Overview

Develop a compensation program that positions your company for success.

This course will give you a solid, fundamental overview of the field of compensation and serve as a primary resource as you implement new programs or improve existing ones.

Course Objective: Gain information and skills needed to implement new or improve existing compensation programs.

Selected Learning Objectives

• Determine and maintain pay levels that will attract, retain, and motivate

• Develop compensation policy guidelines that reflect the company’s values and culture

• Meet the seven basic objectives when implementing an effective compensation plan

• Integrate performance, productivity and business results into the compensation process

• Adjust compensation plans to address a company’s changing needs

Testing Format

This course contains one multiple choice test valued at one Continuing Education Unit (CEU) and one examination case valued at one Continuing Education Unit (CEU).

Table of Contents

About This Course

How to Take This Course

1. The Basics of a Compensation Program 1

Compensation and Human Resources Management

The Role of Compensation in Enterprise Management

Compensation Policy

Objectives of an Effective Compensation Program

Serve All Stakeholders

Be Simple

Identify Compensation Needs

Group Employees Properly

Include a Process for Developing a Compensation Program

Reflect Company Culture and Values

Be Skilled in the Art of Managing Change

Summary

Review Questions

2. The Elements of Compensation 11

Financial Elements of Compensation

Types of Financial Compensation

The Magnitude of Financial Payments

Nonfinancial Elements of Compensation

Types of Nonfinancial Compensation

The Value of Nonfinancial Compensation

Compensation Management

Summary

Review Questions

3. Job Evaluation 23

The Traditional Job Evaluation Approach

The Ranking System

The Classification System

The Point Evaluation System

Factor Comparison System

Combination Systems

Technical Factors of Job Evaluation Methods

Market Classification Systems

The Administration of Job Evaluation Programs

Satisfying Job Information Needs

Keeping the Program Up-to-Date

Giving Proper Consideration to Compliance Matters

Communicating Results to Employees

New Approaches to Bases for Pay

Summary

Review Questions

4. Market Surveys 35

Market Data

Availability of Market Data

Defining and Selecting Benchmark Jobs

The Nature of Labor Markets

The Proper Sample of the Market

Survey Methods

Recommendations

Use of Survey Data

Compensation Increase Surveys

Compensation Practices Surveying

Summary

Review Questions

5. Salary Structure 47

Technical Features of a Salary Structure

Slotting Benchmark Jobs into the Structure

Positioning the Structure to the Market

Adjusting the Salary Structure

The Use of Salary Structures

Special Problems and Issues

Salary Grades and Levels

Summary

Review Questions

6. Salary Actions 59

General Salary Increases

The Need for General Increases

Methods of Granting General Increases

Cost of Living Adjustments and Indexing

Basic Approaches to Individual Salary Actions within Salary Grade

Single-Rate Approach

Automatic Approach

Informal Approach

Merit Pay Approach

Managing Salaries within a Salary Grade

Other Salary Actions

Promotions

Demotions

Reevaluation and Inequity Increases

Special Cases

Summary

Review Questions

7. Pay for Performance 71

Performance, Productivity, and Business Results

Performance Reward Systems in Business

Types of Performance Rewards

Salary Reward for Performance

Basic Principles of Performance Salary Systems

Rating Performance

Translating Performance into Pay

Performance Salary Increase Guidelines

Economic Performance Increase Systems

Operating Problems of Performance Pay Increases

Incentive Pay Plans

Summary

Review Questions

8. Planning, Control, and Administration of Salaries 87

Planning

Operational and Strategic Plans

Budgets

Salary Planning

Control

Information

Review and Approval

Distribution Controls

Monitoring Results

Administration

Administrative Tasks

Legal Compliance

Questions and Complaints

Summary

Review Questions

9. Management Compensation 101

Management Salaries

Market Pricing

Fair Salaries

Salary Structure and Job Classification

Salary Increase Practices

Annual Bonus Award Plans

Types of Bonus Plans

Incentive Pay Standards

Types of Incentive Compensation Plans

Management Bonus Plan Issues

Long-term Income Plans

Long-term Income Standards

Alternative Long-term Income Plans

Trends in Long-term Plans

Issues with Respect to Long-term Income

Special Management Benefits

A Model Management Compensation Program

Guidelines for Management Salaries

Guidelines for Management Bonus Plans

Guidelines for Long-term Income Plans

Summary

Review Questions

10. Employee Benefits and Retirement Plans 121

Types of Benefits

Health Care Benefits

Disability and Sickness Insurance

Life Insurance

Legally Required Payments

Vacations

Holidays

Employee Services

Prepaid Legal Services

Education

Financial Assistance

Outplacement

The Unique Company Benefit

Designing the Employee Benefits Program

Administering the Benefits Program

Health Care Cost Containment

Retirement Plans

Sources of Retirement Income

Essential Features of Private Retirement Plans

Problems with Private Retirement Plans

A Rethinking of Private Pension Plans

A New Retirement Income Strategy

Summary

Review Questions

The First Examination

The Practice Case

The Practice Case Solution

The Examination Case

Selected Readings

Index