Supervisors
Corporate directors
Top management executives
Professional employees
Sales staff
Contingent workers
Tend to be strategically important to a company
Positions tend to have built-in conflict that arises because different factions place incompatible demands on members of group
Caught between demands of:Upper management in terms of
production and
Employees in terms of rewards, reinforcements, and counseling
Major challenge in paying supervisorsEquity
Provide incentives to entice nonexempt employees to accept challenges of being a supervisor
Pay strategies
Key base salaries of supervisors to an amount exceeding highest paid employee
Pay supervisors for scheduled overtime
Trend in supervisory compensation
Increased use of variable pay
More than half of all companies have a variable pay component for supervisors
Stockholders blame corporate directors for excessively high executive compensation Directors are much more active in decision
making and somewhat less prone to grant huge salaries to the CEO
Approximately two-thirds of boards now include more outside directors than inside directors
In exchange for meeting at least quarterly a typical director receives about $55,000 in cash and incentives and a total of about $150,000
Pay is linked to company performanceCompany performance exceeds industry
standards, big bonuses and stock payouts follow
Poor financial performance means much smaller pay packages
Ways to rein in executive compensationUse of tally sheet Increase government regulation
Stockholders can vote/ propose limits to compensation
Social comparisonsExecutive salaries bear a consistent relative
relationship to pay of lower-level employees Economic approach
Value of CEO should correspond to some measure of organizational success
Agency theory Incorporates political motivationsCEO compensation should be designed to
ensure executives focus on best interests of firm and stockholders
Base salary
Short-term (annual) incentives or bonuses
Long-term incentives and capital appreciation plans
Executive benefits
Perquisites
Incentive stock options
Non-qualified stock options
Phantom stock plans
Stock appreciation rights
Restricted stock plans
Performance share/unit plans
Physical exam Company car Financial counseling Company plane Income tax preparation First-class air travel Country club
membership Luncheon club
membership Estate planning
Personal liability insurance
Spouse travel Chauffeur service Reserved parking Executive dining room Home security system Car phone Financial seminars Loans at low or no
interest Legal counseling
Scientists and engineers are classified as professionals
Problems in designing pay
Salary plateaus due to knowledge obsolescence of mature professionals Dual-Career Ladder
Question of equity
Dual-career ladders Performance-based incentives
Profit sharingStock ownership
BonusesCompletion of projects on or before deadlinesPatentsPublicationsElections to professional societiesAttainment of professional licenses
Perks based on unique needs of professional employees
Often go for extended periods in field with little supervision
Challenges
Staying motivated
Continuing to make sales calls despite little supervision
Nature of people who enter sales profession Organizational strategy Market maturity Competitor practices Economic environment Product sold
Guaranteed base salary
Guaranteed base salary + commission
Guaranteed base salary + bonus
Guaranteed base salary + commission + bonus
Commission only
Combination plan
Types include a person who works
Through a temporary help agency
On an on-call basis
As an independent contractor
Typical salary arrangements
Workers in first two categories often earn less than workers in traditional arrangements
Independent contractors often earn more
Identify ways to deal with equity issues
View workers as pool ofcandidates for morepermanent hiring status
Champion idea ofboundary less careers
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