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COMPENSATION - Coggle Diagram
COMPENSATION
TYPES
Base Pay
The basic compensation that an employee receives, usually as a wage or salary
two base pay categories: hourly and salaried, which are identified according to the way pay is distributed and the nature of the jobs
Variable Pay
Pensation linked directly to individual, team, or organizational performance
Benefits
Indirect reward given to an employee or group of employees as part of membership in the organization
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JOB EVALUATION METHODS
Job evaluation
Formal, systematic means used to identify the relative worth of jobs within an organization
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Pay Grades
Two methods are commonly used to establish pay grades: job evaluation data and use of job market banding
Market Pricing
Advantages : it closely ties organizational pay levels, without being distorted by “internal” job evaluation
Disadvantages: for numerous jobs, pay survey data are limited or may not be gathered in methodologically sound ways
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TYPES OF BENEFITS
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Financial
Life, disability and long term care insurace
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SYSTEM DESIGN ISSUES
Internal Equity
Depends on KSAs
Procedural justice: base pay for jobs, allocating pay increases, and measuring performance must be perceived as fair.
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Statistical Analysis
managers to understand the various statistical methodologies that can be used to evaluate current compensation levels
HR professionals: Determine the degree to which compensation is distributed fairly within the organization based on such factors
MARKET COMPETITVE
Lag-the Market Stategy
Used when the employer is experiencing financial difficulties and when an abundance of workers is available
Lead teh Market Strategy
Aggressive approach that enables a company to attract and retain sufficient workers with the required capabilities and be more selective when hiring
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INCENTIVES
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Individual
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Bonuses: additional compensation, does not become part of the employee’s base pay
Recognition Awards: “employee of the month”, “employee of the year”; selecting award winners may be determined subjectively in some situations
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Performance Awards: Cash, merchandise, gift certificates, and travel
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