM392: Managing Employment Relationship 103/104 Fall 2009 Yoshio Yanadori Announcement Midterm exam on October 21, 6:30pm Wood 2 (http://www.students.ubc.ca/facultystaff/buildings.cfm?code=WOOD)) http://www.students.ubc.ca/facultystaff/buildings.cfm?code=WOOD Domain: Chapters 1 (Introduction) 7 (Compensation) [Benefits NOT included] Textbook SRP The following are available on WebCT Review questions Sample 392 exam and marking key Format (tentative) 15 multiple choice questions (2 points each) 5 short answer questions (8 points each) 1 case study (30 points total) Review on October 20 (in class) Objectives Identify factors that influence pay rates Understand key steps involved in designing compensation systems Compensation All forms of financial returns and tangible services and benefits employees receive as a part of employment relationship Employee Compensation Cash Compensation Longterm Incentives Shortterm Incentives Employee benefits Base/wage Merit/Cost of Living Income Protection (insurances, Allowances pensions) Work/Life Balance Key Consideration in Determining Pay Rates/Compensation Systems Legal considerations Employment Standards Legislation Human Rights Legislation Pay Equity Act "Women earned 85 cents for every dollar paid to men in a comparison of fulltime, fullyear workers ages 25 to 29" (Vancouver Sun, Oct. 3 2008: http://www.canada.com/vancouversun/story.html?id=5f07b03f8f204be28e69ab034beae9ea ) http://www.canada.com/vancouversun/story.html?id=5f07b03f8f204be28e69ab034beae9ea ) Providing equal pay to maledominated job classes and female dominated job classes of equal value to the employer Primarily in the public sector Others (e.g., Canadian Pension Plan, Workers Compensation Legislation, Employment Insurance) Key Consideration in Determining Pay Rates/Compensation Systems Union influences Compensation will be a key part of bargaining Many union leaders fear that any systems used to evaluate the worth of job can be abused by management Compensation policies Leader or follower Basis for pay increases Key Consideration in Determining Pay Rates/Compensation Systems Equity considerations Person compares the ratio of their inputs to outcomes with comparison others' ratio Internal equity within organizations External equity across organizations (e.g., those holding similar jobs in other firms) When inequity exists Reduce one's input Leave organization * Be careful equity/equities have various meanings in compensation management Establishing Pay Rates (page 206) Ensure internal equity Ensure external equity 1. Job evaluation 1. 2. 3. 2. Group similar jobs into pay grades Determine compensable factors (what to value) Assess value Point method Ranking method Classification Conduct a salary survey Price each pay grade Finetune pay rates Ensure Internal Equity Point Method 1. 2. Conduct job evaluation Determine compensable factors (e.g., knowledge, skill, responsibility, hardship) 1. 2. 3. 4. 5. Scale the factors Weight the factors Group similar jobs into pay grades and establish structure Based on work performed (what is done) Based on strategy and value of the organization (what is valued) HR Manager II (425575pts) HR Manager I (315425pts) HR Specialist III (225315pts) HR Specialist II (175225pts) HR Specialist I (125175pts) Job Evaluation Example Bookstore manager Check one x Administrative Technical Degree x X Weight 20% 20% 15% 15% 10% 10% 5% 5% = = = = = = = = = Total Subtotal 80 60 30 60 40 30 5 5 310 Job: Compensable Factors Skill (40%) Mental Experience Effort (30%) Physical Mental Responsibility (20%) Effect of error Inventiveness/ Innovation Working Conditions (10%) Environment Hazards x x x x x x x Ensure External Equity Conduct a salary survey Draw wage curves Set competitive pay policy Many firms buy information from consulting firms Need to define market (e.g., industry, location, size, performance) Merge internal and external pressure Relative to market/competitors (i.e., lead vs. follow) Internal Equity External Equity HR Manager II (425575pts) HR Manager I (315425pts) HR Specialist III (225315pts) HR Specialist II (175225pts) HR Specialist I (125175pts) Market pay 150000 level y = 161.85x + 15767 HR Mgr II (500) 100000 50000 HR I HR I (150) (150) HR II (200) HR III (270) 200 300 HR Mgr I (370) (Pay) Wage Curve Range HR Mgr II HR Mgr I HR III HR II 0 0 100 400 500 600 Job evaluation point Market Pay HR Specialist I $48K HR Specialist II $50K HR Specialist III $52K HR Manager I $75K HR Manager II $102K HR I (Grade) Job Evaluation Exercise Work in teams and evaluate 5 accounting jobs use the following five compensable factors: 1. Step 1: Determine weights for the five compensable factors 1. Skill & Knowledge ( ___ %) 2. Effort ( ___ %) Physical Mental Education Experience 3. Responsibility ( ___ %) 4. Problem solving ( ___ %) 5. Strategic value ( ___ %) Effect of error Analyze problems and provide solutions The degree to which employees' decisions influence organizational effectiveness 1. Step 2: Evaluate 5 accounting jobs Calculate job evaluation point for each of the 5 jobs Example 1. ACCOUNTANT1 (total: 145 points) Skill & Knowledge: (1, 2, 3, 4, 5, 6, 7) x (a 25 %) = ( 25 points) Effort: (1, 2, 3, 4, 5, 6, 7) x (b 10 %) = ( 10 points) Responsibility: (1, 2, 3, 4, 5, 6, 7) x (c 30 %) = ( 60 points) Problem solving: (1, 2, 3, 4, 5, 6, 7) x (d 20 %) = ( 20 points) Strategic value: (1, 2, 3, 4, 5, 6, 7) x (e 15 %) = ( 30 points) 2. ACCOUNTANT1 (total: 220 points) Skill & Knowledge: (1, 2, 3, 4, 5, 6, 7) x (a 25 %) = ( 50 points) Effort: (1, 2, 3, 4, 5, 6, 7) x (b 10 %) = ( 20 points) Responsibility: (1, 2, 3, 4, 5, 6, 7) x (c 30 %) = ( 60 points) Problem solving: (1, 2, 3, 4, 5, 6, 7) x (d 20 %) = ( 60 points) Strategic value: (1, 2, 3, 4, 5, 6, 7) x (e 15 %) = ( 30 points) Next Class Continue compensation ...
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