Microsoft PowerPoint - 5. Compensating EmployeesTotal Compensation
Nonfinancial Financial
Case #2
Determinants of IndividualDeterminants of Individual Financial Compensation
The OrganizationThe Organization
Individual Financial Compensation
Cost of Living Labor Union Society The EconomyThe Economy Legislation
The Organization
Ability to Pay Compensation PoliciesCompensation Policies
Pay Leader Market Rate (Going Rate)Market Rate (Going Rate) Pay Follower
Organizational PoliticsOrganizational Politics
The EmployeeThe Employee Pay for Performance SenioritySeniority Experience O i ti M b hiOrganization Membership Potential Political Influence Luck
Case #3
The Job
How Employers p y Establish Pay Rates
Conduct a salary surveyConduct a salary survey Determines the worth of each job Group similar jobs into pay gradesGroup similar jobs into pay grades Price each pay grade D l tDevelop rate ranges
Case #4
Compensation Systems
Broadbanding
Collapsing salaryCollapsing salary grades and ranges into just a few wideinto just a few wide levels or bands, each of which contains a relatively y wide range of jobs and salary levelsand salary levels
Case #5
Incentive Programs
Bonuses
Awards
Gainsharing
Bonuses
Individual IncentiveIndividual Incentive Programs
Repeat PerformanceRepeat Performance Shape an individual’s goals over time Help the firm achieve individual equity. Fit in with an individualistic culture.
Case #7
T I ti PTeam Incentive Programs
They foster group cohesiveness. Th id f tThey aid performance measurement.
Case #8

Plantwide Incentive Programs (Gainsharing)
Improve the productivityImprove the productivity Increase the level of cooperation across workers and teams by giving everyone a common goalg Subject to fewer measurement difficulties Easier both to formulate bonus calculationsEasier both to formulate bonus calculations and to achieve acceptance of these plans
Case #9

Corporatewide Incentive p Programs (Profit Sharing)
Financial flexibility for the firm. Increased employee commitmentIncreased employee commitment. Tax advantages.
Case #10
ll i d fiLegally Required Benefits
Social SecuritySocial Security Workers’ Compensation Unemployment Insurance Unpaid LeaveUnpaid Leave
Voluntary Benefits
H lth IHealth Insurance Retirement Benefits Insurance Plans Paid Time OffPaid Time Off Employee Services
Case #11