© 2010 mcgraw hill ryerson 12-1 compensation third canadian edition milkovich, newman, cole

© 2010 McGraw Hill Ryerson

12-1

COMPENSATIONThird Canadian Edition

Milkovich, Newman, Cole


12-2

STRATEGICPOLICIES

TECHNIQUES STRATEGICOBJECTIVES

EFFICIENCY

Performance

Quality

Customers

Stockholders Costs

FAIRNESS

COMPLIANCE

ALIGNMENTALIGNMENT

COMPETITIVENESSCOMPETITIVENESS

CONTRIBUTORSCONTRIBUTORS

MANAGEMENTMANAGEMENT

INTERNAL STRUCTURE

PAY

STRUCTURE

INCENTIVE

PROGRAMS

EVALUATION

THE PAY MODEL


12-3

Government as Part of the Employment Relationship

government is a key stakeholder in compensation decision making.

governments’ usual interests are whether: procedures for determining pay are fair (pay

discrimination)safety nets for the unemployed and

disadvantaged are sufficient (minimum wage, employment insurance)

employees are protected from exploitation (human rights, pay equity)


12-4

Employment Standards Acts

minimum wage paid vacation paid holidays standard hours of work and overtime pay pay on termination of employment minimum age of employment equal pay for equal work by men and

women


12-5

Human Rights Laws

based on Charter of Human Rights and Freedoms in Canadian Constitution

equal treatment in employment and opportunity for employment regardless of race, colour, religion, sex…

prohibit harassment in the workplace


12-6

Pay Equity

issue relating to the gender wage gap gender wage gap is the amount by

which the average pay for female workers is less than the average pay for male workers


12-7

Reasons for Gender Wage Gap

differences in occupational attainment; women historically segregated in small number of occupations e.g., sales, nursing

differences in number of hours worked differences in industries and firms differences in union membership presence of discrimination


12-8

Pay Equity Legislation intended to redress the portion of the wage gap

assumed to be due to discrimination, through comparison of male- and female-dominated jobs

four job evaluation factors required: Skill Effort Responsibility working conditions

compare male and female job classes: job to job method proportional value/wage line method proxy comparison method


12-9

The Impact of Unions in Wage Determination

impact on general wage and benefit levels

impact on the structure of wage packages

impact on non-union firms (spillover)

impact on wage and salary policies and practices in unionized firms


12-10

Union Impact on General Wage Levels

union workers earn about 10 percent more than non-union workers

size of the gap varies from year to year union impact higher during periods of

higher unemployment and slow economy union impact smaller during strong

economy

union benefits 20 to 30 percent higher than non-union


12-11

Union Impact on Structure of Wage Packages

Division between wages and benefitsUnion benefits 20 to 30 percent

higher than non-union

Two-tier wage plans Lower wages for lower seniority

workers


12-12

Union Impact: The Spillover Effect

employers seek to avoid unionization by offering workers the wages, benefits, and working conditions won in rival unionized firms e.g., Dofasco

non-union management continues to enjoy the freedom from union “interference” in decision making

non-union workers receive the “spillover” of rewards obtained by unionized counterparts


12-13

Role of Unions in Pay Policies and Practices

collective agreement/contract specifies:basis of pay (regular, overtime)occupation - wage differentialsexperience / merit differentialsvacations and holidayswage adjustment provisions (COLA)


12-14

Unions and Alternative Reward Systems

some collective agreements include alternative rewards:lump sum awardspiece rates gain-sharingprofit sharingpay-for-knowledge (skill/competency-

based pay)


12-15

Conclusion

governments assess fairness and legislate employment standards, human rights, and pay equity rules that affect compensation management

unions affect compensation management directly through collective agreements, and are facing the need to adjust compensation due to international competition

© 2010 mcgraw hill ryerson 12-1 compensation third canadian edition milkovich, newman, cole

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