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REWARD SYSTEMS SHOULD ENCOURAGE WORKERS TO:

JOIN AND REMAIN WITH THE ORGANIZATIONAttraction & Membership

Loyalty & Longevity

PERFORM THEIR JOBS EFFECTIVELY

Attendance and Required BehaviorAccomplish Specific Results

Do What is Expected

ENGAGE IN SPONTANEOUS, INNOVATIVE BEHAVIOR ON BEHALF OF THE FIRM

Put Themselves Out by Going the 2nd MileDemonstrate Committed We Care Behavior

Doing the Unexpected, But Highly Appreciated

ORGANIZATIONAL CITIZENSHIP BEHAVIOR

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COMPENSATION ISSUES, CONTD

NUMBER OF PAY SYSTEMS

SEPARATE PAY SYSTEMS FOR DIFFERENT OCCUPATIONAL GROUPS?

Different factors determine the worth of these positions (clerical, professional, skilled trades)

ONE SINGLE PAY SYSTEM FOR THE WHOLE ORGANIZATION

This approach appears fairer and avoids comparable worth issues

ABILITY TO PAY COMPETITIVE WAGESSET PAY AT, ABOVE, OR BELOW THE GOING RATES IN THE INDUSTRY

What can we afford? What other compensation do we provide?

PHILOSOPHY OF EXECUTIVE COMPENSATION

Wage differences between the top and bottom jobs in the firm (multiples)

PHILOSOPHY OF WAGE PROGRESSION

Number of pay grades and amount of overlap between them

Number of steps within each grade?

On what basis is each move (step) granted? Merit? Seniority? Experience?

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THREE POSSIBLE BASE PAY SYSTEMS

A SINGLE RATE FOR EACH JOB

There is no range, this job pays $12.00/hr

There are no pay increments awarded for either seniority or merit

A PAY RANGE FOR EACH JOB

The pay for this job ranges from $11.00 to $17.00/hrOn what basis do employees progress through the range?

SENIORITY? TIME-IN-GRADE? MERIT?

How large should each step or increment be? $.50? $1.00? $2.00?

A PAY GRADE SYSTEM

Several jobs are grouped together into a single pay grade

All these jobs will share a common pay range

Painters, mechanics, and truck drivers are paid from $10.50 to 16.85/hr

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COMPENSATION ISSUES, CONTD

NUMBER OF PAY SYSTEMS

SEPARATE PAY SYSTEMS FOR DIFFERENT OCCUPATIONAL GROUPS?

Different factors determine the worth of these positions (clerical, professional, skilled trades)

ONE SINGLE PAY SYSTEM FOR THE WHOLE ORGANIZATION

This approach appears fairer and avoids comparable worth issues

ABILITY TO PAY COMPETITIVE WAGESSET PAY AT, ABOVE, OR BELOW THE GOING RATES IN THE INDUSTRY

What can we afford? What other compensation do we provide?

PHILOSOPHY OF EXECUTIVE COMPENSATION

Wage differences between the top and bottom jobs in the firm (multiples)

PHILOSOPHY OF WAGE PROGRESSION

Number of pay grades and amount of overlap between them

Number of steps within each grade?

On what basis is each move (step) granted? Merit? Seniority? Experience?

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INTERNAL JOB EVALUATION METHODS

RANKINGManager rank-orders all jobs in descending order of importance

Used in small organizations with a limited number of different jobs

CLASSIFICATION SYSTEM

Jobs are grouped together into clusters with similar difficulty

A generic description is written for each cluster or grade (classification)

US Postal Serviceall jobs are slotted into one of 16 job grades

FACTOR COMPARISONSKey jobs selected and ranked on four or five job factors (skills, effort, resp, work cond)

Allocate the base wage for each key job across factors (eg, $4 for skill, $3 for effort, etc)

Assemble benchmarks into a manual which can be used to set pay for other non-key jobs

POINT SYSTEM

Establish criteria (compensable factors) on which to evaluate all jobs

Write degree descriptions which illustrate the variability of demand for each factor

Assign weights to each factor; then assign points to each degree descriptor

Assemble into a point manual, which can act as a standard to evaluate all jobs

The more points allocated to the job, the higher the base wage should be

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FACTOR COMPARISONS

PROCEDURES

SELECT KEY JOBS (well-known jobs which we believe are fairly-paid)

CREATE RANK ORDERINGS OF THE KEY JOBS WITHIN EACH OF THE UNIVERSAL COMPENSABLE FACTORS

Skills

Effort (Physical and Mental)

Responsibility

Working Conditions

ALLOCATE THE KEY JOB PAY ACROSS THE COMPENSABLE FACTORS

How much of the total wage do you pay for skills? How much for effort?

CREATE A FACTOR COMPARISON MANUAL USING YOUR MONETARY ALLOCATIONS TO BENCHMARK THE VALUEOF EACH KEY JOB.

USE THIS FACTOR COMPARISON MANUAL TO ASSIGN BASE PAY VALUES TO THE NON-KEY JOBS WITHIN THEORGANIZATION.

THE FACTOR COMPARISON SYSTEM COMPARES JOBS TO JOBSTHERE REALLY ISNT ANYTHING SPECIFIC IN THE MANUAL TO PRECISELY DEFINE WHAT SKILLS IS.

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FACTOR COMPARISONS

KEY JOBS Fair Base Pay Rate

Systems Programmer $ 20/hr

Plumber $ 18/hr

Carpenter $ 17/hr

Painter $ 14/hr

Office Secretary $ 13/hr

BENCHMARKS

SKILL EFFORT RESPONSIB WORK COND

Programmer $ 10 Plumber $ 6 Programmer $ 6 Plumber $ 4.50Secretary $ 6 Carpenter $ 5.50 Secretary $ 4.50 Painter $ 4

Carpenter $ 5 Painter $ 5 Carpenter $ 3.50 Carpenter $ 3

Plumber $ 4.50 Programmer $ 3 Plumber $ 3 Secretary $ 1.50

Painter $ 3 Secretary $ 1 Painter $ 2 Programmer $ 1

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POINT METHOD

PROCEDURES

Establish criteria (more specific examples of compensable factors) on which to

evaluate all jobs

Write degree descriptions to illustrate the variability of demand for each factor

Assign weights to each factor

Assign points to each degree descriptor in harmony with the weightings

Assemble these descriptions and points into a manual, which can act as a standard toevaluate all jobs

Validate the manual by evaluating KEY JOBS on each criterion.

Allocate the corresponding points, run a regression analysis on the assigned pointsand the fair base pay for each key job. If the regression is a good statistical fit, andat least 90% of the key jobs stay within 10% of the calculated regression line, themanual has been validated, and can be used to assign base pay rates to all non-key

jobs in the organization.

The more points allocated to the job, the higher the base wage should be.

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Developing Factors for a Job Evaluation ManualEDUCATION (20%)

Education represents the knowledge required to perform the duties involved in the job; usually acquired through formal education.

Consider only what the job requires, not the education of the current employee on the job. Exclude consideration of on-the-jobexperiences for this factor. The degrees are expressed in terms of formal education for convenience.

Degree Points Definitions

1 20 Able to read and follow simple oral and written instructions. Can add and subtract. Can fill

out simple reports and forms. Equivalent to an eighth grade elementary education.

2 35 Able to give clear oral and written instructions. Writes reports. Makes simple computationsand comparisons. Can multiply and divide, equivalent to skills acquired by a tenth grade education.

3 50 Good knowledge of high school subjects such as algebra, geometry, physics, chemistry,

English, computing or knowledge of commercial, mechanical, or vocational subjects

equivalent to a typical high school graduate.

4 80 One year of college or vocational/technical training beyond the high school level in a specific

technical or theoretical subject area.

5 115 Two years of specific subject knowledge beyond high school is required. Specialized subject

knowledge may demand registration, certification, or licensure. Required education is

equivalent to an AS degree.

6 155 A specialized baccal aureate degree is required.

7 200 A specialized master's degree is required.

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A Job Evaluation Manual (outline/illustration) - 1

I. EDUCATION (20%)1 (20) Able to read, do simple math (add/subtract), and follow instructions (eighth-grade level)

2 (35) Makes comparisons, computes (multiply/divide), writes instructions & reports (tenth grade level)

3 (50) Good knowledge of math, chemistry, English, or computing equivalent to a high school graduate

4 (80) One year of specific subject knowledge technical or trade school equivalent

5 (115) Two years of specific subject knowledge certification/licensure required equivalent to an AS degree

6 (155) Bachelors degree specialized degree required

7 (200) Masters degree specialized degree required

II. EXPERIENCE (10%)1 (10) No previous experience required can learn on the job

2 (40) Three to six months previous experience is required3 (80) At least one year of previous experience is required

4 (100) Must have at least two years previous experience

III. SUPERVISION (20%)1 (20) None

2 (60) Informal supervision, provides advice and guidance to 1-4 coworkers

3 (120) Formal supervision, schedules and appraises 1-4 workers

4 (170) Formal supervision of 5-9 workers5 (200) Formal supervision of ten or more workers

IV. PHYSICAL DEMANDS (18%)1 (18) Mostly sits; visual demands less than 20% of the day; no required standing or walking

2 (40) Sits about 75% of the day; visual demands less than 50% of the day; stands or walks about 25% of the day

3 (70) High visual demands more than 50% of the day; constant finger motion; moderate standing/walking

4 (105) Rapid hand coordination much of the day; stands more than 50% of the day; occasionally carries loads up to 20 lbs

5 (150) Regularly lifts/carries loads of 50 lbs or more; stands/walks all day long; constant physical activity

6 (180) Regularly lifts/carries loads > 80 lbs; stands, pushes, crawls; very strenuous physical activity much of the day

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A Job Evaluation Manual (outline/illustration) - 2

V. PROPERTY/LIABILITY (10%)1 (10) Potential loss < $100; minor equipment maintenance; products; cash; no exposure to confidential information

2 (35) Potential loss $1000; equipment; product quality; cash; lawsuit; exposure/loss of semi-confidential information3 (55) Potential loss $3000; equipment; product quality; cash; lawsuit; exposure/loss of semi-confidential information

4 (75) Potential loss $6000; cash; equipment; product quality; lawsuit; exposure/loss of highly-confidential information

5 (100) Potential loss $10000; cash; equipment; products; lawsuit; exposure/loss of highly-confidential information

VI. PUBLIC CONTACTS (12%)1 (12) Deals only with departmental personnel; rarely has contact with people in other departments

2 (30) Has several important contacts within the organization (other departments); occasionally meets publics (outsiders)

3 (55) Has frequent public contacts and many internal contacts within the organization

4 (85) Nearly constant public contact and many internal contacts; more than 90% of all contacts are friendly

5 (120) Constant public and internal contacts; > 15% of contacts are stressful; tact and negotiating skills needed

VII. WORK ENVIRONMENT (10%)

1 (10) Pleasant, well-lit, climate-controlled environment; safe

2 (35) Workplace is a bit uncomfortable, cramped; dirty/dim/damp; noisy environment; hot/cold

3 (60) Minor injury possible if care is not exercised; exposure to sharp surfaces, minor cuts, slippery floors, sprains and strains

4 (100) Major injury possible if care is not exercised; exposure to fumes, falls, unguarded equipment; safety equipment required

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To Validate the Job Evaluation (Point) Manual

1---SELECT 10-15 KEY JOBS FROMWITHIN THE ORGANIZATION.

--a KEY job is one that has a well-known job description, and is fairly paid

in other words, we believe the current pay for the job is correct/fair.

2---EVALUATE EACH KEY JOB, USING THE JOB DESCRIPTION AND THE POINT MANUAL

3---FOR EACH COMPENSABLE FACTOR, ASSIGN THE APPROPRIATE DEGREE AND THE

APPROPRIATE POINT VALUE ASSOCIATEDWITH IT.

4---ONCE COMPLETE, TOTAL UP THE POINTS ASSIGNED TO EACH KEY JOB.

5---REPORT THE CURRENT PAY FOR EACH POSITION (which we assume is fair/correct).

6---PLOT EACH KEY JOB ON A GRAPH (Points assigned on the bottom, Pay rate on the left)

7---RUN A REGRESSION ANALYSIS OF THE DATA.

8---IF THE REGRESSION MODEL IS STATISTICALLY APPROPRIATE, THE MANUAL IS USABLE

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Evaluate the Job and Assign Degrees (and Points)COMPENSABLE FACTORS FINISH SPRAYER(Job Specifications) Explanation Assign degree Points

Education Able to read, write, and make simple math calculations 1 20

Experience No previous experience needed, can learn on-the-job 1 10

Supervision No supervisory duties 1 20

Physical Demands Lifts 50 lbs or more, stands constantly,

must turn pieces by hand 5 150

Property/Liability Keep equip unclogged; paint mistakes

cause rework + lost production 2 35

Public Contacts Works alone all work-related contacts

are internal 1 12

Work Environment Exposed to fumes and overspray, must

wear respirator at all times 4 100TOTAL POINTS ASSIGNED 347

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VALIDATING THE POINT MANUAL

1 - Graph the Key Jobs

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method

14 Key Jobs

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2 - Plot the Regression Line

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Y = 6.4075 + 0.01075(X)

Point-Factor Method

14 key jobs

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3 - Graph 10% Above and Below the Regression Line

Are >90% of Key Jobs Within the Bounds?

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Y = 6.4075 + 0.01075(X)

Point-Factor Method

14 key jobs

10% above: Y1.1 = 7.0482 + 0.01183(X)

10% below: Y0.9 = 5.7667 + 0.00968(X)

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4 - Graph 15% Above and Below the Regression Line

Are ALL Key Jobs Within the Bounds?

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Y = 6.4075 + 0.01075(X)

Point-Factor Method

14 key jobs

15% above: Y1.15 = 7.3686 + 0.01236(X)

15% below: Y0.85 = 5.4463 + 0.00914(X)

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CREATING PAY GRADES AND RANGES

Build Pay Grades 50 Points Wide

Between the High and Low Regression Lines

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Y = 6.4075 + 0.01075(X)

Point-Factor Method

14 key jobs

Pay Grades

15% above: Y1.15 = 7.3686 + 0.01236(X)

15% below: Y0.85 = 5.4463 + 0.00914(X)

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DISPLAY FINAL PAY GRADES AND RANGES

(Point Method Pay System is now Complete)

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method

14 key jobs

Pay Grades

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

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PLOT NON-KEY JOBS ON GRAPH

WITH PAY GRADES AND RANGES

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method

40 Non-key Jobs

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

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WHAT SHOULD BE DONE ABOUT UNDERPAID JOBS?

(Green Circle Rates) RAISE PAY UP AS SOON AS POSSIBLE TO THE

APPROPRIATE LEVEL

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method

40 Non-key Jobs

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Green Circle

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WHAT SHOULD BE DONE WITH OVERPAID JOBS?

(Gold Circle Rates) LEAVE RATE AS ISDO NOT ADJUSTCONTINUE

GIVING RAISES & COLAs

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method

40 Non-key Jobs

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Gold Circle

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(Silver Circle Rates) LEAVE RATE AS ISDO NOT ADJUST, CONTINUE

COLAs BUT NOT RAISES

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method40 Non-key Jobs

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Silver Circle

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(Red Circle Rates) MUST BRING RATES DOWN TO THE

PROPER LEVEL

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$11.50

$12.00

100 150 200 250 300 350 400 450

W a g e s / h r

Points Assigned

Point-Factor Method

40 Non-key Jobs

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Red Circle

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STRATEGIES FOR HANDLING DEVIATIONS ABOVE AND

BELOW THE RECOMMENDED BASE PAY RATE

GREEN CIRCLE RATES

RAISE PAY UP AS SOON AS POSSIBLE TO THE APPROPRIATE LEVEL

GOLD CIRCLE RATES

LEAVE RATE AS ISDO NOT ADJUSTCONTINUE GIVING RAISES & COLAs

SILVER CIRCLE RATES

LEAVE RATE AS ISDO NOT ADJUST, CONTINUE COLAs BUT NOT RAISES

RED CIRCLE RATESMUST BRING RATES DOWN TO THE PROPER LEVEL

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RED CIRCLE STRATEGIES MUST BRING RATES

DOWN TO THE PROPER LEVEL

BRING RATES IMMEDIATELY DOWN INTO LINE

Give proper notification first

PAY A LUMP SUM SETTLEMENT

Bring rates into line, but pay a one-time severance settlement

PROVIDE AN ADDER SUPPLEMENTBring rates into line, but issue a supplemental check each pay period that

is gradually reduced over time

FREEZE PAY RATE IMMEDIATELY

No raises given for seniority or COLAEventually, the entire organizational pay structure will rise (due to COLAs

and wage surveys) which will bring the pay rate back into range, at which

time the worker will again get raises and COLAs.

TRANSFER THE WORKER TO A HIGHER-RATED JOB

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COMPENSATION SURVEYS

Needed to attract and retain workers with scarce skills

Develops a sense of external equity and fairness

Helps the firm maintain an adequate pay structure

DETERMINING THE SCOPE OF THE SURVEY

Where are we having trouble retaining workers?

Where are market rates likely to be different from internal rates?

Which jobs are the most difficult to fill?

Where are we adding new positions to our organization?

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SHOULD WE USE STANDARD WAGE SURVEYS?

PROS:Minimal time investment needed for the individual firm

Data is based on large samples adequate representation

Surveys conducted by expertspeople who know how to do it

Data is summarized, categorized, easy to interpret

CONS:

There may be a fee (cost) for access to the data

You cant select the specific companies surveyed

Cant control the type of data reported (which jobs? benefits?)Data summaries may mask differences you want to examine

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COLLECTING YOUR OWN WAGE SURVEY DATA

PHONE INTERVIEW -- (easiest)

+ Quick and relatively easy to do

+ Job content can be clarified to ensure the jobs are comparable

+ Can build rapport with respondent over time. Future contacts will be easier.

- Puts a burden on the responder to reply immediately (to a possible stranger)

- May yield incomplete answers because the respondent didnt anticipate your call- Long phone calls are not welcome. You cant get much data in five minutes.

MAILED QUESTIONNAIRE -- (most common)

+ Can collect data on many different job titles, benefits, etc+ Responses arent rushed allows time for careful thought before answering

- Response rates may be very low

- Misunderstanding or confusion about comparable jobs cannot be clarified

- Only gathers responses to specific questions posed - if you forgot to ask too bad!

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THE WAGE SURVEY PACKAGE

Introductory letter or contact

Explain purpose and solicit cooperation

Assure confidentiality

Offer to share a summary of results

INFORMATION PROVIDED

Job titles and summary of duties section

INFORMATION SOUGHT

Comparable job titles in the surveyed organization

Base pay ranges (bottom, midpoint, top)

Benefits (is the medical, pension, etc. contributory?)

Incentives (how large and based on what?)

ADDITIONAL CONSIDERATIONS

Use of stratified samples?

Will reminders be sent?

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10

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200 300 400 500 600 700 800 900

T h o u s a n d s $

Points

Present Pay-GradesEstablished by point method job evaluation system

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10

12

14

16

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200 300 400 500 600 700 800 900

T h

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Points

Wyatt Wage Survey of six key jobs

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200 300 400 500 600 700 800 900

T h

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Points

Self Wage Survey of same six key jobs

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200 300 400 500 600 700 800 900

T h

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Points

Self Wage Survey - of same six key jobs

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200 300 400 500 600 700 800 900

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Points

Shift pay grades up to capture wage survey trends

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HOW TO ENCOURAGE EXCELLENCE?

ARE WE TAKING FULL ADVANTAGE OF THE REWARDS WE CONTROL?

HAVE WE THOUGHT THROUGH THE FULL IMPACT THAT OUR REWARD

SYSTEM HAS ON THE ORGANIZATION?

DO EMPLOYEES HIGHLY VALUE THE REWARDS WE MAKE AVAILABLE TOTHEM?

DO EMPLOYEES KNOW WHAT THEY MUST DO TO OBTAIN THESE

REWARDS?

IN SHORT, DO WE REWARD EXCELLENCE OR MEDOCRITY?

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USE INCENTIVE PAY TO REWARD:

PRODUCTIVITY

ACHIEVEMENTS & ACCOMPLISHMENTS

ACQUISITION OF NEW SKILLS

LONGEVITY WITH THE FIRM

HOW TO ADMINISTER INCENTIVE PAY

A. ADD IT TO THE REGULAR PAYCHECK

ONCE ACQUIREDFOREVER PAIDNEVER IS EARNED AGAIN

INCENTIVE PAY MIXED WITH BASE PAYWORKERS LOSE MOTIVATION

B. PAY IT ALL OUT AS A LUMP-SUM AT ONE TIME

LARGE CASH OUTFLOWS ARE DIFFICULT FOR THE FIRM TO MANAGE

OPPOSED BY UNIONS BECAUSE ANNUAL WAGES DONT GROW

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INCENTIVE PLANS AND PERFORMANCE-BASED REWARDS -- 2

3. PIECE RATES & COMMISSIONS

Setting fair standards

Changing standards and rates

Who controls work outcomes?

Are there rewards for all the essential duties of the job?

WHEN IS IT FEASIBLE TO USE PIECE RATES?

1. UNITS OF WORK ARE EASY TO DISTINGUISH AND MEASURE

2. QUALITY IS OF LESSER IMPORTANCE THAN QUANTITY

3. WORKER INVOLVEMENT IS A MAJOR DETERMINANT OF PRODUCTIVITY

4. THE WORKER CONTROLS WORK SPEEDNOT MACHINE-PACED

5. CLOSE SUPERVISION IS IMPRACTICAL

6. CHANGES IN WORK PROCESSES ARE INFREQUENT

7 . YOU HAVE EXPERTS TO SET AND EVALUATE YOUR WORK STANDARDS

8. COMPETITION REQUIRES THAT UNIT LABOR COSTS BE PREDICTABLE

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5. SUGGESTION SYSTEMS Origin of the ideawho should get the credit?

Some workers cant write their ideas down

Does management follow up on the ideas submitted?

Supervisors criticizedsuggests theyre incompetent

6. COST-REDUCTION (GAINSHARING) PLANS ± SCANLON, KAISER, RUCKER, IMPROSHARE

Sensitive cost data must be revealed to workers

Middle management is left out

Unions use the system to criticize management

Usually a complex formula for distributing rewards

Weakened link between rewards & individual performance

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7. PROFIT-SHARING PLANS Is there a real link to worker performance?

Impact of economic declinewhat happens to motivation?

Determining the formula for distribution

8. STOCK OWNERSHIP PLANS

Dilution of control over the company

Impact of changes in the tax laws and economic cycles

Any real link to worker performance?

9. SPECIAL CONTESTS AND AWARDS ABSE NTEE ISM, S ALE S PROMOT IONS, OUT STANDING SE RVIC E AWARDS

Are the consequences of the spirit of competition anticipated? JEALOUSY , UNCOOPE R AT IV E NE SS, COMPET IT ION W ITHIN TEAMS AND GROUPS

Only the Best receives a rewardwhat about # 2?

Awards are often seen as rights (I earned it!), not as gifts

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FOR INCENTIVE SYSTEMS TO BE SUCCESSFUL

1. PERFORMANCE INDICATORS MUST BE CLEARLY DEFINED

2. STANDARDS MUST BE COMMUNICATED TO WORKERS

3. WORKERS MUST BE ABLE TO INFLUENCE PERFORMANCE

ACHIEVEMENT

4. PERFORMANCE MUST BE ACCURATELY EVALUATED

5. REWARDS MUST BE BASED ON WORKER PERFORMANCE

6. REWARDS OFFERED MUST BE HIGHLY VALUED BY WORKERS

7. WORKERS AND MANAGEMENT MUST TRUST EACH OTHER

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LEGALLY REQUIRED BENEFITS

SOCIAL SECURITY -- 40 Quarters Earn $500+ per qtr

RETIREMENT

DISABILITY

SURVIVOR

HEALTH INSURANCE

UNEMPLOYMENT COMPENSATION 26 wks + 13

NO-FAULT JOB LOSS

WORKERS COMPENSATIONJOB-RELATED INJURIES

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EXPECTED BENEFITS

PAYMENT FOR TIME NOT WORKED

HOLIDAYSVACATIONS

SICK PAY

FUNERAL LEAVE, ETC.

INSURANCE PLANS

HEALTH

DENTAL

VISION

LIFE

RETIREMENT PLANS

PENSION

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RETIREMENT PLANS

SOCIAL SECURITY mandated by the government

PRIVATE PENSION PLANS

DEFINED BENEFIT vs DEFINED CONTRIBUTION PLANS

CONTRIBUTORY vs NONCONTRIBUTORY PLANS

INIDIVIDUAL RETIREMENT ACCOUNTS (IRAs)

PROFIT SHARING PLANS

EMPLOYEE STOCK PLANS

Stock Grants

Stock Options

ESOPs

EMPLOYEE RETIREMENT INCOME SECURITY GRATUITY Act, Superannuation

ADEQUATE FUNDING OF PRIVATE PENSION PLANS

VESTING REQUIREMENTS

REPORTING & DISCLOSURE

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FAMILY & MEDICAL LEAVE ACT - 1993

ORGANIZATIONS WITH 50 OR MORE EMPLOYEESEMPLOYED FOR ONE YEAR PRIOR TO LEAVE REQUEST

UP TO 12 WEEKS OF UNPAID LEAVE FOR:

CHILDBIRTH

ADOPTION

SERIOUSLY ILL FAMILY MEMBER (Child, Spouse, Parent)

EMPLOYEES OWN ILLNESS

EMPLOYERS MUST CONTINUE HEALTH COVERAGE

MUST ALLOW RETURN TO SAME/COMPARABLE POSITION

KEY EMPLOYEES EXEMPTED (Highest paid 10%)

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NON-FINANCIAL COMPENSATION

THE JOB ITSELFCHALLENGING

MEANINGFUL

RESPONSIBLE

POTENTIAL FOR ADVANCEMENT

INTRINSICALLY REWARDING

THE WORK ENVIRONMENT

COMPETENT SUPERVISION

CONGENIAL COWORKERS

APPROPRIATE STATUS SYMBOLS

ENLIGHTENED MANAGERIAL PHILOSOPHY & PROGRAMS

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ENLIGHTENED PROGRAMS

WORK SCHEDULES

COMPRESSED WORKWEEK

FLEXTIME

JOB SHARING/PART-TIME WORK

TELECOMMUTING/WORK-AT-HOME

INNOVATIVE COMPANY POLICIES

ALL-SALARY WORKFORCE

OVERTIME FOR EXEMPT EMPLOYEES

DAYCARE & ELDERCARE BENEFITS

COMMUTER ALLOWANCES

FLEXIBLE (CAFETERIA) BENEFIT PLANS

MEDICAL TRAVEL OPTIONS

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FLEXIBLE BENEFIT PLANS(CAFETERIA BENEFIT PLANS)

TYPES OF FLEXIBLE PLANS

CORE

MODULAR ( BASE + PACKAGES)

FLEXIBLE SPENDING ACCOUNTS

HEALTH SAVINGS ACCOUNTS

ADVANTAGESCAPS OR CONTAINS BENEFIT COSTS

RAISES CONSCIOUSNESS RE: BENEFIT COSTS

PROVIDES WORKERS ONLY THE BENEFITS THEY DESIRE

LIMITATIONSCOST OF BENEFITS FLUCTUATES (ADVERSE SELECTION)

PEOPLE MAKE IRRESPONSIBLE DECISIONS

IRS RULINGS & TAX LIABILITY ISSUES

BOOKKEEPING & ADMINISTRATIVE ISSUES

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MEDICAL TRAVEL OPTIONS(INTERNATIONAL OPTIONS & MEDICAL TOURISM)

GIVE EMPLOYEES THE OPTION TO TRAVEL ABROAD FOR ELECTIVE MEDICAL PROCEDURES

knee replacements, dental work, cosmetic surgery, etc.

ADVANTAGES

TREATED AT JCI-ACCREDITED HOSPITALS BY PHYSICIANS TRAINED IN US OR EUROPE

COST OF PROCEDURES IS MUCH LESSSAVES THOUSANDS ON INSURANCE

TRAVEL TO EXOTIC LOCATIONSCAN TAKE VACATION BEFORE OR AFTER TREATMENT MANY PLANS NOT ONLY PAY ALL TRANSPORTATION, BUT ALSO OFFER $$ INCENTIVES

LIMITATIONS

HAVING A SERIOUS HEALTH MATTER TREATED IN A FOREIGN ENVIRONMENT

DONT KNOW THE PHYSICIAN BEFOREHANDSTAFF MAY NOT SPEAK ENGLISH VERY WELL

MAY NEED A LONG RECOUPERATION TIME BEFORE FLYING BACK HOME

COUNTRY MAY NOT ALLOW LAWSUITS IF NEGLIGENT TREATMENT OCCURS

GETTING GOOD AFTERCARE & REHABILITATION ONCE YOU RETURN HOME

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MEDICAL COST COMPARISONS: US & COSTA RICA

PROCEDURES US Price Costa Rica

Angioplasty $57,000 $9,000

Heart Bypass Surgery $130,000 $24,000

Heart Valve Replacement $160,000 $15,000

Hip Replacement $43,000 $12,000

Hysterectomy $20,000 $4,000

Knee Replacement $40,000 $11,000

Spinal Fusion $62,000 $25,000

Breast Augmentation $5-8,000 $2,700-$2,900

Dental Reconstruction $8,500-$10,000 $2,500-$3,000

Facelift $7-9,000 $4,600-$5,000

Gastric Bypass $30,000 $10,500

Rhinoplasty $8-12,000 $3,500-$3,900

Tummy Tuck $6-8,500 $3,900-$4,200

(Tico Times Directory 2009)

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MEDICAL COST COMPARISONS U.S. & ASIA(as of January 1, 2009)

PROCEDURES US Price India Thailand Singapore

Angioplasty $55,000 $11,000 $12,000 $13,000

Heart Bypass Surgery $120,000 $10,000 $10,000 $18,500

Heart Valve Replacement $165,000 $9,000 $9,000 $12,500

Hip Replacement $80,000 $9,000 $10,000 $11,000

Hysterectomy $21,000 $3,000 $4,000 $6,000Knee Replacement $65,000 $8,500 $9,000 $13,000

Spinal Fusion $65,000 $5,500 $7,000 $9,000

(Medical Tourism: Thailand 2009)

IS YOUR MEDICAL INSURER OR EMPLOYER WILLING TO SHARE SOME OF THE COST

SAVINGS WITH YOU ( as an incentive) IF YOU OPT TO GO OVERSEAS FOR SURGERY?

INTERNATIONAL HOSPITAL

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INTERNATIONAL HOSPITAL

DESTINATIONS AND AFFILIATIONSCOSTA RICA

Hospital Clinica Biblica Affiliated with Ochster Medical Institute - New Orleans

INDIA

Apollo Hospitals Designated as a Center of Excellence in Global Healthcare

Wockhardt Hospitals Affiliated with Harvard Medical School

MALAYSIAPanang Adventist Hospital Affiliated with Loma Linda University & Hospital

MEXICO

CIMA Hospitals Affiliated with CIMA hospitals in US

Grupo Christus Muguerza Affiliated with Christus Muguerza system in US

SINGAPORE

Gleneagles Hospital Affiliated with Johns Hopkins University & Hospital

THAILAND

Bumrungrad Hospital Designated a Center for Excellence in Global

Healthcare. Has an American management team & 200+ US or UK doctors

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AMERICAN MEDICAL ASSOCIATION GUIDELINESThe AMA advocates that employers and insurance companies that facilitate or incentivize

medical care outside the U.S. adhere to the following principles:

(a) Medical care outside of the U.S. must be voluntary . (b) Financial incentives to travel outside the U.S. for medical care should not inappropriately limit the

diagnostic and therapeutic alternatives that are offered to patients, or restrict treatment or referral

options.

(c) Patients should only be referred to institutions that have been accredited by recognized

international accrediting bodies [e.g., the Joint Commission International (JCI) or the International

Society for Quality in Health Care (ISQHC)].

(d) Prior to travel, local follow-up care should be coordinated and financing should be arranged to

ensure continuity of care when patients return from medical care outside the US.

(e) Coverage for travel outside the U.S. for medical care must include the costs of necessary follow-up

care upon return to the U.S.

(f) Patients should be informed of their rights and legal recourse prior to agreeing to travel outside

the U.S. for medical care.

(g) Access to physician licensing and outcome data, as well as facility accreditation and outcomesdata, should be arranged for patients seeking medical care outside the U.S.

(h) The transfer of patient medical records to and from facilities outside the U.S. should be consistent

with HIP AA guidelines.

(i) Patients choosing to travel outside the U.S. for medical care should be provided with information

about the potential risks of combining surgical procedures with long flights and vacation activities.

TYPICAL MEDICAL TRAVEL PROCEDURE

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TYPICAL MEDICAL TRAVEL PROCEDURE

FOR A SELF-FUNDED HEALTH PLAN

SELF-FUNDED GLOBAL HEALTHCARE OPTION

INITIAL DIAGNOSIS PROVIDED BY AN IN-NETWORK PROVIDER

PATIENT MUST BE A GOOD CANDIDATE FOR TRAVEL

FOLLOW-UP CARE TO BE PROVIDED BY AN IN-NETWORK PROVIDER

COVERAGE COORDINATED THROUGH AN APPROVED MEDICAL TRAVEL AGENCY

DESTINATION MUST BE A JCI-ACCREDITED FACILITY

SERVICES MUST MEET THE COST-EFFECTIVE THRESHOLD (HOW MUCH WILL IT SAVE?)

BENEFITS TO THE PATIENT

UP TO A $10 ,000 EMPLOYEE INCENTIVE (TREATED AS TAXABLE INCOME)

TRAVEL PROVIDED FOR PATIENT AND COMPANION (PHYSICIAN, NURSE, OR FAMILY MEMBER)

ALL APPOINTMENTS, LODGING AND TRAVEL ARRANGED BY MEDICAL TRAVEL AGENT

TRAVEL FIRST-CLASS AND STAY IN NEAR-LUXURY FACILITIES

CAN VACATION IN AN EXOTIC LOCATION EITHER BEFORE OR AFTER PROCEDURE

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WHAT A SELF-FUNDED EMPLOYER CAN DO

MAKE THE TRAVEL BENEFIT A VOLUNTARY OPTION IF EMPLOYEES WANT IT

CAREFULLY SELECT THE MEDICAL TRAVEL AGENCY THAT WILL ARRANGE ALL APPROVED

MEDICAL TRAVEL PLANS

IDENTIFY INTERNATIONAL PROVIDERS (Doctors and Hospitals) YOU TRUST AND LIST THEM

AS IN-NETWORK PROVIDERS

PROVIDE A SIGNIFICANT INCENTIVE PAYMENT (Taxable) FOR ANY EMPLOYEE WHO TAKES

ADVANTAGE OF THE MEDICAL TRAVEL OPTION

HAVE EMPLOYEES SIGN A LIABILITY WAIVER THAT PROTECTS THE COMPANY, INSURER, AND

MEDICAL TRAVEL AGENCY

ARRANGE AND COORDINATE FOLLOW-UP CARE WITH IN-SYSTEM PROVIDERS WHEN

PATIENT RETURNS HOME

JUST A FEW PARTICIPATING EMPLOYEES SHOULD SAVE THE EMPLOYER THOUSANDS OF $$$

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OTHER COMPENSATION CONCERNS 1 MLH Chap 2

MEAL & REST BREAKS

LUNCH BREAKS Relieved of all work duties? Scheduled to work 4+ hours?

REST BREAKS Less than 20 minutes?

EXPRESS MILK BREAKS

TRAVEL TIME

DAY ONLY Subtract normal commute time?

OVERNIGHT Paid only for travel time during normal working hours

ON-CALL TIME

ON-PREMISES

OFF-PREMISES How frequently called? How much time to respond?

Where can employee go? What can employee do?

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OTHER COMPENSATION CONCERNS 2 MLH Ch 2

PAY DOCKING & SUSPENSIONS

WHATS WRONG WITH DOCKING PAY? EXEMPT v. NON-EXEMPT? Treating an exempt worker like a non-exempt worker jeopardizes the exempt status of the job

A salary is a fixed amount not dependent on time

As long as some work is done during the week theyre entitled to the full salary

GARNISHMENTS

LEGAL OBLIGATION TO DEDUCT $$$ FROM PAYCHECK Child support, tax debts, alimony

COLLECT DEBTS THE WORKER OWES THE COMPANY Rent, salary advances, cafeteria

Cant deduct so much money that a workers pay falls below the required minimum wage

Only garnish the amount the court orders

RECORD-KEEPING REQUIREMENTS

PERSONAL INFO, HOURS WORKED EACH DAY AND WEEK, TOTAL WEEKLY EARNINGS

REGULAR PAY RATE, OVERTIME PAY EACH WEEK, TOTAL PAID EACH PAY PERIOD

Need records to prove to the Department of Labor that youve complied with the law

KEEP ALL RECORDS FOR AT LEAST THREE YEARS (after termination)

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Documents

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