Compensation represents the rewards

employees receive for performing their job,

are either:

Intrinsic compensation:

reflects
employees psychological mind-sets that
result from performing their jobs.
Organisational development professionals

promote intrinsic compensation through

effective job design.

Extrinsic compensation: includes

monetary and non-monetary rewards.

 Skill variety
Task identity
Task significance
Autonomy
Feedback

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 Base Pay
Hourly pay

Annual salary

Base pay adjustments

COLAs
pay
Merit pay
pay
Pay-for-knowledge

Skill-based
Incentive
Seniority pay
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 An employees skill level

An employees effort
An employees level of responsibility
The severity of the working

conditions

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Federal Legislation Designed to:

Promote worker safety and health

Maintain family income
Assist families in crisis
Provide assistance in case of
Disability
Unemployment

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Three Broad Categories

Protection programs
Pay-for-time-not-worked
Services

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W.C.
$/%

B.C.
$/%

Service
$/%

Total

28.02/100

20.41/100

13.09/100

Base Pay

20.57/73.4

14.14/69.3

9.60/73.3

5.37/19.6

4.30/21.0

2.29/17.5

Benefit

Dscry
LRBs

1.94/6.9

1.95/9.6

1.19/9.1

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TOTAL

BASE
PAY

DISCRY
BENEFIT

LRB

ALL

$25.75

$18.07

$5.61

$2.07

MGMT/
PROFL

$41.91

$30.11

$9.81

$2.79

SALES/
OFFICE

$19.39

$13.96

$3.86

$1.57

SERVICE

$14.26

$10.23

$2.68

$1.35

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 Strategic decisions - Guide the

activities of companies in the market

Strategic management - Entails

judgments that direct a company

toward achieving specific goals
Strategic planning - Supports business

objectives
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 The planned use of company resources

2+ years time span
Choices

Lowest cost strategy

Differentiation strategy

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 Lowest Cost: Focus on being lowest cost

producer/ seller of goods or services

Differentiation: Focus on offering unique

goods or services

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Effective when Jobs

Include predictable behaviors
Have a short-term focus
Require autonomous activity
Focus on quantity of output

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Effective when Jobs:

Require highly creative behaviors
Have a long-term focus
Demand cooperation &

independence
Involve risk-taking
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 Recruitment Career development

Selection

Performance

appraisal

Training

Labor- management

relations

Employment termination
Insuring legal compliance
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Two Types:
Involuntary

Terminated
Laid - off

Voluntary

Quit
Retired

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 Income continuity, safety work hours

Pay discrimination
Meeting disabled & family needs
Prevailing wage

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 Davis Bacon Act

Fair Labor Standards Act
Equal Pay Act
Civil Rights Act
Pregnancy Discrimination Act
Americans with Disabilities Act
Family and Medical Leave Act
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 Internal consistency
Market competitiveness
Recognizing individual

efforts

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Achieved when the value of each job is

clearly
defined
Represents:
Job structure
Hierarchy
Achieved using:
Job analysis
Job evaluation
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 Compensation policies that fit with business

objectives
Vital in attracting and retaining employees

Are based on:

Strategic analyses
Compensation surveys

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 Pay Structures: Pay is determined by

employees credentials, job knowledge,

and
job performance
Pay Grades: Based on compensable
factors and value
Pay Ranges: Builds on grades, uses
midpoints, minimums, and maximums
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Individuals or entities directly affected by

compensation practices, like
Employees
Line managers
Executives
Unions
U.S. government

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