Compensation
is defined as all the monetary rewards provided to employees
Direct Monetary Rewards
wages and salaries, overtime pay, paid vacations and holidays, retirement pay and sick leaves.
Indirect Monetary Rewards
health insurance and life insurence, dental, vision, and cancer insurance.
Labor Union
Is a factor that impacts compensation system.
Union representatives push hard for rewards systems that emphasize equality wherein all salary and wage increases are distributed equally among all workers.
-Use of step-increase program.
Reject performance-based reward systems wherein salary and wage increases are determined on the quality and quantity.
Market Forces
law of supply and demand has a great deal to do with the compensation levels paid.
supply of workers increase then wages decrease.
the supply of professional workers is greater than the demand because:
-intrinsic and extrinsic
-lack of formal control (no testing competence)
-may not appreciate hiring professional workers in park.
Compensation program
developing job descriptions, evaluating and ranking the relative worth of various jobs within an organization, assigning jobs to classification according to written standard, and defining a pay structure for each level of compensation.
informal, arbitrary system
although flexible, easy to establish, and easy to administer, an informal, arbitrary pay program usually leads to favoritism, discrimination, and unfair politicking, and game playing
formal base-pay systems
job descriptions
job evaluation
job clasiffication
pay structure
Augmenting salary and wages: performance-based increases
most organizations have a system in place for awarding merit increases based on the quantity and quality of work performed.
Augmenting salary and wages: non-performance based increases
organization may adjust salaries upward based on increases in the cost-of-living for rent, fuel, clothing, food, and other living expenses
-COLA, cost-of-living adjustment
-across the board increase.
pay compression: when there is only a small pay difference among employees regardless of the qualifications and experience.
-Longevity:length of service to an organization
employee benefits programs
based on tenure of years worked and whether you are permanent or full time.
-entitled to benefits
part time and seasonal don’t get benefits.
employer-sponsored benefits
- healthcare insurance they get premium at a group rate, they still have to share the cost with their organization
- Life insurance compensates a surviving spouse or another designated beneficiary in the case of the death of an employer.
- Disability insurance
- Supplemental Insurance
- Pension plan
- Paid Time off
- Annual Leave
- Holiday Leave
- Sick Leave
- Death of a love one: Bereavement leave. - mileage reimbursement for use of personal vehicle
- assigning a company vehicle - Memberships to professional associations and societies.
- Continuing education, training and development
- free and discounted fees for participating programs and services
- uniforms and clothing
- EAP: employee assistance prgram: counseling,
- Senior management: 100% paid.
legislation impacting compensation
- Social security and medicare
- unemployment insurance (FUTA)
- Workers compensation
- Fair labor and standars act (FLSA) prevents low wages from workers attaining the minimum standards of living.
- COBRA: Consolidated omnibus budget reconciliation act: still get covered if anything happens
