Week 9 HR

Goals of Compensation Package

1. Be positive to attract best people for the ob

2. compensation to be competetive wnough to motivate people to stay

3. improve morale, motivation, satisfaction among employees

4. reward individual or team performance / increase organizational growth and development

Compensation can be…

direct, indirect or non monetary

Questions to see if you have a Fair Wage?

1. Are wages too high to achieve financial health in your organization?

2. Do managers and employees know and buy-into your compensation philosophy?

3. Does the pay scale reflect the importance of various job titles within the organization?

4. Is your compensation good enough to retain employees?

5. Are state and federal laws being met with your compensation package?

6. Is your compensation philosophy keeping in line with labour market changes, industry changes, and organizational changes

 market compensation policy

to pay the going rate for a particular job, within a particular market based on research and salary studies

market plus philosophy

determine the going rate and add a percentage to that rate, such as 5 percent

market minus philosophy

particular percentage less than the market; so in our example, if a company pays 5 percent less, the same job will pay $54,150

Job evaluation

The process of determining the relative worth of jobs to determine pay structure. Job evaluation can help us determine if pay is equitable and fair

job ranking system

• job titles are listed and ranked in order of importance to the organization.

paired comparison

individual jobs are compared with every other job, based on a ranking system, and an overall score is given for each job, determining the highest-valued job to the lowest-valued job.

Job classification

every job is classified and grouped based on the knowledge and skills required for the job, years of experience, and amount of authority for that job. The US military is perhaps the best known for this type of classification system

Compensable Factors

1. Knowledge

2. Autonomy

3. Supervision

4. Psychological demands

5. Interpersonal skills

6. Internal and external contacts

Hay Profile Method

This proprietary job evaluation method focuses on three factors called know-how, problem solving, and accountability. Within these factors are specific statements such as “procedural proficiency.” Each of these statements is given a point value in each category of know-how, problem solving, and accountability

pay grading

• This is the process of setting the pay scale for specific jobs or types of jobs.

• possible lack of motivation for employees to work harder

steps of pay grading

• The first method to pay grades is to develop a variety of pay grade levels.

• Then once the levels are developed, each job is assigned a pay grade.

• When employees receive raises, their raises stay within the range of their individual pay grade, until they receive a promotion that may result in a higher pay grade

Going Rate Model

analysis of the going rate for a particular job at a particular time is considered when creating the compensation package. This model can work well if market pressures or labor supply-and-demand pressures greatly impact your business.

Management Fit Model

each manager decides about who should be paid what when that person is hired. The downside to this model may be potential discrimination, halo effects, and resentment within the organization. Of course, these factors can create morale issues, the exact thing we want to avoid when compensating employees.

Skill-based pay

With a skill-based pay system, salary levels are based on an employee’s skills, as opposed to job title. This method is implemented similarly to the pay grade model, but rather than job title, a set of skills is assigned a particular pay grade.

Competency-based pay

Rather than looking at specific skills, the competency-based approach looks at the employee’s traits or characteristics as opposed to a specific skills set. This model focuses more on what the employee can become as opposed to the skills he or she already has.

Broadbanding

Broadbanding is like a pay grade system, except all jobs in a particular category are assigned a specific pay category. For example, everyone working in customer service, or all administrative assistants (regardless of department), are paid within the same general band.

Variable pay system

This type of system provides employees with a pay basis but then links the attainment of certain goals or achievements directly to their pay. For example, a salesperson may receive a certain base pay but earn more if he or she meets the sales quota

Equity Theory

people will evaluate their own compensation by comparing their compensation to others’ compensation and their inputs to others’ inputs. In other words, people will look at their own compensation packages and at their own inputs (the work performed) and compare that with others. If they perceive this to be unfair, in that another person is paid more but they believe that person is doing less work, motivational issues can occur.

External pay equity

refers to what other people in similar organizations are being paid for a similar job

Internal pay equity

focuses on employees within the same organization

Expectancy Theory

employees will put in as much work as they expect to receive. In other words, if the employee perceives they are going to be paid favorably, they will work to achieve the outcomes.

Reinforcement Theory

if high performance is followed by some reward, that desired behavior will likely occur in the future. Likewise, if high performance isn’t followed by a reward, it is less likely the high performance will occur in the future

Centralized pay system

be one pay system which would be one pay system for all employees regardless of where they live

pay attitude survey

create a transparent compensation process resulting in higher performing employees

Desireable traits of incentive plans

• clearly communicated

• attainable but challenging

• easily understandable

• tied to company goals

Laws relating to pay

• Pay Equities Act

• Public Sectors Act 

• Pay Transparencies Act 2018 

• OVERTIME

Vacation and General Holidays / Time off

• depends on the Province you live in.

• The employer is responsible for making sure that the employee takes the minimum amount of vacation per year.

• A recent study revealed that Canadians have the lowest number of paid vacation days (10) compared to other developed countries (30), so if you really want to attract new talent, offer more vacation days than what’s required. Plus, employees that return to work after a vacation are more engaged and productive than usual, making it a win-win.

maternity leave

• Pregnant employees are entitled up to 17 weeks of maternity leave that can be taken up to 13 weeks before the expected date or birth and ends 17 weeks after the actual birth.

• Natural or adoptive parents are entitled up to 63 weeks of parental leave. One parent can take the entire leave, or the time can be combined and/or shared.

Employees are also entitled to other leaves of absence

• 10 unpaid days/year domestic violence leave

• 3 unpaid days/year personal injury or illness leave

• Employees with a family member of a critically ill child or adult are eligible for up to 17 weeks or 37 weeks of unpaid leave depending on the family member.

Critical illness leave

generally unpaid, but it ensures that the employee will get paid the same when they return. Critical Illness Leave is important because it means that the employee still has their job security while caring for their dependent.

Compassionate Care Leave

unpaid, In the event of an employee’s immediate family member has a serious medical condition, employees can take up to 28 weeks of unpaid leave to look after that family member

Canadian Pension Plan Contributions

• Employees, employers, and self-employed individuals are required to contribute to the Canadian Pension Plan. Employers must contribute by deducting a certain percentage of an employee’s wage. Certain employees are exempt from this, like employees who make less than $3,500 a year. In return, employees get access to retirement pensions and survivors’ benefits for widows and children, as well as certain disability benefits.

Survivors’ benefits

include either a one-time payment to the beneficiary or a monthly payment to the beneficiary. The amount an employee receives from their pension after they turn 65 depends on how much they made throughout their working years and how much they worked

Employment Insurance Contributions

Canadian Employment Insurance (aka EI) provides regular benefits to individuals who lose their jobs through “no fault of their own” and can’t find a job to replace it. Employees who receive EI of any amount are subject to tax for that amount and the amount can vary but is usually 55% of your average earnings up to around $55,000. You can receive these benefits from 14 to 45 weeks while you try to find another job.

Canada's Universal Health System

• the Government of Canada provides basic health coverage through it's publicly -funded universal health care system. Coverage is for basic healthcare such as hospital and emergency room care, doctor visits, and various medical services like X-Rays or MRIs.

• Provinces and territories administer and deliver health care services according to the Canada Health Act.

Employer-Sponsored Benefits Plans

• Government-funded health coverage is generally not included for prescription drugs (varies by Province), dental, paramedical services (massage therapy, chiropractor, or physical therapy), and vision (see more about Vision below).

• This means that it's the responsibility of Canadian citizens to find insurance through a personally funded private insurance policy or through their employer. Employer -sponsored benefits plans are NOT mandatory but about 90% of large to mid-size employers provide a benefits package and about 70% of small businesses provide a benefits pac kage to attract and retain employees plus:

Employer -sponsored benefits typically include some or all of these:

• Life Insurance and/or Dependent Life

• Accidental Death & Dismemberment (AD&D)

• Dental

• Extended Health Care (see below)

• Short Term Disability

• Long Term Disability

• Critical Illness

most valued benefits

• Drugs

• Paramedical

  • Massage, physical therapy etc

• Vision

There are two kinds of spending accounts:

• Health Spending Accounts (HSA), and

• Taxable Lifestyle Spending Accounts (LSA).

Spending Accounts

These are pooled accounts in which an employee can use pre-allocated funds (typically employer-funded) on whatever their employer has approved. HSAs are often used to top-up expenses not covered under a traditional benefits plan (e.g. dental/orthodontics, drugs).

LSAs are typically for wellness activities like gym memberships or vitamins, and Not only do spending accounts offer lots of flexibility, but they’re also a really great cost-effective option for small businesses since they use a pay-as-you-use model. With spending accounts, you can also offer it as a standalone plan instead of a complement to a traditional plan

Employee Assistance Programs

They offer a wide variety of services from short-term counseling to general mental health support. Employees value when their employers care about their mental health, and these services help employees who are going through a rough time.