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1
ELEVENTH EDITION
GARY DESSLER
Part 4 | Compensation
Chapter
11
112
Direct Financial
Payments
Indirect Financial
Payments
113
Walsh-Healey Public
Contract Act (1936)
Employee Retirement
Income Security Act (ERISA)
Employee
Compensation
Age Discrimination in
Employment Act
Americans with
Disabilities Act
Workers Compensation
2008 Prentice Hall, Inc. All rights reserved.
114
FIGURE 111
Exempt Professionals
Attorneys
Physicians
Dentists
Pharmacists
Optometrists
Architects
Engineers
Teachers
Certified public accountants
Scientists
Computer systems analysts
Nonexempt
Paralegals
Nonlicensed accountants
Accounting clerks
Newspaper writers
Exempt Executives
Corporate officers
Supervisors
Source: Jeffrey Friedman, The Fair Labor Standards Act Today: A Primer,
Compensation, January/ February 2002, p. 53. Reprinted with permission of Sage
Publications, Inc. Note: These lists are general in nature, and exceptions exist. Any
questionable allocation of exemption status should be reviewed by labor legal counsel.
Superintendents
General managers
Individual who is in sole charge of an
independent establishment or
branch
Nonexempt
Working foreman/forewoman
Working supervisor
Lead worker
Management trainees
Exempt Administrators
Executive assistant to the president
Personnel directors
Accountants
Purchasing agents
Nonexempt
Secretaries
Clerical employees
Inspectors
Statisticians
115
FIGURE 112
Reprinted by permission of
Sage Publications, Inc.
116
FIGURE 113
Independent
Contractor
117
118
TABLE 111
Questions to Ask:
1. What must our company do to be successful in fulfilling its
mission or achieving its desired competitive position?
2. What are the employee behaviors or actions necessary to
successfully implement this competitive strategy?
3. What compensation programs should we use to reinforce those
behaviors? What should be the purpose of each program in
reinforcing each desired behavior?
4. What measurable requirements should each compensation
program meet to be deemed successful in fulfilling its purpose?
5. How well do our current compensation programs match these
requirements?
Source: Adapted from Jack Dolmat-Connell, Developing a Reward Strategy that Delivers Shareholder
and Employee Value, Compensation and Benefits Review, MarchApril 1999, p. 51.
2008 Prentice Hall, Inc. All rights reserved.
119
1110
Forms of Equity
External
Equity
Internal
Equity
Individual
Equity
Procedural
Equity
1111
Methods to
Address Equity
Issues
Performance Appraisal
and Incentive Pay
Communications, Grievance
Mechanisms, and Employees
Participation
1112
Conduct a salary survey of what other employers are paying for comparable jobs (to help ensure external
equity).
Determine the worth of each job in your organization through job evaluation (to ensure internal
equity).
1113
To price
benchmark
jobs
To marketprice wages
for jobs
To make
decisions
about benefits
1114
Employer SelfConducted
Surveys
Consulting
Firms
Professional
Associations
Government
Agencies
The
Internet
1115
TABLE 112
Sponsor
Internet Address
What It Provides
Downside
Salary.com
Salary.com
Wageweb
www.wageweb.com
U.S. Office of
Personnel
Management
www.opm.gov/oca/
07tables/
Job Smart
http://jobstar.org/tools/
salary/sal-prof.php
Profession-specific salary
surveys
Necessary to review
numerous salary surveys
for each profession
moving.com
moving.com
cnnmoney.com
cnnmoney.com
1116
Effort
Responsibility
Working Conditions
1117
1118
Ranking
Job
Classification
Point
Method
Factor
Comparison
1119
1120
TABLE 113
Ranking Order
1. Office manager
2. Chief nurse
42,500
3. Bookkeeper
34,000
4. Nurse
32,500
5. Cook
31,000
6. Nurses aide
28,500
7. Orderly
25,500
1121
Administrative assistants
different.
1122
FIGURE 114
This is a summary chart of the key grade level criteria for the GS-7 level of clerical and assistance
work. Do not use this chart alone for classification purposes; additional grade level criteria are in
the Web-based chart.
1123
1124
Example:
http://www.tropicanagolf.com/
1125
Point Method
Step 3. Group
Similar Jobs
into Pay Grades
Ranking Method
Classification Methods
1126
1127
FIGURE 115
Plotting a
Wage Curve
1128
1129
FIGURE 116
Wage Structure
1130
TABLE 114
41,246
42,621
43,997
45,372
46,747
48,122
49,498
50,873
52,248
53,623
GS-9
45,556
47,074
48,593
50,111
51,630
53,148
54,666
56,185
57,703
59,221
GS-10
50,169
51,841
53,513
55,185
56,857
58,529
60,201
61,873
63,545
65,218
GS-11
55,119
56,957
58,794
60,632
62,469
64,307
66,145
67,982
69,820
71,657
1131
FIGURE 117
Compensation
Administration
Checklist
1132
1133
Base
Pay
Short-term
Incentives
Long-Term
Incentives
Executive
Benefits and
Perks
1134
they filled.
Boards are reducing the relative importance of base
1135
1136
Competency-Based Pay
Competencies
Demonstrable characteristics of a person, including
1137
Support HighPerformance
Work Systems
Support
Strategic Aims
Support
Performance
Management
1138
acquire skills.
3. A formal competency testing system.
4. A work design that lets employees move among
1139
Cons
Pay program implementation problems
Costs of paying for unused knowledge, skills, and
behaviors
Complexity of program
Uncertainty that the program improves productivity
2008 Prentice Hall, Inc. All rights reserved.
1140
1141
FIGURE 118
Broadbanded
Structure and
How It Relates
to Traditional
Pay Grades
and Ranges
1142
1143
frequently, enabling them to be promoted to higherlevel jobs over women with more seniority.
In blue-collar jobs, women tend to be placed in
1144
compensation-related information.
Increased executive liability for accuracy in corporate
1145
actions.
1146
KEY TERMS
employee compensation
direct financial payments
indirect financial payments
Davis-Bacon Act (1931)
Walsh-Healey Public Contract Act
(1936)
Title VII of the 1964 Civil Rights Act
Fair Labor Standards Act (1938)
Equal Pay Act (1963)
Employee Retirement Income
Security Act (ERISA)
salary compression
salary survey
benchmark job
job evaluation
2008 Prentice Hall, Inc. All rights reserved.
compensable factor
ranking method
job classification (or grading) method
classes
grades
grade definition
point method
factor comparison method
pay grade
wage curve
pay ranges
competency-based pay
competencies
broadbanding
comparable worth
1147
Human Resource
Management
ELEVENTH EDITION
GARY DESSLER
Part 4 | Compensation
Appendix for
Chapter 11
1149
FIGURE 11A1
1. Mental Requirements
Either the possession of and/or the active application of the following:
A. (inherent) Mental traits, such as intelligence, memory, reasoning, facility in verbal expression,
ability to get along with people, and imagination.
B. (acquired) General education, such as grammar and arithmetic; or general information as to sports, world
events, etc.
C. (acquired) Specialized knowledge such as chemistry, engineering, accounting, advertising, etc.
2. Skill Requirements
A. (acquired) Facility in muscular coordination, as in operating machines, repetitive movements, careful
coordinations, dexterity, assembling, sorting, etc.
B. (acquired) Specific job knowledge necessary to the muscular coordination only; acquired by
performance of the work and not to be confused with general education or specialized knowledge.
It is very largely training in the interpretation of sensory impressions.
Examples
1. In operating an adding machine, the knowledge of which key to depress for a subtotal would be skill.
2. In automobile repair, the ability to determine the significance of a knock in the motor would be skill.
3. In hand-firing a boiler, the ability to determine from the appearance of the firebed how coal should be
shoveled over the surface would be skill.
3. Physical Requirements
A. Physical effort, such as sitting, standing, walking, climbing, pulling, lifting, etc.; both the amount
exercised and the degree of the continuity should be taken into account.
B. Physical status, such as age, height, weight, sex, strength, and eyesight.
Source: Jay L. Otis and Richard H. Leukart, Job Evaluation: A Basis for Sound Wage Administration,
p. 181. 1954, revised 1983. Reprinted by permission of Prentice Hall, Upper Saddle River, NJ.
2008 Prentice Hall, Inc. All rights reserved.
1150
FIGURE 11A1
Sample Definitions of Five Factors Typically Used in Factor Comparison Method (contd)
4. Responsibilities
A.
B.
C.
D.
E.
F.
1.
5. Working Conditions
A. Environmental influences such as atmosphere, ventilation, illumination, noise, congestion,
fellow workers, etc.
B. Hazardsfrom the work or its surroundings.
C. Hours.
Source: Jay L. Otis and Richard H. Leukart, Job Evaluation: A Basis for Sound Wage Administration,
p. 181. 1954, revised 1983. Reprinted by permission of Prentice Hall, Upper Saddle River, NJ.
2008 Prentice Hall, Inc. All rights reserved.
1151
TABLE 11A1
Mental
Requirements
Physical
Requirements
Skill
Requirements
Responsibility
Working
Conditions
Welder
Crane operator
Security guard
1 is high, 4 is low.
1152
TABLE 11A2
Requirements
Hourly
Wage
Mental
Physical
Skill
Responsibility
Working
Conditions
Welder
$9.80
4.00(1)
0.40(4)
3.00(1)
2.00(1)
0.40(2)
Crane operator
$5.60
1.40(3)
2.00(1)
1.80(3)
0.20(4)
0.20(4)
$6.00
1.60(2)
1.30(3)
2.00(2)
0.80(2)
0.30(3)
Security guard
$4.00
1.20(4)
1.40(2)
0.40(4)
0.40(3)
0.60(1)
1 is high, 4 is low.
1153
TABLE 11A3
Mental
Requirements
Physical
Requirements
Skill
Requirements
Responsibility
Working
Conditions
A1
$2
A1
$2
A1
$2
A1
$2
A1
$2
Welder
Crane operator
Security guard
1154
TABLE 11A4
Mental Requirements
Physical Requirements
Skill Requirements
0.20
Responsibility
Working Conditions
Crane Operator
Crane Operator
0.30
0.40
Welder
Sec. Guard
Sec. Guard
Welder
0.50
0.60
Sec. Guard
0.70
0.80
0.90
1.00
(Plater)
1.10
1.20
Sec. Guard
1.30
1.40
1.50
Sec. Guard
(Inspector)
(Plater)
(Inspector)
1.60
1.70
(Plater)
1.80
(Inspector)
Crane Operator
(Inspector)
Welder
1.90
2.00
Crane Operator
2.20
2.40
(Plater)
(Inspector)
(Plater)
2.60
2.80
3.00
Welder
3.20
3.40
3.60
3.80
4.00
Welder
1155
1156
FIGURE 11A2
Example of
One Factor
(Complexity/
Problem
Solving) in
a Point Factor
System
Source: Richard W.
Beatty and James R.
Beatty, Job Evaluation,
in Ronald A. Berk (ed.),
Performance
Assessment: Methods
and Applications
(Baltimore, MD: Johns
Hopkins University
Press, 1986), p. 322.
Reprinted by
permission.
1157
TABLE 11A5
FirstDegree
Points
SecondDegree
Points
ThirdDegree
Points
FourthDegree
Points
FifthDegree
Points
Decision making
41
82
123
164
204
Problem solving
35
70
105
140
174
Knowledge
24
48
72
96
123
1158
1159