MANA 3320 16th Edition Lecture 15 Outline of Last Lecture I Wages vs Salary II Total Compensation III 3 Compensation Philosophies IV Strategic Compensation V 7 Common Strategic Compensation Goals VI Motivating Employees Through Compensation VII Expectancy Theory and Pay VIII Factors Affecting the Pay Mix Outline of Current Lecture I 4 Job Evaluation Systems II Job Evaluation for Management III Wage and Salary Surveys IV Collecting Survey Data V The Wage Curve VI 3 Compensation Laws Current Lecture 4 Job evaluation systems o 1 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 job s worth Final job rankings indicate the relative importance of jobs not the extent of differences between jobs Method can be used to consider only a reasonably small number of jobs Very subjective These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute o o 2 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 Ex Federal Civil Service System 3 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 elements compensable factors KSAs that constitute the job The Point Manual o 4 Work valuation A job evaluation system that seeks to measure a job s worth through its value to the organization Jobs are to be valued relative to financial operational or customer service objectives of the organization Considers that work should be valued relative to the business goals of the organization rather than by an internally applied point factor job evaluation system Work valuation serves to direct compensation dollars to the type of work pivotal to organizational goals Job evaluation for management positions o Hay Profile Method A handbook that contains a description of the compensable factors and the degrees of which these factors may exist within the jobs Job evaluation technique using three factors knowledge mental activity and accountability to evaluate executive and managerial positions Wage and Salary surveys o Tells what the market is for job titles o Surveys the job titles that have the largest number of employees in the company o the job titles with the highest turnover Very expensive Collecting survey data o Outside sources of data Bureau of Labor Statistics BLS o State and local wage surveys Online survey data Problems with Surveys Not always compatible with the user s jobs The user cannot specify what specific data to collect Conducting employer initiated surveys o Select key jobs o Determine relevant labor market o Select organizations o Decide on info to collect wages benefits pay policies o Compile data received o Determine wage structure and benefits to pay The Wage Curve o Wage curve National compensation survey A curve in a scatterplot representing the relationship between The federal wage poster o o Red circle rate A person that is being paid more than the maximum in their job grade Can happen when someone is demoted Green circle rate A person that is being paid below the minimum in their job grade Can be legal during the first 90 days of employment if they are trainees Competence based pay aka skill based pay or knowledge based pay o 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 3 Laws about Compensation o o o 1 Davis Bacon Act Required minimum wage prevailing wage rates 1 overtime premium payments by federal contractors Directly influenced all WPA projects Only influenced 1 of all workers in the US All federal gov t projects for public work projects had to pay the prevailing wage union scale 2 Walsh Healy Act Required overtime payments after 8 daily or 40 regular work hours for workers on federal contracts Expanded to all federal workers not just public works Redefined overtime 3 of workers affected 3 Fair Labor Standards Act Interstate commerce clause used to cover workers except agricultural and exempted managerial employees child labor under 16 is prohibited 100 of workers are affected Does 5 major things 1 Defines exempt and non exempt workers 2 Defined overtime nationally after 40 hours in a workweek 3 Defined overtime level of pay time and 1 2 if normally paid 10 then overtime is 15 4 Made child labor illegal 5 Established nationally minimum wage originally was 25 cents hr 5 categories of exempt workers 1 Executives 2 Administrators 3 White collar professionals 4 Outside sales people 5 Computer technicians