-1 Part 5 Compensation of Human Resources Chapter 8 Establishing Pay Plans ©2004 by UIBE Liu yuxin
© 2004 by UIBE Liu yuxin 11-1 Part 5 Compensation of Human Resources Chapter 8 Establishing Pay Plans
Chapter 8 Outline I Determining Pay Rates II Establishing Pay Rates III Pricing Managerial and Professional Jobs IV Compensation Trends V Comparable Worth ©2004 by UIBE Liu yuxin 8-2
© 2004 by UIBE Liu yuxin 8-2 11-2 Chapter 8 Outline I Determining Pay Rates II Establishing Pay Rates III Pricing Managerial and Professional Jobs IV Compensation Trends V Comparable Worth
Learning Objectives List the basic factors in determining pay rates Explain in detail how to establish pay rates Describe how to price managerial and professional jobs Discuss current trends in compensation Establish a pay plan ©2004 by UIBE Liu yuxin 8-3
© 2004 by UIBE Liu yuxin 8-3 11-3 Learning Objectives List the basic factors in determining pay rates Explain in detail how to establish pay rates Describe how to price managerial and professional jobs Discuss current trends in compensation Establish a pay plan
I Determining Pay Rates 8-4
© 2004 by UIBE Liu yuxin 8-4 11-4 I Determining Pay Rates I Determining Pay Rates
Determining Pay Rates Employee compensation refers to all forms of pay or rewards going to employees and arising from their employment.It consists of 2 parts: Direct financial payments Indirect financial payments Can you name examples of direct and indirect payments? ©2004 by UIBE Liu yuxin 8-5
© 2004 by UIBE Liu yuxin 8-5 11-5 Determining Pay Rates Employee compensation refers to all forms of pay or rewards going to employees and arising from their employment. It consists of 2 parts: Direct financial payments Indirect financial payments Can you name examples of direct and indirect payments?
Employee Compensation Direct or Indirect compensation is given based on: ◆Increments of time o Hourly o Salaried ◆Performance o Piecework o Commission ©2004 by UIBE Liu yuxin 8-6
© 2004 by UIBE Liu yuxin 8-6 11-6 Employee Compensation Direct or Indirect compensation is given based on: Increments of time Hourly Salaried Performance Piecework Commission
Factors Influencing Pay Legal considerations Company policy Competitive strategy Equity ©2004 by UIBE Liu yuxin 8-7
© 2004 by UIBE Liu yuxin 8-7 11-7 Factors Influencing Pay Legal considerations Company policy Competitive strategy Equity
Corporate Policies and Competitive Strategy To remain competitive,compensation plans must reward strategy that furthers the firm's strategy aims by asking: 1.What are our key competitive success factors? 2. What actions implement this competitive strategy? 3.What compensation program reinforces those behaviors? 4. What requirement should each pay element meet? 5.How well do the current reward programs match these requirements？ ©2004 by UIBE Liu yuxin 8-8
© 2004 by UIBE Liu yuxin 8-8 11-8 Corporate Policies and Competitive Strategy To remain competitive, compensation plans must reward strategy that furthers the firm’s strategy aims by asking: 1. What are our key competitive success factors? 2. What actions implement this competitive strategy? 3. What compensation program reinforces those behaviors? 4. What requirement should each pay element meet? 5. How well do the current reward programs match these requirements?
Important Policy Issues In writing the pay plan,ask the following: 1.Will we be a pay leader or a follower? 2.Will we emphasize seniority or 50 performance? 24% 22% 3.What pay cycle? ■Weekly ■Biweekly 49% ■2 x monthly ■Monthly ©2004 by UIBE Liu yuxin 8-9
© 2004 by UIBE Liu yuxin 8-9 11-9 Important Policy Issues In writing the pay plan, ask the following: 1. Will we be a pay leader or a follower? 2. Will we emphasize seniority or performance? 3. What pay cycle? 24% 5% 22% 49% Weekly Biweekly 2x monthly Monthly
Important Policy Issues 4.How do we fix salary compression? 5.How should we compensate based on geography or overseas employees? 6.Is the pay rate equitable with rates in other organizations outside the firm? ©2004 by UIBE Liu yuxin 8-10
© 2004 by UIBE Liu yuxin 8-10 11-10 Important Policy Issues 4. How do we fix salary compression? 5. How should we compensate based on geography or overseas employees? 6. Is the pay rate equitable with rates in other organizations outside the firm?