Chapter 11 dessler 12-ce_ppt_ch11

Chapter 11: Strategic Pay Plans

Strategic Pay Plans | 11-1

Copyright © 2014 Pearson Canada Inc. All rights reserved.

Dessler, Chhinzer, Cole
Human Resources
Management in Canada
Canadian Twelfth Edition

Learning Outcomes

• EXPLAIN in detail each of the three
stages in establishing pay rates.
• DISCUSS competency-based pay.



• EXPLAIN the strategic importance of total
rewards.

Learning Outcomes

• DEFINE pay equity and EXPLAIN its
importance today.



• DESCRIBE the five basic elements of
compensation for managers.

Strategic Importance of
Total Rewards
• monetary (extrinsic)
• compensation: cash payments and benefits
• personal growth and interpersonal rewards

• total awards approach
• rewards are part of integrated whole
• aligns rewards with business strategies



• non-monetary (intrinsic)

reserved.
Copyright © 2014 Pearson Canada Inc. All rights reserved

Employment Rewards


reserved.

Total Rewards


Five Components of Total Rewards
1. Compensation

2. Benefits
4. Performance and recognition

5. Development and career opportunities



3. Work-life programs

Basic Considerations in
Determining Pay Rates
•
•
•
•
•

Employment/Labour Standards Act
Pay Equity Acts
Human Rights Acts
Canada/Quebec Pension Plan
other legislation (worker’s comp., EI)

• union influences
• compensation policies
• equity and its impact on pay rates


• legal considerations in compensation

Establishing Pay Rates

Stage 2: Conduct wage/salary survey

Stage 1: Job evaluation


reserved.

Stage 3: Combine job evaluation and salary
survey to determine pay

Stage 1: Job Evaluation

• Benchmark job
• critical to operations or commonly found in other
organizations

• Compensable factors
•

fundamental, compensable element of a job



A systematic comparison to determine
relative worth of jobs within a firm.

Job Evaluation Methods
• Classification/grading method
categorizes jobs into groups
grade/group description: outlines level of
compensable factors required by each job

• Point method
• identify compensable factors
• determine the degree to which each factor is present
in each job



•
•

reserved.

Grade/Group Description
Sample


Point Method Steps

Step 3: Assign points for each degree of
each sub-factor
Step 2: Determine factor weights and degrees
Step 1: Preliminary steps

reserved.

Step 4: Evaluate the jobs

reserved.

Sub-Factor Sample


reserved.

Point Method
Job Evaluation Plan Sample


Stage 2: Conduct a Wage/
Salary Survey
• aimed at determining prevailing wage rates

• avoid upward bias
• informal surveys good for easily recognized
jobs

• formal surveys are most comprehensive


• determine rates for benchmark jobs
• determine market rates for jobs
• collect data on benefits, recognition programs, etc.

reserved.

Earnings Data Sample


Stage 3: Combine Job Evaluation
and Salary Survey Information
• a graphic description of the relationship
between the value of the job and the
average wage paid for this job

Pay ranges
• a series of steps or levels within a pay
grade, usually based on years of service


Wage curve

reserved.

Wage Curve


reserved.

Pay Ranges Sample


Reducing the number of salary grades and
ranges into just a few wide levels or
“bands”, each of which then contains a
relatively wide range of jobs and salary
levels.
advantage
• greater flexibility in employee
compensation


Broadbanding

reserved.

Broadbanding


Pay for Knowledge
• competency-based pay
(managers, professionals)

• pay-for-knowledge program should
include:
• competencies/skills directly important to job
performance
• new competencies that replace competencies that
are no longer important
• on-the-job training, not “in the classroom.”


• skill-based pay (manufacturing employees)

Compensating Executives
and Managers
1.
2.
3.
4.
5.

Salary
Benefits
Short-term incentives
Long-term incentives
Perquisites



Five elements:

Compensating Professional
Employees
• engineers, scientists, accountants, lawyers
, etc.

• difficult to measure economic impact to
organization
• market pricing approach commonly used



• compensable factors not easily measured:
creativity, problem solving

Pay Equity
• wage gap has narrowed but remains at 30%

• aim is to provide equal pay to male and
female-dominated job classes of equal value

• must ensure no gender bias in job evaluation
• long-term solution is to eliminate male and
female- dominated jobs



• gap attributed to systemic discrimination

reserved.

Male-Female Wage Gap


Chapter 11 dessler 12-ce_ppt_ch11

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