Compensation And BenefitChapter 1

A Component Of Human Resource Systems

By: Hany E. GuirgisFeb 8, 2007

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Agenda

What is Compensation? Extrinsic Compensation Compensation Professionals’ Goal. Compensation Department Main Goal.

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objectives

At the end of this lecture you will be: Able to define Compensation Generally understand the different types of

extrinsic compensation. Understand the main goals for Compensation

Department.

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Defining the Compensation Context What is Compensation?

Compensation represents both the intrinsic and extrinsic rewards employees receive for performing their jobs.

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Defining the Compensation Context (Cont’d)

Core compensation• Hourly wageAnnual salary

Core compensation• Hourly wageAnnual salary

Adjustments to core compensation• Cost-of livingSeniorityMeritIncentivePerson-focused

Adjustments to core compensation• Cost-of livingSeniorityMeritIncentivePerson-focused

Total CompensationTotal Compensation

Extrinsic Compensation

Extrinsic Compensation Intrinsic

CompensationIntrinsic

Compensation

Legally Required Employee Benefits• Social Security Act •Workers compensation laws Family & Medical leave Act

Legally Required Employee Benefits• Social Security Act •Workers compensation laws Family & Medical leave Act

Discretionary Employee Benefits Health insurance Disability insurance life insurance retirement plans paid time-off Accommodation and enhancement

Discretionary Employee Benefits Health insurance Disability insurance life insurance retirement plans paid time-off Accommodation and enhancement

Job characteristics• Skill variety•Task identityTask significanceAutonomyFeedback

Job characteristics• Skill variety•Task identityTask significanceAutonomyFeedback

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Extrinsic Compensation.

Core Compensation1) Salaries (Monthly).2) Wages (Hourly, Daily, or Weekly).

Cost-of-Leaving Adjustment (COLAs).1) Consumer Price Index (CPI).2) Seniority Pay.3) Merit Pay.4) Incentive Pay.5) Person-focused Pay (Pay-for-Knowledge and

Skill-Based Pay).

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Extrinsic Compensation (Cont’d) Employee Benefits:

Legally Required Benefits1) Social Insurance

2) Sick leave. Discretionary Benefits:

1) Health Insurance

2) Life Insurance.

3) Retirement Plans.

4) Paid time-off.

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Compensation Professionals’ Goals How HR Professionals fit into the corporate

hierarchy. (Line employees and Staff employees). Recruitment. Performance appraisal. Training and Development. Employee Relations. Employee Termination.

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Compensation Professionals’ Goals (Cont’d) How the Compensation Function fits into HR

Department: Compensation, Recruitment, and Selection. Compensation and Performance Appraisal. Compensation and Training. Compensation and Employee Termination. Compensation and Employee Relations.

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Compensation Department Main Goal Internal Consistency.

Job analysis. Job evaluation.

Market Competitiveness. Strategic analysis (External market and Internal

factors). Salary Surveys.

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Q & A

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Thank you