HRM Dessler CH# 11

1. Human Resource
Management
1
ELEVENTH EDITION
GARY DESSLER
Part 4 | Compensation
Chapter
11
Establishing Strategic Pay Plans
© 2008 Prentice Hall, Inc.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama

2. 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.
© 2008 Prentice Hall, Inc. All
rights reserved.
11–2

3. Basic Factors in Determining
Pay Rates
Employee
Compensation
Direct Financial
Payments
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rights reserved.
Indirect Financial
Payments
11–3

4. Legal Considerations in Compensation
Davis-Bacon Act (1931)
Equal Pay Act (1963)
Walsh-Healey Public
Contract Act (1936)
Employee Retirement
Income Security Act (ERISA)
Title VII of the 1964
Civil Rights Act
Employee
Compensation
Age Discrimination in
Employment Act
Fair Labor Standards Act
(1938)
Americans with
Disabilities Act
The Family and Medical
Leave Act
The Social Security Act of
1935 (as amended)
Workers’ Compensation
© 2008 Prentice Hall, Inc. All
rights reserved.
11–4

5. Equity and Its Impact on Pay Rates
Forms of Equity
External
Equity
Internal
Equity
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Individual
Equity
Procedural
Equity
11–5

6. Addressing Equity Issues
Salary Surveys
Methods to
Address Equity
Issues
Job Analysis and
Job Evaluation
Performance Appraisal
and Incentive Pay
Communications, Grievance
Mechanisms, and Employees’
Participation
© 2008 Prentice Hall, Inc. All
rights reserved.
11–6

7. The Salary Survey
Step 1. The Wage Survey:
Uses for Salary Surveys
To price
benchmark
jobs
To marketprice wages
for jobs
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rights reserved.
To make
decisions
about benefits
11–7

8. Sources for Salary Surveys
Sources of Wage and
Salary Information
Employer SelfConducted
Surveys
Consulting
Firms
Professional
Associations
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rights reserved.
Government
Agencies
11–8
The
Internet

9. Establishing Pay Rates (cont’d)
Skills
Step 2. Job Evaluation:
Identifying
Compensable Factors
Effort
Responsibility
Working Conditions
© 2008 Prentice Hall, Inc. All
rights reserved.
11–9

10. Establishing Pay Rates (cont’d)
Methods for
Evaluating Jobs
Ranking
Job
Classification
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rights reserved.
Point
Method
Factor
Comparison
11–10

11. Establishing Pay Rates (cont’d)
Point Method
Step 3. Group
Similar Jobs
into Pay Grades
Ranking Method
Classification Methods
© 2008 Prentice Hall, Inc. All
rights reserved.
11–11

12. Pricing Managerial and Professional Jobs
Compensating Executives
and Managers
Base
Pay
Short-term
Incentives
© 2008 Prentice Hall, Inc. All
rights reserved.
Long-Term
Incentives
Executive
Benefits and
Perks
11–12

13. Competency-Based Pay (cont’d)
Why Use CompetencyBased Pay?
Support HighPerformance
Work Systems
Support
Strategic Aims
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rights reserved.
Support
Performance
Management
11–13

14. 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.
© 2008 Prentice Hall, Inc. All
rights reserved.
11–14

15. KEY TERMS
employee compensation
direct financial payments
indirect financial payments
Davis-Bacon Act (1931)
Walsh-Healey Public Contract Act
(1936)
Title VII of the 1964 Civil Rights Act
Fair Labor Standards Act (1938)
Equal Pay Act (1963)
Employee Retirement Income
Security Act (ERISA)
salary compression
salary survey
benchmark job
job evaluation
© 2008 Prentice Hall, Inc. All
rights reserved.
compensable factor
ranking method
job classification (or grading) method
classes
grades
grade definition
point method
factor comparison method
pay grade
wage curve
pay ranges
competency-based pay
competencies
broadbanding
comparable worth
11–15

16. Human Resource
Management
ELEVENTH EDITION
1
GARY DESSLER
Part 4 | Compensation
Appendix for
Chapter 11
Quantitative Job Evaluation Methods
© 2008 Prentice Hall, Inc.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama

17. 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
© 2008 Prentice Hall, Inc. All
rights reserved.
11–17