MGMT 4560 ch. 8

Job ranking

Placing jobs from lowest to highest, or vice versa, based on their relative worth to the organization

• not based on quantitative data

• subjective & biased

Point Factor

Determines the relative worth of a job based on the degree to which a compensable factor is present or required.

A compensable factor is a job characteristic that an organization values and chooses to pay for.

Each factor is assigned a number of points, to the degree that it is present or required in each job. The points are totaled, and the more points assigned to a job, the more worth that job has to the organization.

Factor Comparison

Combines point & ranking

• Points are assigned to each benchmark job.

• The benchmark jobs are then rank-ordered

• All other jobs in organization are compared to the benchmark jobs

Job Classification

Classifies all jobs within a company according to a standardized scale (grades), based on the overall tasks, responsibilities, and duties associated with each job

kinda like ranking

Individual Compensation Plan

Group Compensation Plans

rewards employees for exceeding performance or productivity goals during a set period of time

Enterprise Compesation Plans

incentive that is based on the success of the entire organization

• profit sharing

• stock purchasing

Direct Compensation

Cash or cash equivalents

Indirect Compensation

bonus pay, paid time off, health insurance, and retirement programs

Compensation THEORIES

Equity, Expectancy, Comparable worth, Pay Compression

Comparable Worth vs Equal Pay

Comparable worth seeks to align salaries across different professions based on job value,

Expectancy theory

one’s level of motivation depends on the attractiveness of the rewards sought and the PROPABILITY of obtaining those rewards

Pay Compression

occurs when there is a small difference in pay between employees regardless of their skills or experience.

Pay inversion

when new hires are paid more than incumbent employees ex. due to inflation or market reflection

External Equity

Comparing your paid position to other companies paid amount for that position

Internal Equity

Comparing pay internally

Comparison Ratio

Used to ensure that employees are paid at the market rate

Compares the salary an employee is paid to the midpoint of the salary range for their position or similar positions at other organizations

FLSA (fair labor standards act)

protects workers

• employees be paid a minimum wage for all hours worked,

• overtime premium pay for hours worked in excess of forty hours in a workweek.

• banned employees 14 and under to work