1. Chapter 11: Strategic Pay Plans
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Dessler, Chhinzer, Cole
Human Resources
Management in Canada
Canadian Twelfth Edition

2. Learning Outcomes
• EXPLAIN in detail each of the three
stages in establishing pay rates.
• DISCUSS competency-based pay.
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• EXPLAIN the strategic importance of total
rewards.

3. Learning Outcomes
• DEFINE pay equity and EXPLAIN its
importance today.
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• DESCRIBE the five basic elements of
compensation for managers.

4. Strategic Importance of
Total Rewards
• monetary (extrinsic)
• compensation: cash payments and benefits
• personal growth and interpersonal rewards
• total awards approach
• rewards are part of integrated whole
• aligns rewards with business strategies
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• non-monetary (intrinsic)

5. reserved.
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Employment Rewards
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6. reserved.
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Total Rewards
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7. Five Components of Total Rewards
1. Compensation
2. Benefits
4. Performance and recognition
5. Development and career opportunities
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3. Work-life programs

8. Basic Considerations in
Determining Pay Rates
•
•
•
•
•
Employment/Labour Standards Act
Pay Equity Acts
Human Rights Acts
Canada/Quebec Pension Plan
other legislation (worker’s comp., EI)
• union influences
• compensation policies
• equity and its impact on pay rates
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• legal considerations in compensation

9. Establishing Pay Rates
Stage 2: Conduct wage/salary survey
Stage 1: Job evaluation
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reserved.
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Stage 3: Combine job evaluation and salary
survey to determine pay

10. Stage 1: Job Evaluation
• Benchmark job
• critical to operations or commonly found in other
organizations
• Compensable factors
•
fundamental, compensable element of a job
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A systematic comparison to determine
relative worth of jobs within a firm.

11. Job Evaluation Methods
• Classification/grading method
categorizes jobs into groups
grade/group description: outlines level of
compensable factors required by each job
• Point method
• identify compensable factors
• determine the degree to which each factor is present
in each job
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•
•

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Grade/Group Description
Sample
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13. Point Method Steps
Step 3: Assign points for each degree of
each sub-factor
Step 2: Determine factor weights and degrees
Step 1: Preliminary steps
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reserved.
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Step 4: Evaluate the jobs

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Sub-Factor Sample
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Point Method
Job Evaluation Plan Sample
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16. Stage 2: Conduct a Wage/
Salary Survey
• aimed at determining prevailing wage rates
• avoid upward bias
• informal surveys good for easily recognized
jobs
• formal surveys are most comprehensive
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• determine rates for benchmark jobs
• determine market rates for jobs
• collect data on benefits, recognition programs, etc.

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Earnings Data Sample
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18. Stage 3: Combine Job Evaluation
and Salary Survey Information
• a graphic description of the relationship
between the value of the job and the
average wage paid for this job
Pay ranges
• a series of steps or levels within a pay
grade, usually based on years of service
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Wage curve

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Wage Curve
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Pay Ranges Sample
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Pay Ranges Sample
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22. Reducing the number of salary grades and
ranges into just a few wide levels or
“bands”, each of which then contains a
relatively wide range of jobs and salary
levels.
advantage
• greater flexibility in employee
compensation
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Broadbanding

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Broadbanding
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24. Pay for Knowledge
• competency-based pay
(managers, professionals)
• pay-for-knowledge program should
include:
• competencies/skills directly important to job
performance
• new competencies that replace competencies that
are no longer important
• on-the-job training, not “in the classroom.”
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• skill-based pay (manufacturing employees)

25. Compensating Executives
and Managers
1.
2.
3.
4.
5.
Salary
Benefits
Short-term incentives
Long-term incentives
Perquisites
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Five elements:

26. Compensating Professional
Employees
• engineers, scientists, accountants, lawyers
, etc.
• difficult to measure economic impact to
organization
• market pricing approach commonly used
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• compensable factors not easily measured:
creativity, problem solving

27. Pay Equity
• wage gap has narrowed but remains at 30%
• aim is to provide equal pay to male and
female-dominated job classes of equal value
• must ensure no gender bias in job evaluation
• long-term solution is to eliminate male and
female- dominated jobs
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• gap attributed to systemic discrimination

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Male-Female Wage Gap
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