Compensation management, also known as wage and salary administration, remuneration management, or reward management, is concerned with designing and implementing total compensation package or salary structure. The most egregious example cited by bloombergcom was ron johnson, former ceo of jc penney, which fired him april 8 after a 17-month stint during which he failed to turn around the company. Subscribe to employer surveys conducted by compensation and benefit research institutes for up-to-the-minute wage and salary information specific to your locale or industry 3. Total compensation plan focused in internal and external equity some organizations decisions are based off of the market they begin by looking at salary surveys to observe what the other competitors are paying their employees (known as external equity . A wage structure, then, is a combination of the job structure, the labor market, and the organization's decisions regarding the wage level the pricing of job structures is subject to the influences discussed in chapter 9 on wage structure determinants plus some technical ones.
Total compensation plan focused in internal and external equity some organizations decisions are based off of the market they begin by looking at salary surveys to observe what the other competitors are paying their employees (known as external equity. I particularly drew contrasts between wages (non-exempt flsa status) and salary (exempt flsa status), between merit pay (increases base pay) and incentives (do not increase base pay), and between merit pay (base pay increase tied to work recognition) and cola (base pay increase for everyone. Showed that compensation was ranked as the number one job element for job satisfaction and increase in salary for performance was ranked as the number one job element for motivation compensation is very valuable tool.
A good salary survey provides specific wage rates for specific jobs – formal written questionnaire surveys are the most comprehensive, but telephone surveys and newspaper ads are also sources of information. Chapter 10 pay structure decisions true/false questions 1 conceptually, a job structure can be defined as the relative pay of various jobs in the organization. Surveys collecting information about employee compensation, including salary and benefits, are commonly called salary surveys salary surveys are conducted with numerous employers to determine pay levels for specific job categories and are generally conducted either by region, sector or job classification for the purposes of comparability. 2 direct compensation alternatives base pay: cash wage paid to the employee because paying a wage is a standard practice, the competitive advantage can come only by paying a higher amount. Maintaining a strong salary structure is imperative for any organization most companies try to be good about keeping it up-to-date, but they tend not to do it as quickly as they should and often.
The external factors that will have the greatest influence on the content of outside wage surveys are, the union wage spillover effect ant the cost of living the influence of the spillover effect, it was shown, is dependant on the extent of unionization within the wage community. Wage level decisions are usually influenced more by forces external to the organization than are wage structure decisions one way of looking at this is that the wage level decision is primary in attracting employees to the organization. Compensation for all 105 workers in joe’s category at his company is $1250 an hour, and the average wage for a fully functioning machinist with two years of tenure is $1150 an hour. Profitability internally, the company’s profitability may affect salary and wage structure when an employer is safely operating in the black, it may revisit its compensation structure and modify salaries so they are more competitive with other employers in the industry.
Or lag labor market wages external equity fairness of organizational compensation levels relative to external compensation assessed by collecting wage and salary survey information to guide in setting organization¶s pay strategy to lead meet. For example, if your lowest paid position is an administrative assistant and you wish to pay at market, and salary survey data for that position shows an average salary of $25,000, a 15% spread for that job would be $21,250 (min), $25,000 (midpoint) and $28,750 (max), making $21,250 your overall minimum salary. Salary compression may be accompanied by pay inequities which could violate equal pay regulations in situations where newer staff earn more than experienced staff, it could create a pay equity problem if the experienced staff are a protected class.
It can be an annual salary, hourly wage or any performance—based pay that an employee receives, such as profit-sharing bonuses indirect compensation is far more varied, including everything from legally required public protection programs such as social security to health insurance, retirement programs, paid leave, child care or housing. Describe how wage and salary surveys are used to affect the compensation structure and pay decisions by using a wage and salary survey, an organization can get hard data to support its current wage and salary programs, and by using this data they can justify making necessary changes or validate their current system. The process of establishing pay rates while ensuring external, internal, and procedural equity consists of five steps: conducting a salary survey, determining the worth of each job, doing a job evaluation, grouping jobs comprised of approximately equal difficulty and pricing each pay grade with wage curves, and fine-tuning pay rates. The salary structure ensures that jobs within the same value range were paid within the same pay range, adding that, placement of the single spine salary structure would be done on the basis of grade structure constructed from the job evaluation exercise.