Dessler Hrm13 Inppt11 Ge

Copyright © 2013 Pearson Education

Establishing Strategic Pay Plans11

Chapter 6-1


Learning Objectives

1. List the basic factors determining pay rates.

2. Define and give an example of how to conduct a job evaluation.

3. Explain in detail how to establish a market-competitive pay plan.

Chapter 6-2


Learning Objectives4. Explain how to price managerial

and professional jobs.

5. Explain the difference between competency-based and traditional pay plans.

6. List and explain six important trends in compensation management.

Chapter 6-3


List the basic factors determining pay rates.

Chapter 6-4


Basic Factors in Determining Pay Rates

• Aligning total rewards with strategy• Equity and its impact on pay rates• Equity theory of motivation• Addressing equity issues

Chapter 6-5


Legal Considerations in Compensation

• Fair Labor Standards Act (1938)• Exempt/nonexempt• Equal Pay Act (1963)• Employee Retirement Income

Security Act (1974)• Other legislation

Chapter 6-6


Other Factors• Union influences on compensation

decisions• Pay policies• Geography

Chapter 6-7


Review• Alignment with strategy• Equity – external, internal• Legal Considerations• Union influences• Pay policies• Geography

Chapter 6-8


Define and give an example of how to conduct a job evaluation.

Chapter 6-9


Job Evaluation Methods

• Compensable factors

• Preparing for the job evaluation

Chapter 6-10


Job Evaluation Methods: Ranking

1. Obtain job information

2. Select and group jobs

3. Select compensable factors

4. Rank jobs

5. Combine ratings

Chapter 6-11


Job Evaluation Methods

• Job classification• Point methodo “Packaged” point

plans

• Computerized job evaluations

Chapter 6-12


Review• Compensable factors• Preparation• Ranking• Classification• Point method• Computer-based

Chapter 6-13


Explain in detail how to establish a market-

competitive pay plan.

Chapter 6-14


How to Create a Market-Competitive Pay Plan

• Choose benchmark jobs• Select compensable factors• Assign weights • Convert percentages to points• Define each factor’s degrees• Determine degrees and assign points

for job factorsChapter 6-15



• Review job descriptions and specifications

• Evaluate the jobsoWhat is a market competitive pay plan?oWhat are wage curves?

Chapter 6-16



• Draw current (internal) wage curve• Conduct market analysis: salary

surveysoCommercial, professional, and

government

• Using internet to do compensation surveys

Chapter 6-17



• Draw market (external) wage curve• Compare and adjust • Develop pay grades• Establish rate ranges• Address remaining jobs• Correct out-of-line rates

Chapter 6-18


Review

Chapter 6-19


Explain how to price managerial and professional

jobs.

Chapter 6-20


Pricing Managerial and Professional Jobs

• Compensating executives and managers

• What determines executive pay?oElements of executive payoManagerial job evaluation

• Compensating professional employees

Chapter 6-21


Review

• Executives• Professionals• Pay

Chapter 6-22


Explain the difference between competency-based

and traditional pay plans.

Chapter 6-23


Contemporary Topics in Compensation

• Competency-based pay

• What is it?• Why use it?• In practice• The bottom line

Chapter 6-24


Review

Chapter 6-25


List and explain six important trends in compensation

management.

Chapter 6-26


Trends

• Broadbanding• Actively managing• Comparable worthoThe pay gap

• Board oversight• Total rewards and tomorrow’s pay

programsChapter 6-27


Review• Broadbanding• Management• Worth• Boards• Tomorrow

Chapter 6-28


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Chapter 6-29

Dessler Hrm13 Inppt11 Ge

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