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Compensation and Benefits Administration Week 10 (Part B)

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Compensation and Benefits Administration Week 10 (Part B) Dr. Teal McAteer Teaching Professor DeGroote School of Business McMaster University Issues In The Benefits ... – PowerPoint PPT presentation

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Title: Compensation and Benefits Administration Week 10 (Part B)


1
Compensation and Benefits Administration Week 10
(Part B)
  • Dr. Teal McAteer
  • Teaching Professor
  • DeGroote School of Business
  • McMaster University

2
Responsibilities of Compensation Professionals
  • Legislative compliance
  • Conduct pay or wage surveys
  • Conduct job evaluations
  • Create links between desired rewards and levels
    of performance
  • Monitor compensation costs

3
Pay Surveys
  • Method of obtaining accurate information about
    pay rates for relevant jobs in other
    organizations
  • Gauge of external equity

4
How To Conduct A Pay Survey
  • Specify the purpose of the survey
  • Specify jobs to be surveyed, their descriptions
    or specifications, and the information needed
    from survey participants
  • Select comparison employers for inclusion in the
    survey
  • Select a survey method and design a survey
    instrument
  • Administer the survey
  • Analyze and communicate survey data

5
Job Evaluation Systems
  • Determine relative worth of jobs to the
    organization
  • Internal equity
  • Central to Pay Equity

6
Job Evaluation Process
  • Collect job analysis data
  • Prepare job descriptions and job specifications
  • Choose compensable factors those factors an
    organization values and chooses to reward through
    differential pay
  • Develop or choose a job evaluation method
  • Evaluate jobs

7
Pay Equity
  • Job evaluation system must be compliant with Pay
    Equity which considers factors of
  • Skill
  • Effort
  • Responsibility
  • Working conditions
  • System must be gender neutral

8
Types of Job Evaluation Methods
  • Ranking
  • Level description (classification method)
  • Factor comparison
  • Point methods
  • Market pricing

9
Ranking
  • Orders jobs from least valued to most valued
  • More appropriate for small organizations and
    those with small numbers of jobs
  • Advantages
  • Simple
  • Quick and inexpensive
  • Disadvantages
  • Entirely subjective
  • No explicit rationale or documentation for results

10
Level Description (Classification Method)
  • Places jobs in a pre-existing hierarchy
  • Compares jobs to descriptions of job grades
  • Advantages
  • Inexpensive
  • Readily available
  • Disadvantages
  • Cumbersome

11
Factor Comparison
  • Compares jobs to key jobs on scales of
    compensable factors
  • Advantages
  • Custom-built
  • Easy to use
  • Disadvantages
  • System becomes less accurate as key jobs change
  • Complex
  • Limited to manufacturing, manual, blue-collar jobs

12
Point Method
  • Jobs are compared to standardized descriptions of
    degrees of universal compensable factors and sub
    factors
  • Advantages
  • Most accurate
  • Stable over time
  • Disadvantages
  • Administrative costs can be high

13
Market Pricing
  • Relies entirely on the labour market to determine
    how much jobs should be paid
  • Advantages
  • Avoids management bias
  • Employees paid at market value
  • Disadvantages
  • Promotes instability of pay structure
  • May lead to perceived inequities
  • Results depend on organizations surveyed
  • Difficult to obtain pay information about some of
    the less common jobs in an organization

14
Key Outcome of Job Evaluation
  • Hierarchy of jobs in terms of their relative
    value to the organization

15
How Is Pay Assigned to Jobs?
  • Requires pay philosophy decision regarding
    Relationship of pay levels to market
  • Lead
  • Lag
  • Match

16
Pay Policy Line
  • Graphic depiction of line drawn between midpoints
    of salary ranges
  • Represents an organizations pay level

17
How do Organizations Structure Pay?
  • Typically offer range of pay
  • Variations in pay based on different in
    performance, employee qualifications and/or
    seniority
  • Requires rationale for setting starting pay and
    for progression through the range
  • Jobs of similar value can be grouped into pay
    grades
  • Within a pay grade, there is a pay range which
    defines the upper and lower limits of pay

18
Assigning Pay to Persons
  • Shift from job-based to person-based pay system
  • Skill based pay systems
  • Based on knowledge and skills individuals develop
    on the job
  • Competency based pay systems
  • Compensation is based on individual traits,
    attitude and/or behaviours individuals bring and
    apply to the job.

19
Using Pay to Motivate Employees
  • Pay for performance pay is contingent on some
    level of performance specified by the
    organization
  • Merit pay
  • Hinging promotion to higher-paying jobs
    contingent of superior performance
  • Incentive pay system

20
Pay For Performance Systems
  • Individual
  • Group
  • Company
  • Merit
  • Promotion
  • Straight piece rate
  • Group piece rate
  • Group standard hour plans
  • Profit sharing plans
  • Cost savings plan

21
Compensation Administration
  • Ensure that compensation system is achieving its
    goals and that compensation costs remain within
    allocated amounts
  • Mechanisms used include
  • Compa-ratio
  • Budgets
  • Periodic audits of wages

22
Pay Equity
  • Equal pay for work of equal value
  • Pay Equity Plan is required for each bargaining
    unit and for that part of the establishment that
    is not in any bargaining unit

23
Trend Total Rewards
  • Definition
  • Any type of reward for service/work
  • More options now presented to compensate/reward
    employees. Desired effect is to enhance ability
    to attract, retain and motivate employees in a
    very competitive market (i.e. War for Talent)

24
Total Rewards Model
External Influences
Internal Influences
25
Why Total Rewards
  • Drive for profitability (private sector)
  • Drive for improved effectiveness/efficiency
  • Better control of labour costs
  • Enhanced ability to recruit, attract and retain
    key staff
  • Enhanced flexibility

26
Categories Of Benefits
  • Universal benefits
  • Statutory benefits
  • Discretionary benefits for employee protection
  • Pay for time not worked
  • Employee services

27
Universal Benefits
  • Government provided without requiring direct
    contributions from either employees or employers
  • OAS (Old Age Security)
  • GIS (Guaranteed Income Supplement)
  • Provincial hospital and medical plans (OHIP)

28
Statutory Benefits
  • Employer must provide under federal and/or
    provincial laws
  • CPP/QPP
  • Workers compensation
  • Employment insurance
  • Supplementary coverage i.e. SUB plans
  • Health insurance

29
Discretionary Benefits
  • Private pension plans
  • Defined benefit plan
  • Defined contribution plan
  • Combination
  • Group insurance programs

30
Holiday And Vacation Pay
  • Statutory plus others
  • Vacations

31
Employee Service Benefits
  • Savings plans
  • Tuition loans
  • Recreation facilities and programs
  • Parking privileges

32
Flexible Benefits
  • Flex plans allow employees a degree of choice in
    some of the benefits, with varying levels of
    cost-sharing by level of coverage, and an
    opportunity to review the choice on a periodic
    basis
  • Four types
  • Modular plans
  • Core plus option plans
  • Private health services plans
  • Cafeteria plans

33
Controlling Benefits Cost
  • Provide benefits that the majority of employees
    value and eliminate those in which they have no
    interest
  • Have employees contribute a certain amount toward
    the purchase of discretionary benefits
  • Group insurance
  • Managed care of employer-provided health benefits

34
Issues In The Benefits Areas
  • Pension issues
  • Same-sex spousal benefits
  • Controlling rising benefit costs
  • Disability management
  • New accounting methods

35
Benefit Cost Containment Strategies
  • Contribution changes
  • Limits
  • Coverage changes
  • Drugs
  • Proactive management approach
  • Communication, education, incentives
  • New Plan/programs

36
The Work Experience
  • Satisfy intrinsic needs
  • Includes elements of reward that are important to
    employees and employers but are less tangible
    than compensation and benefits
  • Employees place high value on the work experience

37
Elements Of The Work Experience
  • Acknowledgement and recognition
  • Balance of work/life
  • Culture
  • Development
  • Environment
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