UB MGI 301 - CHPT 11 STUDENT(1) (19 pages)

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CHPT 11 STUDENT(1)



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CHPT 11 STUDENT(1)

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Pages:
19
School:
University at Buffalo, The State University of New York
Course:
Mgi 301 - Human Resources Mgt

Unformatted text preview:

How Companies Pay Employees Pay Structure Decisions Equity Theory People evaluate fairness of their situations by comparing to other peoples situations Employees often evaluate their pay relative to that of other employees How do you determine if your pay is equitable 11 2 2 Developing Pay Levels Pay structure relative pay of different jobs job structure how much they are paid pay level o Job structure relative pay of jobs or range of pay often expressed by salary grades o Pay level average pay of jobs in an organization including wages salaries bonuses Pay policies are attached to jobs not individuals to make the process more manageable and equitable 11 3 Developing Pay Levels Market Pressures Competitive Market Challenges in Pay Decisions Product market competition sell goods and services at a quantity and price that will bring a ROI Labor market competition amount an organization must pay to compete against other organizations that hire similar employees Companies with higher labor costs than competitors must charge higher prices for their products services Labor Cost Components 11 5 Employees as Resources A philosophy that considers employees to be an investment that will yield valuable returns Controlling costs through noncompetitive pay can result in low employee productivity and quality Pay policies and programs are important HR tools for encouraging desired behaviors and discouraging undesired behaviors Must constantly evaluate pay in terms of cost and ROI from employees 11 6 Deciding What to Pay Deciding pay levels is discretionary and based on broad range of factors The organization decides whether to pay at below or above market average then decides which jobs this applies to 11 7 Market Pay Surveys Benchmarking procedure by which an organization compares its own practices against the competition Consider before using pay surveys o Which employers to include in the survey o Which jobs to include in the survey o If multiple surveys used how rates of pay are weighted and combined 11 8 Developing Job Structure Job structure relative pay of jobs in organizations often determined by worth of that job internally Job evaluation administrative procedure used to measure internal job worth o Evaluation process composed of compensable factors which are characteristics of jobs an organization values and chooses to pay for o Job evaluators apply weighting scheme to account for differing importance of compensable factors 11 9 Developing Pay Structure Pay Setting Approaches Market Survey Approach emphasizes external comparisons based pay on market surveys that cover as many key jobs as possible Pay Policy Line mathematical expression that describes the relationship between a job s pay and its job evaluation points Pay Grades Grouping jobs of similar worth or content together for pay administration purposes o some jobs may be underpaid while others in same grade are overpaid 11 10 Pay Grade Structure Pay Grade Minimum Midpoint Maximum 1 20 000 23 220



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