Human Resource
Management
ELEVENTH EDITION
1
GARY DESSLER
Part 4 | Compensation
Chapter
11
Establishing Strategic Pay Plans
© 2008 Prentice Hall, Inc. PowerPoint Presentation by Charlie Cook
All rights reserved. The University of West Alabama
After studying this chapter, you should be able to:
1. List the basic factors in determining pay rates.
2. Explain in detail how to establish pay rates.
3. Explain how to price managerial and professional jobs.
4. Discuss competency-based pay and other current
trends in compensation.
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Basic Factors in Determining
Pay Rates
Employee
Compensation
Direct Financial Indirect Financial
Payments Payments
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Legal Considerations in Compensation
Davis-Bacon Act (1931) Equal Pay Act (1963)
Walsh-Healey Public Employee Retirement
Contract Act (1936) Income Security Act (ERISA)
Title VII of the 1964 Employee Age Discrimination in
Civil Rights Act Compensation Employment Act
Fair Labor Standards Act Americans with
(1938) Disabilities Act
The Family and Medical The Social Security Act of
Leave Act 1935 (as amended)
Workers’ Compensation
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Equity and Its Impact on Pay Rates
Forms of Equity
External Internal Individual Procedural
Equity Equity Equity Equity
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Addressing Equity Issues
Salary Surveys
Job Analysis and
Job Evaluation
Methods to
Address Equity
Issues Performance Appraisal
and Incentive Pay
Communications, Grievance
Mechanisms, and Employees’
Participation
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The Salary Survey
Step 1. The Wage Survey:
Uses for Salary Surveys
To price To market- To make
benchmark price wages decisions
jobs for jobs about benefits
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Sources for Salary Surveys
Sources of Wage and
Salary Information
Employer Self-
Consulting Professional Government The
Conducted
Firms Associations Agencies Internet
Surveys
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Establishing Pay Rates (cont’d)
Skills
Effort
Step 2. Job Evaluation:
Identifying
Compensable Factors
Responsibility
Working Conditions
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Establishing Pay Rates (cont’d)
Methods for
Evaluating Jobs
Job Point Factor
Ranking
Classification Method Comparison
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Establishing Pay Rates (cont’d)
Point Method
Step 3. Group
Similar Jobs Ranking Method
into Pay Grades
Classification Methods
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Pricing Managerial and Professional Jobs
Compensating Executives
and Managers
Executive
Base Short-term Long-Term
Benefits and
Pay Incentives Incentives
Perks
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Competency-Based Pay (cont’d)
Why Use Competency-
Based Pay?
Support High- Support
Support
Performance Performance
Strategic Aims
Work Systems Management
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Other Compensation Trends
• Broadbanding
Consolidating salary grades and ranges into just a
few wide levels or “bands,” each of which contains a
relatively wide range of jobs and salary levels.
Pro and Cons
More flexibility in assigning workers to different job grades.
Provides support for flatter hierarchies and teams.
Promotes skills learning and mobility.
Lack of permanence in job responsibilities can be unsettling
to new employees.
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KEY TERMS
employee compensation compensable factor
direct financial payments ranking method
indirect financial payments job classification (or grading) method
Davis-Bacon Act (1931) classes
Walsh-Healey Public Contract Act grades
(1936) grade definition
Title VII of the 1964 Civil Rights Act point method
Fair Labor Standards Act (1938) factor comparison method
Equal Pay Act (1963) pay grade
Employee Retirement Income wage curve
Security Act (ERISA) pay ranges
salary compression competency-based pay
salary survey
competencies
benchmark job
broadbanding
job evaluation comparable worth
© 2008 Prentice Hall, Inc. All rights reserved. 11–15
Human Resource
Management
ELEVENTH EDITION
1
GARY DESSLER
Part 4 | Compensation
Appendix for
Chapter 11
Quantitative Job Evaluation Methods
© 2008 Prentice Hall, Inc. PowerPoint Presentation by Charlie Cook
All rights reserved. The University of West Alabama
Quantitative Job Evaluation Methods
• Factor Comparison Job Evaluation Method
Step 1. Obtain job information
Step 2. Select key benchmark jobs
Step 3. Rank key jobs by factor
Step 4. Distribute wage rates by factors
Step 5. Rank key jobs according to wages
assigned to each factor
Step 6. Compare the two sets of rankings to
screen out unusable key jobs
Step 7. Construct the job-comparison scale
Step 8. Use the job-comparison scale
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