7 - compensating employees fairly Flashcards
What are the manager’s roles when it comes to compensation?
- Understand compensation principles (explain + work around them)
- Possess adequate knowledge of the position manages (implication in evaluation)
- Ensure equity (important factor in compensation decisions)
What are the objectives of compensation? (3)
Attract
Motivate
Retain employees
What are the 2 types of compensation?
Direct - Base Salary - Salary Increase - Pay incentives (ex : bonus) Indirect - Benefits - Paid time off - Employee services (ex : employee work programs)
Give examples of short-term variable plan pay incentives.
- Team bonuses : for small teams, to motivate teamwork
- Gain sharing : for plant workers, to attain lower costs
- Profit sharing : for managers, for motivation
Give examples of long-term variable plan pay incentives.
- Stock purchase : for all employees, for mobilization
- Stock options : for senior managers, to increase market value of stocks
Describe the legal context in which a compensation program is create.
- Labour Standard Act govern base salary and paid time off.
- Canadian Charter of Rights and Freedom prevents from paying less because of discrimination.
- Pay Equity Act corrects salary differences caused by systemic discrimination.
what is the internal equity
With respect to salaries and requirement for a similar or different job within the organization.
- Job analysis
- Job description
- Job evaluation
what is the external equity
With respect to salaries for similar jobs in different organizations.
- Salary survey
- Salary range
what is the individual equity
With respect to the same job in the same organization.
- Individual performances
- Competency
- Seniority
- Experience
what is the collective equity
With respect to compensation received by different groups of employees in the organization (“us against them”). Takes into account the group’s contribution to the success of the organization
what are the steps to set a base salary?
- choose a benchmark: choosing the type of organization to compare with (market, location, size)
- salary survey: info about wages supplied by the companies in the benchmark market (lowest, highest, average)
- salary positioning: lead, lag, match
- salary range
What are the 4 factors to determine a base salary according to the Pay Equity Act?
- Qualifications and experience required (degrees)
- Responsabilities
- Intellectual and physical effort
- Working conditions
What are the traps to avoid when evaluating job positions?
Assuming the job descriptions are up to date.
Assuming the job evaluation process is objective by default.
Assuming it is useless because the market will tell you how much to pay.
Evaluating jobs by considering the current job holder.
Thinking the job title indicates its value.
Assuming the gender predominance of the position (predominance is determined when 60%+ of the group is a certain gender).
What are the 3 possible options when it comes to salary positioning?
Lead
Lag
Match
Describe the graph of a job value point system.
The higher you go, the bigger the overlay. This is because the are less jobs available (more space to grow without a promotion) and that you get experience in the same section
