L2

• REASONS WHY FAIR, EQUITABLE COMPENSATION IS IMPORTANT TO EMPLOYEES

  • It’s a basic determinant of their worth to the org.

  • It provides a measure of status & recognition.

  • It directly affects their standard of living.

  • It is a reward for the time & effort they contribute to the org.
• GOALS OF SALARY ADMINISTRATION PROGRAMS

  • To provide a systematic determination of equitable compensation for EMs.

  • To help the org conform with existing legislation of EM compensation.

  • To help the org control its salary costs.

  • To help reduce EM turnover.

  • To motivate EM to perform at an optimum level.

  • To promote good employer-employee relations.
• RESPONSIBILITY FOR SALARY ADMINISTRATION PROGRAMS: In Large Organizations

  • Generally falls under the guidance of the director of the salary administration program.
• RESPONSIBILITY FOR SALARY ADMINISTRATION PROGRAMS: In Small Organizations

  • Generally falls under the guidance of the human resources manager.
• RESPONSIBILITY FOR SALARY ADMINISTRATION PROGRAMS: In Many Organizations

  • The input of an advisory committee is also available.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Relative Worth of Jobs

  • Determined by job eval.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Going Rates

  • Can determine comparable rates for comparable jobs using salary surveys.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Cost-of-Living Index

  • Giving raises that at least match the cost-of-living index enables EMs to maintain purchasing power.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Legislation

  • A variety of federal & state laws affect EM‘s salaries.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Collective Bargaining

  • In unionized orgs, collective bargaining often plays a role in setting salaries & salary increases.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Org‘s Ability to Pay

  • The more able the org is to pay, the more likely its salary program is comparable to other orgs in the community.
• FACTORS THAT AFFECT THE SALARY STRUCTURE: Level of Productivity

  • The more productive in organization is, the more able it is to have a competitive salary program.
• Methods of Salary Reception:

  • Interval Method

  • Merit Method
• Methods of Salary Reception: Interval Method

  • Increases at specific, predetermined times

  • Such as once/twice a year.
• Methods of Salary Reception: Merit Method

  • Ties the quality of an EM’s perf to the amount of their salary increase
• INCENTIVE PAY

  • Designed to take into consideration EM’s perf to work standards est. through work measurement procedures.
• Properly Designed Incentive Pay Plans Benefit Both Employees and the Organization:

  • Employee
  • Organization
• Properly Designed Incentive Pay Plans Benefit Both Employees and the Organization: Employee

  • Able to increase their level of compensation.
• Properly Designed Incentive Pay Plans Benefit Both Employees and the Organization: Organization

  • Able to increase productivity = increases profitability
• PERFORMANCE-BASE PAY PLANS

  • Tend to put greater emphasis on key EMs than do the incentive plans.

  • Reward total perf rather than just one component of an EM‘s job.
• Trends in Salary Administration:

  • Competency-based Pay

  • Broadbanding
• Trends in Salary Administration: Competency-based Pay

  • Paying EMs based on the breadth & depth of skills they have
  • And paying based on the job knowledge they use in carrying out their duties.
• Trends in Salary Administration: Broadbanding

  • Reduces the number of salary grades & pay ranges in an org.
• LEGALLY REQUIRED PLANS

  • Social Security

  • Worker‘s Compensation

  • Unemployment Compensation

  • Disability Insurance
• Federal Legislation Impacting Salary Administration Covered in this Class:

  ff Acts

  • Fair Labor Standards Act
  • Equal Pay Act
  • Civil Rights Act
  • Pregnancy Discrimination Act
  • Age Discrimination in Employment Act
• FACTORS THAT AFFECT SALARY STRUCTURE:

  • Going Rates
  • Relative worth of Jobs
  • Cost-of-living Index
  • Organization's ability to Pay
  • Level of Productivity
  • Legislation
  • Collective Bargaining