哈佛商学院MBA导师授课讲义人力资源管理Chap011

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1、Pay Structure DecisionsPay Structure DecisionsAfter reading this chapter,you should be able to:uList the major decision areas and concepts in employee compensation management.uDescribe the major administrative tools used to manage employee compensation.uExplain the importance of competitive labor-ma

2、rket and product-market forces in compensation decisions.uDiscuss the significance of process issues such as communication in compensation management.Chapter11Pay Structure DecisionsPay Structure DecisionsuDescribe new developments in the design of pay structures.uExplain where the United States sta

3、nds from an international perspective on pay issues.uExplain the reasons for the controversy over executive pay.uDescribe the regulatory framework for employee compensation.Chapter11Introduction From the employers point of view:uPay is critical in attaining strategic goals.uPay has a major impact on

4、 employee attitudes and behaviors.uEmployee compensation is typically a significant organizational cost.From the employees point of view:uPolicies having to do with wages,salaries,and other earnings affect their overall income and thus their standard of living.uBoth level of pay and fairness compare

5、d with others pay are important.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Pay DecisionsuPay structure refers to the relative pay of different jobs(job structure)and how much they are paid(pay structure).uPay level is the average pay in organizations,including wages,sal

6、aries,and bonuses.uJob structure is the relative pay of jobs in organizations(i.e.,the range of pay often expressed by salary grades).uPay policies are attached to jobs,not individuals.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Equity Fairness Two types of employee soci

7、al comparisons of pay are especially relevant in making pay-level and job structure decisions:Pay StructureDecision AreaPay LevelJob StructureAdministrativeToolMarket pay surveysJob evaluationFocus of Employee PayComparisonsExternal equityInternal equityConsequences ofEquity PerceptionsExternal empl

8、oyeemovement,laborcosts,employee attitudesInternal employeemovement,cooperation,employee attitudesMcGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Developing Pay Levels-Market PressuresuTwo important competitive market challenges in deciding what to pay its employees:uProduct

9、-market competition the challenge to sell goods and services at a quantity and price that will bring a return on investment.uLabor-market competition the amount an organization must pay to compete against other organizations that hire similar employees.McGraw-Hill/Irwin 2006 The McGraw-Hill Companie

10、s,Inc.All rights reserved.Employees as a ResourceuA philosophy that considers employees to be an investment that will yield valuable returns.uControlling costs through noncompetitive pay can result in low employee productivity and quality.uPay policies and programs are one of the most important huma

11、n resource tools for encouraging desired employee behaviors and discouraging undesired behaviors.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Deciding What to PayuDeciding pay levels is discretionary,and is based on a broad range.uThe organization has to decide whether to

12、 pay at,below,or above the market average.uEfficiency wage theory states that wages influence worker productivity.uThe benefits of higher wages may outweigh higher costs when the organizations technology or structure depends on highly skilled employees or when the organization has difficulty observi

13、ng and monitoring employee performance.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Market Pay SurveysuBenchmarking is a procedure by which an organization compares its own practices against those of the competition.uThe following issues must be determined before pay surv

14、eys are used:uWhich employers should be included in the survey?uWhich jobs are included in the survey?uIf multiple surveys are used,how are all the rates of pay weighted and combined?McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Product Market v.Labor Market Comparisons Pr

15、oduct-market comparisons will be more important when:uLabor costs represent a large share of total costs.uProduct demand is elastic.uThe supply of labor is inelastic.uEmployee skills are specific to the product market.Product-market comparisons will be more important when:uAttracting and retaining e

16、mployees is difficult.uThe costs of recruiting are high.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Rate RangesuRate ranges refer to different employees in the same job that may have different pay rates.uKey jobs are benchmark jobs that have relatively stable content and

17、 are common to many organizations so that market-pay survey data can be obtained.uNonkey jobs are unique to organizations and cannot be directly valued or compared through the use of market surveys.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Developing a Job StructureuA

18、job structure refers to the relative worth of various jobs in the organization,based on internal comparisons.uJob evaluation is an administrative procedure that measures a jobs worth to the organization.uThe evaluation process is composed of compensable factors,which are the characteristics of jobs

19、that an organization values and chooses to pay for.uJob evaluators often apply a weighting scheme to account for the differing importance of the compensable factors to the organization.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Developing a Pay StructureuThree pay-setti

20、ng approaches include:uMarket survey approach-The greatest emphasis is on external comparisons.It bases pay on market surveys that cover as many key jobs as possible.uPay-policy line-A mathematical expression that describes the relationship between a jobs pay and its job evaluation points.uPay grade

21、s-Grouping jobs of similar worth or content together for pay administration purposes.uThe range spread is the distance between the minimum and maximum amounts in a pay grade.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Conflicts between Market Pay Surveys and Job Evaluati

22、onuIn resolving the conflict,emphasizing the internal data would drive up labor costs and creates product-market problems.uIf external market data are emphasized and a job is paid lower internally,the comparisons that employees make internally would result in dissatisfaction.uThere are no right answ

23、ers.An organization should consider its strategy and what jobs and/or functions will be critical for success.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Monitoring Compensation Costs One way to examine the difference between policy and practice is to compute a compa-rati

24、o,which is an index of correspondence for actual and intended pay.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Globalization,Geographic Region,and Pay StructureuPay structures can differ substantially across countries both in terms of their level and in terms of the relat

25、ive worth of jobs.uExpatriate pay and benefits continue to be linked more closely to the home country.However,this link appears to be slowly weakening and now depends more on the nature and length of the assignment.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.The Importan

26、ce of ProcessParticipationuParticipation should involve both those who will manage the process and those who will be affected by it.uParticipation includes recommending,designing,and communicating a pay program.uTypically,pay-level decisions are only made by top management.CommunicationuThe effect o

27、f communication is likely to be an impact on employees perceptions of equity.uManagers must be prepared to explain to employees why the pay structure is designed the way it is and to judge whether changes to the structure should be made.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights

28、 reserved.Current ChallengesuJob-based pay structures can create the following problems:uThey encourage bureaucracy.uThey reinforce top-down decision making as well as status differentials.uThe bureaucracy,time,and cost required to generate and update job descriptions can become a barrier to change.

29、uThe job-based structure may not reward desired behaviors,where the knowledge,skills,and abilities needed yesterday may not be helpful today and tomorrow.uThe system encourages promotion-seeking behavior,but discourages lateral movement.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights

30、 reserved.Current ChallengesuResponses to problems with job-based pay structures include the following:uDelayering is reducing the number of job levels.This provides more flexibility in job assignments and assigning merit increases.uA second response to job-based pay structure problems has been to m

31、ove away from linking pay to jobs and toward building structures on skill,knowledge,and competency.uSkill-based pay typically pays individuals for the skills they are capable of using rather than for the job they are performing at a point in time.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.

32、All rights reserved.Can the U.S.Labor Force Compete?uCosts for labor are high in the United States,particularly in comparison to newly industrialized and developing countries.uFactors to consider in shifting production to other countries include:NonlaborconsiderationsUnit labor costsStabilityQuality

33、 andproductivityMcGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Executive PayuExecutive pay has been given widespread attention in the press.uHowever,executive pay accounts for a small proportion of the labor costs of an organization,and executives have a disproportionate ab

34、ility to influence organizational performance.uExecutives also help set the culture,so if their pay seems unrelated to organizational performance,employees may not understand why their pay should be at risk depending on the organizations performance.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,I

35、nc.All rights reserved.CEO Remuneration in U.S.DollarsCOUNTRYUnited StatesBrazilFranceArgentinaGermanyJapanMexico CEO TOTALREMUNERATION$1,404,000 597,000 540,000 861,000 422,000 546,000 649,000CEO/MANUFACTURINGEMPLOYEE TOTALREMUNERATION MULTIPLE 31 60 15 48 11 11 46McGraw-Hill/Irwin 2006 The McGraw-

36、Hill Companies,Inc.All rights reserved.Reasons for Executive Pay CriticismsuSome executives are very highly paid,such as the CEO of Walt Disney,who earns over$600 million.uExecutives in the United States are the best paid in the world.uThe ratio of executive pay to average worker pay is cited as cre

37、ating a trust gap in which workers do not trust executives intentions and resent their pay.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Equal Employment OpportunityuEqual Employment Opportunity(EEO)(Title VII)prohibits discrimination in all employment outcomes,including p

38、ay,unless business necessity can be proven.uTwo trends related to EEO are the increasing participation of women and nonwhites in the labor force.uThe proportion of wages that women earn compared to men was 76 percent in 2000.uThe proportion of black to white earnings in 2000 was 79 percent.McGraw-Hi

39、ll/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Comparable WorthuComparable worth(or pay equity)is a public policy that advocates remedies for any under evaluation of womens jobs.uBased on the idea that individuals should obtain equal pay,not just for jobs of equal content,but for jo

40、bs of equal value or worth.uThe courts have consistently ruled that using the going market rates of pay is an acceptable defense in comparable worth litigation suits.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.Wage LawsuThe Fair Labor Standards Act(FLSA)of 1938 establish

41、ed a minimum wage and overtime pay rate.uMinimum wage is the lowest amount that employers are legally allowed to pay.uMinimum wage now stands at$5.15 an hour.uExecutive,professional,administrative,and outside sales are exempt from FLSA coverage.uExempt means that these employees are not covered by the FLSA,and they are not eligible for overtime pay.uThe Davis-Bacon Act and Walsh-Healy Public Contracts Act require federal contractors to pay employees no less than the prevailing wages in the area.McGraw-Hill/Irwin 2006 The McGraw-Hill Companies,Inc.All rights reserved.