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Compensation Administration Strategies

This document discusses compensation administration, which involves managing compensation programs to attract, recruit, motivate and retain competent employees. It outlines the goals of compensation as recruiting the best employees, maintaining satisfaction, and rewarding top performers. There are intrinsic and extrinsic types of rewards, as well as direct compensation involving monetary pay and indirect compensation involving benefits. Different compensation philosophies like entitlement versus pay-for-performance are covered. The concepts of meeting, lagging, and leading the market are presented. The importance of equity, both internal and external, is discussed along with team-based reward systems and government influences like the Fair Labor Standards Act.

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Shobhit Rajput
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18 views18 pages

Compensation Administration Strategies

This document discusses compensation administration, which involves managing compensation programs to attract, recruit, motivate and retain competent employees. It outlines the goals of compensation as recruiting the best employees, maintaining satisfaction, and rewarding top performers. There are intrinsic and extrinsic types of rewards, as well as direct compensation involving monetary pay and indirect compensation involving benefits. Different compensation philosophies like entitlement versus pay-for-performance are covered. The concepts of meeting, lagging, and leading the market are presented. The importance of equity, both internal and external, is discussed along with team-based reward systems and government influences like the Fair Labor Standards Act.

Uploaded by

Shobhit Rajput
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Compensation Administration

MOHIT ARORA SHOBHIT RAJPUT

The process of managing a compensation program so that the organization can attract, motivate and retain competent employees who perceive that the program is fair.

Recruit & retain the best employees To maintain satisfaction Reward & encourage the best performers Modify (through Negotiations) practice of unions

Types of Rewards
Intrinsic
Intangible, psychological and social effects of compensation

Extrinsic
Tangible, monetary and nonmonetary effects of compensation

Types of Compensation
Direct compensation
The employer exchanges monetary rewards for work done.

Indirect compensation
Employer-provided benefitslike health insurancethat are provide employees for being a member of the organization.

Entitlement Philosophy
Assumes that individuals who have worked another year are entitled to pay increases, with little regard for performance differences.

Pay-for-Performance Philosophy
Requires that compensation changes reflect individual performance differences.

Meet the Market

Attempting to balance employer costs and the need to attract and retain employees.

Lag the Market

Paying all that the firm can afford. Taking advantage of the abundant supply of potential employees in a loose labor market.

Lead the Market

Paying for higher qualified, more productive workers.

Equity

The perceived fairness between what a person does (inputs) and what the person receives (outcomes).
Employee compensation viewed as equitable in relation to the compensation of employees performing similar jobs in other organizations. Employees receive compensation in relation to the knowledge, skills, and abilities they use in their jobs as well as their responsibilities and accomplishments. Perceived fairness of the process and procedures used to make decisions about employees. Perceived fairness in the distribution of outcomes.

External Equity Internal Equity

Procedural Justice Distributive Justice

Pay Openness/ The degree of openness or secrecy that an organization Secrecy allows regarding its pay system.

Using Team-Based Reward Systems

Use skill-based pay for the base.


Make system simple and understandable. Use variable pay based on business entity performance Distribute variable rewards at the team level Maintain a high degree of employee involvement

Government Influence on Compensation Administration Fair Labor Standards Act: 1938 act which requires
minimum wage overtime pay record-keeping child labor restrictions

Government Influence on Compensation Administration Fair Labor Standards Act

Exempt employees

Nonexempt employees

include professional and managerial employees not covered under FLSA overtime provisions eligible for premium pay when they work more than 40 hours in a week

Government Influence on Compensation Administration Equal Pay Act and Civil Rights Act protect employees from discrimination. Organizations cannot discriminate in pay on the basis of race, color, age, or sex.

Thanks

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