Chapter 8 Notes - Chapter 8 Establishing a Strategic...

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Chapter 8 – Establishing a Strategic Compensation System Strategic Aspects of Compensation – Total Compensation: all forms of pay and benefits given to employees arising from their employment. Compensation is used to reward high performance, improve performance, and contribute to the achievement of an organization’s strategic goals Three strategic approaches: Paying an employee for his or her skills and competencies rather than on the basis of job description Rewarding excellence through pay for performance Individualizing pay systems by providing flexibility and choice to an increasingly diverse workforce Two bases for direct financial payments to employees: Increments of time Performance Piecework: compensation is tied directly to the amount of production that a worker produces. (a popular incentive plan) The role of HR in compensation management HR representatives should ensure that the employees know how to earn salary increases and incentives and other organizational goals They should also monitor internal organizational changes and canvass feedback from employees about whether the compensation system is satisfying their needs Basic Considerations in Determining Pay Rates – Legal considerations in compensation Employment/labour standards act minimum wage, maximum hours of work, overtime pay, paid vacation, paid statutory holidays, termination pay, record keeping of pay information Pay equity acts equal pay for equal work (no gender bias) Human rights act Canada/Quebec pension plan Other legislation affecting compensation Union influences on compensation decisions Compensation policies Equity and its impact on pay rates Procedural Justice: when the policies and procedures for determining how pay is calculated are perceived as fair. Distributive Justice: when the rate of pay for a given job is perceived as fair. Pay inequity leads to upset employees who are likely to file complaints, leave the company, organize a union, or take an employer to court Establishing Pay Rates – 1. Determine the worth of each job within the organization through job evaluation (to achieve internal equity) Job Evaluation: a systematic comparison to determine the relative worth of jobs within a firm. Benchmark Job: a job commonly found in other organizations and/or critical to a firm’s operations that is used to anchor the employer’s pay scale and act as a reference point around which other jobs are arranged in order of relative worth.
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  • Spring '12
  • Zinni
  • Employment compensation, Strategic Compensation System

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