BZ45093 HUMAN RESOURCES

MANAGEMENT
Unit 5

Compensation,
Benefits&
Services

T16 - Aspects of Compensation

CompensationatWork

Employeecompensationreferstoallformsofpay
orrewardsgoingtoemployeesarisingfromtheir
employment
Twomaincomponents:
Directemployeepayment(formofwages,salaries,
incentives,commissions,andbonus.)
Indirectpayments(formoffinancialbenefitslike
employer-paidarising&vacation)

Compensation at Work
Waystomakedirectfinancialpaymentsto
employees:
incrementsoftimeandonperformance(day
work & salaried)
payforperformance(piecework)

FACTORS IN DETERMINING PAY RATES

LegalConsiderationsinCompensation
UnionInfluencesonCompensationDecisions
CompensationPolicies
EquityandItsImpactonPayRates

Legal Considerations in Compensation

lawsstipulatewhatemployerscanormustpay
intermsofminimumovertimerates,and
benefits.
1963EQUALPAYACT-amendmenttotheFair
LaborStandardsAct

Union Influences on Compensation Decisions

Unionsandlaborrelationslawsalsoinfluencehow
payplansaredesigned.
TheNationalLaborRelationsActof1935(or
WagnerAct)
TheNationalLaborRelationsBoard(NLRB)isthe
groupcreatedbytheNationalLaborRelationsAct
tooverseeemployerpracticesandtoensurethat
employeesreceivetheirrights.

Compensation Policies
Anemployer'scompensationpoliciesalso
influencethewagesandbenefitsitpays
SuchpoliciesareusuallywrittenbytheHRor
compensationmanagerinconjunctionwithtop
management.


Equity and Its Impact on Pay Rates

equityisacriticalfactorindeterminingpayrates,
specificallyexternalequityandinternalequity.
Externally,paymustcomparefavorablywithrates
inotherorganizations,
Payratesmustalsobeequitableinternally;each
employeeshouldviewhisorherpayasequitable
givenotherpayratesintheorganization

T17 - Establishing Pay Rates

ConducttheSalarySurvey
Compensationorsalarysurveysplayacentral
roleinpricingjobs
Employersusesalarysurveysinthreeways:
pricing benchmarkjobs
Informaltelephonesurveys
formalquestionnaires

USING THE INTERNET TO DO COMPENSATION SURVEYS

ArapidlyexpandingarrayofInternet-based
optionsmakesitfairlyeasyforanyonetoday
(especiallysmallerfirms)toaccesspublished
compensationsurveyinformation.
Example:PayScale
-MalaysiaSalarySurveyReport

T18 - Incentives for Operations Staff

PieceworkPlans
Theworkerispaidasum(calledapiecerate)foreach
unitheorsheproduces.
Oldestincentiveplanandisstillthemostcommonly
used
Workablepiece-rateplanrequiresbothjobevaluation
and(usually)industrialengineering
Jobevaluationenablestoassignanhourlywagerateto
thejobinquestion.
Theindustrialengineerdeterminedthestandard
productionrate.

Advantages and Disadvantages of piece rate plans

1.Theyaresimpleto
calculateandeasily
understoodbyemployees.
2.Piece-rateplansappear
equitableinprinciple
3.Incentivevaluecanbe
powerfulbecauserewards
aredirectlytiedto
performance.

1.Unsavoryreputation
amongsomeemployees
2.Moresubtle;sincethe
piecerateisquotedona
per-piecebasis
3.Considerableworker
resistance