Managing Human Resources 15e. - Southeastern Homepages

Managing Compensation The Challenges of Human Resources Management 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 Compensation Management and Other HRM Functions Aid Aidor orimpair impairrecruitment recruitment Recruitment Recruitment Supply Supplyof ofapplicants applicants affects wage affects wagerates rates Pay Payrates ratesaffect affectselectivity selectivity

Selection Selection Selection Selectionstandards standardsaffect affect level of pay required level of pay required Pay Paycan canmotivate motivatetraining training Training Trainingand and Development Development Increased Increasedknowledge knowledgeleads leads to higher pay to higher pay Training

Compensation Trainingand anddevelopment developmentmay may Compensation lead Management leadto tohigher higherpay pay Management Low Lowpay payencourages encourages unionization unionization Labor LaborRelations Relations AAbasis basisfor fordetermining determining employees employeesrate rateof ofpay pay Pay Payrates ratesdetermined

determined through negotiation through negotiation 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product

or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 2 of 51 36 Compensation Pay is a statement of an employees worth by an employer. Pay is a perception of worth by an employee. 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted

2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 3 of 51 36

What Determines Pay & Benefits? 4 Copyright 2008 Cengage Learning. All rights reserved Common Strategic Compensation Goals 1. To reward employees past performance 2. To remain competitive in the labor market 3. To maintain salary equity among employees 4. To mesh employees future performance with organizational goals 5. To control the compensation budget 6. To attract new employees 7. To reduce unnecessary turnover 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned,

or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 5 of 51 36 Total Total Compensation Compensation Direct Direct Wages Wages/ /Salaries Salaries

Commissions Commissions Indirect Indirect Time TimeNot NotWorked Worked Vacations Vacations Breaks Breaks Holidays Holidays Insurance InsurancePlans Plans Bonuses Bonuses Gainsharing Gainsharing Medical Medical Dental

Dental Life Life Security SecurityPlans Plans Pensions Pensions Employee EmployeeServices Services Educational assistance Educational assistance Recreational programs Recreational programs 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved.

May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 6 of 51 36 Salary and Wage Web Sites NACE Salary Guide - Research salaries in your area of interest NACE Salary Calculator - Research salaries for your area of interest and location Career Guide to Industries Provided by the U.S. Department of

Labor, Bureau of Labor Statistics Occupational Employment & Wage Estimates From the U.S. Department of Labor, Bureau of Labor Statistics Salary.com Comprehensive site offering salary and compensation information SalaryExpert.com Offers salary information for a variety of careers JobSearchIntelligence.com - Precise Salary Calculator and Salary Comparison Program for Job Seekers 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as

in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 7 of 51 36 Salary and Wage Web Sites (contd) Payscale.com Salary information based on profession, location, education, etc. Indeed.com Excellent job search engine with integrated salary search engine Cbsalary.com Salary search engine offered by CareerBuilder GlassDoor.com Great site offering information on company salaries, employee reviews, and specific interview information Economic Research Institute Offering salary information & cost of living comparisons

Cost of Living Calculator Beneficial if youre planning a move. Offers the cost of living in other cities around the country 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise

on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 8 of 51 36 Legal Considerations in Compensation Davis-Bacon Act (1931) Equal Pay Act (1963) Walsh-Healey Public Contract Act (1936) Employee Retirement Income Security Act of 1974 Title VII of the 1964 Civil Rights Act Employee Compensation Age Discrimination in Employment Act of 1967

Fair Labor Standards Act (1938) Americans with Disabilities Act The Family and Medical Leave Act The Social Security Act of 1935 (as amended) National Labor Relations Act of 1935 (Wagner Act) Workers Compensation 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May

not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 9 of 51 36 Government Regulation of Compensation Davis-Bacon Davis-BaconAct Act (1931)

(1931) Required Requiredminimum minimumwage, wage,prevailing prevailingwage wagerates, rates, 1 overtime premium payments by federal 1 overtime premium payments by federal contractors. contractors. Walsh-Healy Walsh-HealyAct Act (1936) (1936) Requires Requirescompanies companieswith withfederal federalsupply supplycontracts contracts >>$10K $10Kto topay

payprevailing prevailingwages. wages.Also, Also,requires requires overtime overtimepayments paymentsafter after88daily dailyor or40 40regular regularwork work hours hoursfor forfederal federalcontract contractworkers. workers. Fair FairLabor Labor Standards StandardsAct Act (FLSA) (FLSA)1938 1938 (as (asAmended) Amended) The

Themost mostsignificant significantlaw lawaffecting affectingcompensation. compensation. The purpose of the FLSA is to establish The purpose of the FLSA is to establishminimum minimum labor laborstandards standardson onaanational nationalbasis basisand andto to eliminate eliminatelow lowwages wagesand andlong longworking workinghours. hours.ItIt established establishedminimum minimumwage

wageand andovertime overtimepay. pay. 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product

or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 10 of 51 36 Government Regulation of Compensation National NationalLabor LaborRelations Relations Act of 1935 Act of 1935 (Wagner (WagnerAct) Act) Employee EmployeeRetirement Retirement Income

Security Income SecurityAct Actof of 1974 (ERISA) 1974 (ERISA) (contd) Most Mostimportant importantlaw lawenacted enactedininU.S. U.S.history. history.ItIt made madethe thefederal federalgovernment governmentthe thearbiter arbiterof of employer-employee relations thru the NLRB. employer-employee relations thru the NLRB. Provides Providesaacomprehensive comprehensivefederal federalscheme

schemefor forthe the regulation regulationof ofemployee employeepension pensionand andwelfare welfare benefit plans offered by private-sector benefit plans offered by private-sectoremployers. employers. The TheADEA ADEAonly onlyforbids forbidsage agediscrimination discriminationagainst against Age Discrimination Age Discrimination people peoplewho whoare areage age40 40or orolder.

older.ItItdoes doesnot not in Employment Act in Employment Act protect protectworkers workersunder underthe theage ageof of40, 40,although although of some of1967 1967 somestates statesdo dohave havelaws lawsthat thatprotect protectyounger younger workers workersfrom fromage agediscrimination. discrimination. 2012 Learning.

All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed

with a certain product or service or otherwise on a website password-protected website for classroom use. 11 of 51 36 Compliance Assistance - Wages and the Fair Labor Standards Act (FLSA) http://www.dol.gov/whd/flsa/ 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned,

or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 1112 12 of 51 36 The Bases for Compensation (cont.) Nonexempt Employees

Employees covered by the overtime provisions of the Fair Labor Standards Act. They must be paid time and one-half their regular pay for all work performed after forty regular hours of work in a workweek. Exempt Employees Employees who not covered in the overtime provisions of the Fair Labor Standards Act. Managers, supervisors, and white-collar professional employees are exempted on the basis of their exercise of independent judgment and other criteria. 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage

Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 13 of 51 36 Minimum Wage Laws in the States - January 1, 2013

http://www.dol.gov/whd/minwage/america.htm 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise

on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 14 of 51 36 Family and Medical Leave Act (FMLA) The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. http://www.dol.gov/whd/fmla/ 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except

as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 15 of 51

36 Intermittent FMLA Leave Handling the tricky questions in FMLA intermi ttent leave When FMLA Intermittent Leave Leads to Suspicious Attendance Patterns Curbing Abuse Of "Intermittent" FMLA Leave 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor

part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 16 of 51 36 Some Considerations for Developing a Compensation Plan 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except

use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use.

17 of 51 36 Factors Affecting the Pay Mix 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product

or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 18 of 51 36 The Traditional Approach to Compensation 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights

Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 19 of 51 36 How Employers Establish Pay Rates 1. Conduct the salary survey (external) 2. Determine the worth of each job (job evaluation; internal)

1. 2. 3. Ranking Classification Point method 3. Group similar jobs into pay grades 4. Price each pay grade (wage curves) 5. Develop rate ranges 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole

or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 20 of 51 36 Step1: The Salary Survey Uses for Salary Surveys To price benchmark jobs To marketprice wages for jobs

To make decisions about benefits Conducting a Wage/Salary Survey Personal interviews Telephone interviews Mailed questionnaires Internet 13-22 Conducting a Wage/Salary Personal interview Survey Most reliable and most expensive method Mailed questionnaires Probably used most frequently Used only to survey jobs having uniform meaning all over industry Can be answered by someone not fully familiar with wage structure 13-23 Conducting a Wage/Salary Telephone method Survey (contd)

Quick but yields incomplete information May be used to clarify responses to mailed questionnaires Internet Inexpensive and quick All companies are not reachable on Internet 13-24 Sources of Pay Surveys 1125 Possible Topics in a Wage Survey 13-26 Step 2: Job Evaluation Job Evaluation The systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization. It is the part of the process in which the organization finally decides the relative internal worth relationships of jobs. How to Evaluate Jobs Methods for Evaluating

Jobs Ranking Job classification Point method Factor comparison Job Evaluation Methods: Ranking Ranking each job relative to all other jobs, usually based on some overall factor. Steps in job ranking: 1. Obtain job information. 2. Select and group jobs. 3. Select compensable factors. 4. Rank jobs. 5. Combine ratings. Job Ranking by Olympia Health Care Ranking Order 1. Office manager Annual Pay Scale $43,000 2. Chief nurse 42,500 3. Bookkeeper

34,000 4. Nurse 32,500 5. Cook 31,000 6. Nurses aide 28,500 7. Orderly 25,500 Job Evaluation Systems (cont.) Job Ranking System Oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth. Disadvantages Does not provide a precise measure of each jobs worth.

Final job rankings indicate the relative importance of jobs, not the extent of differences between jobs. Method can used to consider only a reasonably small number of jobs. Job Evaluation Methods: Job Classification Raters categorize jobs into groups or classes of jobs that are of roughly the same value for pay purposes. Classes contain similar jobs. Administrative assistants Grades are jobs similar in difficulty but otherwise different. Mechanics, welders, electricians, and machinists Jobs are classed by the amount or level of compensable factors they contain. Job Evaluation Systems (cont.) Job Classification system

A system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades. Successive grades require increasing amounts of job responsibility, skill, knowledge, ability, or other factors selected to compare jobs. Job Classification System Example of a Grade Level Definition This is a summary chart of the key grade level criteria for the GS-7 level of clerical and assistance work. Do not use this chart alone for classification purposes; additional grade level criteria are in the Web-based chart. Federal Government Pay Tables Salary Table 2013-GS Other pay tables General Schedule (GS; white collar) Federal Wage System (WS; blue collar) Law Enforcement Officer (LEO) Executive and Senior Level Employees 2012 Learning. All Rights

Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain

product or service or otherwise on a website password-protected website for classroom use. 36 of 51 36 Job Evaluation Methods: Point A quantitative technique Method that involves: Identifying the degree to which each compensable factor is present in the job. Awarding points for each degree of each factor. Calculating a total point value for the job by adding up the corresponding points for each factor. Point System Point System A quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it. Permits jobs to be evaluated quantitatively on the basis of factors or elementscompensable factorsthat constitute the job.

The Point Manual A handbook that contains a description of the compensable factors and the degrees to which these factors may exist within the jobs. Job Evaluation: Point System Identifying Compensable Factors Skills Effort Responsibilit y Working conditions Compensable Factors Paid-for, measurable qualities, features, requirements, and/or constructs that are common to many different kinds of jobs. 40 Compensable Factors The Universal Compensable Factors identified In the Equal Pay Act and subsequently adopted by the government are: SKILL - The experience, training,

education, etc, required to perform the job under consideration. EFFORT - measure of the physical and mental exertion needed to perform the job. 41 Compensable Factors (contd) RESPONSIBILITY - The extent to which the employer depends on the employee to perform the job as expected. WORKING CONDITIONS - The physical surroundings and hazards of a job. 42 Degrees Of Compensable Factors Degrees Or Levels Provide a yardstick, or measurement scale, that assist in identifying the specific amount of the factor required to perform the job. 43 Compensable Factor

2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use.

permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 44 of 51 36 Sample Point Values (1000 point system) 13-45 A Typical Point Plan (500 point) 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning.

All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 46 of 51 36 Prairie View A&M University Has 8 compensable factors Different numbers of levels for each

factor Not a 500 or 1000 point system http://www.pvamu.edu/pages/2085.asp 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service

or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 47 of 51 36 Job Evaluation for Management Positions Hay Profile Method Job evaluation technique using three factorsknowhow, problem solving, and accountability to evaluate executive and managerial positions. 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted

2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 48 of 51 36

Major Factors of the Hay Plan 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise

on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 49 of 51 36 Step 3: Grouping Jobs Point Method Grouping Similar Jobs into Pay Grades Ranking Method Classification Methods Step 4: Price Each Pay Grade The Wage Curve Shows the pay rates paid for jobs in each pay grade, relative to the points or rankings assigned to each job or grade by the job evaluation.

Shows the relationships between the value of the job as determined by one of the job evaluation methods and the current average pay rates for your grades. Plotting a Wage Curve Wage Structure Hierarchy of Clerical Jobs, Pay Grades, and Weekly Pay Range for a Hypothetical Office 1154 Step 5: Fine-Tune Pay Rates Developing Pay Ranges Flexibility in meeting external job market rates Easier for employees to move into higher pay grades Allows for rewarding performance differences and seniority Correcting Out-of-Line Rates Raising underpaid jobs to the minimum of the rate range for their pay grade Freezing rates or cutting pay rates for overpaid (red circle) jobs to maximum in the pay range for their pay grade Special Issues in Compensation

Exempt vs. non-exempt employees Independent contractors Broadbanding Pay compression Comparable worth Executive pay Pay secrecy Competence-based pay Living wage Salary card 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved.

May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 56 of 51 36 Some Typical Exempt, Nonexempt Job Titles EXEMPT NONEXEMPT

Attorneys Paralegals Physicians Accounting clerks Pharmacists Newspaper writers Engineers Working supervisor Teachers Management trainees Scientists Secretaries Computer systems analysts Clerical employees General managers Personnel directors Accountants Purchasing agents 2012 Learning.

All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed

with a certain product or service or otherwise on a website password-protected website for classroom use. 57 of 51 36 FLSA Exemptions from Over Time (OT) Apply Only to White Collar Employees Exemptions from OT Executive Administrative Professional Computer employee Outside sales Fact Sheet #17A: Exe mption for Executive, Administrative, Profes sional, Computer & O utside Sales Employe es Under the Fair Lab or Standards Act (FLS A ) Coverage Under the F LSA Highly compensated 1158

Who Is Exempt? Who Is Not Exempt? Step 1: Salary Basis Test Yes Step 2: Exemption Applicability/Duties Test Is the employee paid at least $455 per week ($23,660 per annum), *not subject to reduction due to variations in quantity/ quality of work performed? Does the employee perform any of the following types of duties/jobs? *The computer professional exemption has a salary basis test of $455 per week or $27.63 per hour. The outside sales exemption is not subject to theNo salary basis test.

Professional/creativeemployee whose work requires highly advanced knowledge/education; creative and artistic professional Employee is Nonexempt Executivemanagement is the employees primary duty Administrativeemployee performing nonmanual office work Step 3: Job Analysis Yes A thorough analysis of the job duties must be performed to determine exempt status. An exempt position must pass both the salary basis and the duties tests. Computer professional employee involved in design or application of computers and related systems Outside salesemployee making sales or taking orders which No of the

influence sales outside employer's premises Employee is Nonexempt 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service

or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 59 of 51 36 FIGURE 111 Independent Contractor 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights

Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 60 of 51 36 GeoLogics Employee or Independent Contractor? From IRS http://corporateweb.geologics.com/irs/body_irs.html

http://corporateweb.geologics.com/irs/body_irs.html 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise

on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 1161 61 of 51 36 Special Topics in Compensation Broadbanding Consolidating salary grades and ranges into a few wide levels or bands, each of which contains a relatively wide range of jobs and salary levels. Pros 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. Illustration of a Typical Broadband 1163 Broadbanded Structure and How It Relates to Traditional Pay Grades and Ranges The Issue of Wage Rate Compression Wage-Rate Compression Compression of pay between new and experienced employees caused by the higher starting salaries of new employees; also the differential between hourly workers and their Managers. Reducing Wage-Rate Compression Reward high performance and merit-worthy employees with large pay increases. Design the pay structure to allow a wide spread between hourly and supervisory employees. Prepare high-performing employees for promotions to jobs with higher salary levels.

Provide equity adjustments for selected employees hardest hit by pay compression. 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed

a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 65 of 51 36 Comparable Worth Concept: Employers should be required to pay men and women equal wages for dissimilar jobs that are of comparable (rather than strictly equal) value to the employer (generally based on job evaluation points). Basis: Seeks to address the issue that women have jobs that are dissimilar to those of men and those jobs are often consistently valued less than mens jobs. Question at Hand: Who will get to make final decisions on the comparability

of jobs? Employers Courts Comparable Worth A reform effort to pay different job titles the same based on their value (read: job evaluation points) to their employer regardless of the gender predominance of those working in such titles. When jobs filled mostly by women are judged comparable to jobs filled mostly by men, wages for both should be the same but often they are not. At the heart of comparable worth Is the fact that jobs traditionally done by women have been systematically undervalued in the marketplace. The net result is that jobs disproportionately held by women are paid less than comparable jobs with the same levels of skills and responsibilities but commonly held by males. Comparable Worth Has been promoted by feminists and advocates of womens rights as the most significant new tool in the struggle to bring womens economic positions up to the level of mens. What would remedy this? A substantial proportion of school districts in the U.S. pay secretaries and teaching assistants considerably less than the janitors.

In Denver, nurses were found to make less than gardeners. In New York State, school nurses in the West Islip school district start at $27,000, groundsmen at $29,000. Example of Minnesota State Jobs RNs (mostly women; 92%)--$1368/ month; Truck Driver (mostly men; 87%)-$1493/month Look at secretary and maintenance carpenter on next slide (both have the same job evaluation points [197]) Job Evaluation Points, Monthly Pay, and Proportion of Females Opponents of Comparable Worth Women are free to choose whatever work they wish The pay differences among jobs result from market forces, especially the excessive supply among women for certain kinds of work Would interfere with free market mechanisms that are required for economic efficiency, and would thereby damage our economy Would raise payrolls leading to huge losses for private employers and higher deficits in the public sector Comparable Worth City employees in Chicago, San

Francisco, and San Jose, and state employees in Michigan and New York, among others, have successfully negotiated pay adjustments for predominantly female job categories Note absence of private sector firms Comparable Worth The courts have failed to rule definitively on the comparable worth issue. The argument continues, with one side advocating remedial action to increase equity while the other side maintains that the current system is fair, and that any attempt to alter the system will cause great harm to society. Pricing Managerial and Jobs Pay? Professional What Determines Executive CEO pay is set by the board of directors taking into account factors such as the business strategy, corporate trends, and where they want to be in the short and long term. CEOs can have considerable influence over the boards that determine their pay. Firms pay CEOs based on the complexity of the jobs they fill. Shareholder activism and government oversight have tightened the restrictions on what companies pay top executives. Boards are reducing the relative importance of base salary

while boosting the emphasis on performance-based pay. 100 Highest-Paid EEOs http://www.aflcio.org/Corporate-Watch/CEO -Pay-and-You/100-Highest-Paid-CEOs 1177 Motivating Employees through Compensation Pay Secrecy An organizational policy prohibiting employees from revealing their compensation information to anyone. Creates misperceptions and distrust of compensation fairness and pay-for-performance standards. Arguments against secrecy: Knowledge of base pay is the strongest predictor of pay satisfaction, which is highly associated with work engagement Knowledge of base pay more strongly predicts pay satisfaction than does the actual amount of pay received by employees. 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in

except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use.

78 of 51 36 Pay Secrecy and Open-Book Management The Case for Open Book Management 1179 OpenBooks Oklahomas Finances: Online & In Action https://data.ok.gov/ Scroll down to State of Oklahoma Payroll Q3 2013 and then click on the link In the box called Find in this Dataset type 66000 and then press Enter Filter by LAST_NAME (click to sort) Filter by AMOUNT (click to sort) 1180 Competence-based Pay Competence-based Pay (also skill-based pay or knowledge-based pay) Compensation for the different skills or increased knowledge employees possess rather than for the job they hold in a designated job category. Greater productivity, increased employee learning and commitment to work, improved staffing flexibility to meet

production or service demands, and the reduced effects of absenteeism and turnover, 2012 Learning. All Rights Reserved. May not be copied, or duplicated, in whole or in except use except as permitted 2012Cengage Cengage Learning. All Rights Reserved. May not be scanned, copied, scanned, or duplicated, inpart, whole or infor part, for use as in a licensein distributed a certain product or service or otherwise

on a password-protected for classroom use. permitted a licensewith distributed with a certain product or service or otherwise on a website password-protected website for classroom use. 81 of 51 36 Board Oversight of Executive Factors Influencing Executive PayCompensation Financial Accounting Standards Board (FASB) requirements for expensing of stock options at fair market value. U.S. governments pay czar overseeing certain pay awards in firms which had U.S. treasury loans. Increased SEC reporting requirements for compensation- related information. Increased executive liability for accuracy in corporate financial reporting under the Sarbanes Oxley Act. Shareholder activism protesting excessive executive compensation due to lack of independence by executive board compensation committees.

Living Wage Paying people based on need rather than on what the job is worth. Living wage is defined by the wage that can meet the basic needs to maintain a safe, decent standard of living within the community. The particular amount that must be earned per hour to meet these needs varies depending on location. Minimum wage vs. living wage Von Bergen, C. W., Mawer, W. T., & Soper, B. (2007). Living Wage Ordinances in the Public Sector. Public Personnel Management, 36, 281-305. 1183 Salary Card Especially relevant for universities, including SE Everyone at same professorial level (e.g., assistant professor, associate professor) should be paid the same/have the same salary structure Statement from Some Faculty at UCO Market forces (e.g., supply and demand) require that inequities between the disciplines exist. Should this be the case? 1184

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