Compensation. Human Resources Association of the Midlands

Transcription

1 Compensation Human Resources Association of the Midlands

2 Introductions Renee Erbes, SPHR, CCP, CEBS HR experience 15+ yrs / 13 in comp Sr HR Consultant The Creelgroup x205 rerbes@creelgroup.com 2

3 Agenda Evening 1 Intro Information 01 - Key Compensation Legislation 02 - Total Rewards and Strategic Focus of Org 03 - Compensation Programs Evening Compensation Programs Complete Section 04 Job Evaluation 05 Pricing, Pay Structure, Administration 06 - SPHR Focus (International Comp; Executive Comp; Stock Plans) 3

4 Compensation Competency Compensation Experience? General Specialized 4

5 01 Key Compensation Legislation 5

6 01 Key Compensation Legislation Exemption Classifications Executive Administrative Professional (Learned Professional and Creative Professional) Highly Compensated Computer Outside Sales 6

7 01 Key Compensation Legislation Learned professional examples: doctors, lawyers, engineers, scientists, pharmacists, dental hygienists, accountants, and architects. (Minimum salary and salary basis for this exemption does NOT apply to doctors, lawyers or teachers.) Creative professional example: journalist may be exempt if primary work requires invention, imagination and originality investigative interviews, opinion columns, etc. 7

8 01 Key Compensation Legislation Do we base our exemptions on job titles? NO exemptions are not based on job titles but on job duties DOL states that blue-collar workers who perform repetitive operations with their hands, physical skill and energy will not be exempt no matter how highly they are compensated. 8

9 01 Key Compensation Legislation Test your exemption knowledge Fire fighter Insurance adjuster (interviews insureds, witnesses and physicians; inspects property damage; makes recommendations regarding claim coverage; negotiates settlements) Registered nurse Help desk specialist (answers phone calls and tries to resolve employee PC problems) 9

10 01 Key Compensation Legislation Test your exemption knowledge Would an employee who operates very expensive equipment be exempt? What if the employer could experience great financial loss if the employee failed to perform the job properly? Would a mechanic making $110k a year be exempt? 10

11 01 Key Compensation Legislation Compensable Travel Time for Non-exempt Employees One Day Trips / Overnight Trips Compensable? Sunday M-F Saturday Yes 8 a.m. to 5 p.m. No 5 p.m. to 8 a.m. 11

12 01 Key Compensation Legislation Travel Time - Compensable? Non-exempt employee travels from home to airport Schedule of non-exempt employee is M-F, 8am-5pm ; travels as a passenger on a Saturday from 9am-11am Exempt employee with same schedule traveling on a Saturday from 9am-11am? 12

13 01 Key Compensation Legislation Comp Regulations Summary Davis-Bacon Act 1931 Copeland Anti-Kickback Act 1934 Walsh Healy Act 1936 Fair Labor Standards Act 1938 Equal Pay Act 1963 Service Contract Act 1965 Age Discrimination in Employment Act 1967 Defense Authorization Bill

14 Compensation Knowledge Progress Check Which of the following acts requires organizations holding federal construction contracts to pay laborers and mechanics the prevailing wage of the employees in the locality where the work is performed? A. Walsh-Healey Act B. Copeland Act C. Davis-Bacon Act D. Fair Labor Standards Act 14

15 Compensation Knowledge Progress Check When calculating overtime, the employer must include the time for an employee who A. Must commute one hour each way from home to the plant B. Arrives at 8:00 as scheduled but cannot begin work because the needed delivery doesn t arrive until 10:00 C. Spends two hours at home, waiting for a call to report to work D. Arrives one hour early for the shift and waits in the employee waiting area 15

16 02 Philosophy, Strategy, Policy and Communication 16

17 Compensation Knowledge Progress Check Which of the following would be considered indirect compensation? A. Granting comp time to a salaried employee for extra hours worked at a convention B. Paying the difference between jury duty and the employee s regular wages C. Paying individual bonuses to team members for meeting critical project deadlines D. Awarding store gift cards to top performers in a sales contest 17

18 Compensation Knowledge Progress Check What is a major advantage of an organization having internal equity? A. It allows organizations to fairly recognize unique jobs B. It is a sure way to eliminate gender bias C. It lowers the amount the organization spends on salaries D. It guarantees that all employees have the same benefits 18

19 03 Compensation Programs 19

20 Compensation Knowledge Progress Check Which of the following statements regarding payroll is correct? A. Social Security taxes are matched and withheld by the employer up to a yearly amount B. Medicare taxes are matched and withheld by the employer up to a yearly amount C. Voluntary deductions are withheld from employee paychecks before involuntary deductions D. Employers must retain paper copies of their payroll records 20

21 Compensation Knowledge Progress Check Gainsharing is a type of: A. Profit sharing B. Individual incentive plan C. Group incentive D. Commission 21

22 04 Job Evaluation 22

23 04 Job Evaluation Ranking Advantages Ranking Disadvantages Quick to implement Inexpensive method Easily explained Not appropriate for a lot of positions Puts jobs in sequence but doesn t determine relative value of one job compared to another Doesn t measure differences between jobs Not as reliable as other methods Relies on judgment of those doing eval 23

24 04 Job Evaluation 24

25 04 Job Evaluation Classification Advantages Understandable by employees Classifications can change as duties and responsibilities do Classification Disadvantages Only looks at whole job Ambiguous; overlapping grade descriptions Only as good as the grade descriptions Relies on judgment of those doing eval 25

26 04 Job Evaluation Factor Comparison Example Skill Resp. Effort Work Cond. Supervision $5.40 A A A $4.80 A A $4.20 B B B B $3.90 B Job A=$5.40+$4.80+$5.40+$4.80+$5.40=$25.80/hr Job B=$4.20+$4.20+$4.20+$4.20+$3.90=$20.70/hr 26

27 04 Job Evaluation Factor Comparison Advantages Relatively objective and defensible results Good documentation and audit trail Factor Comparison Disadvantages Complex and time consuming Relies on judgment of those doing eval Requires good job documentation, job descriptions and analysis Difficult to communicate Not easy to maintain when market rates change 27

28 04 Job Evaluation Point Factor Example of Compensable Skill Factor Degree Levels Points 1 Knowledge of simple, routine tasks. Skill to operate simple equipment. Requires no previous experience 2 Knowledge of basic procedures. Skill and judgment to operate equipment. Moderate degree of experience 3 Knowledge of technical procedures to perform complex assignments. Requires considerable experience. Requires judgment to operate various machinery

29 04 Job Evaluation Example of Point Factor Factors Points for Job C Factor Totals Skill Responsibility Effort Working Conditions Supervision Total Job A Job B Job C Job D Job E

30 04 Job Evaluation Point Factor Advantages Relatively objective and defensible results Good documentation and audit trail Yields good results if used consistently Point Factor Disadvantages Complex and time consuming More difficult to explain to employees Requires good job documentation, job descriptions and analysis Relies on judgment of those doing eval 30

31 Compensation Knowledge Progress Check Which of the following statements regarding job evaluation methods is correct? A. Quantitative methods are more easily explained to employees B. Quantitative methods do not establish the relative order of jobs C. Nonquantitative methods evaluate the whole job D. Nonquantitative methods evaluate job worth 31

32 05 Pricing, Pay Structure, Administration 32

33 05 Pricing, Pay Structure, Admin Market-Based Advantages Considers external competition while initially deemphasizing internal equity Well suited for orgs where it is vital to maintain competitive market position Market-Based Disadvantages Reliant on survey data (must be available for a significant number of org s jobs) Less legally defensible than job content approaches Doesn t recognize internal job importance 33

34 05 Pricing, Pay Structure, Admin Data Analysis - survey data may need to be aged and/or leveled Aging data: market rates are adjusted to a point in time Leveling data: when job in a survey is similar but not identical to the job in the org, data can be weighted or leveled for a better match 34

35 05 Pricing, Pay Structure, Admin Data Analysis Average (mean) Un-weighted Average* / Weighted Average** Company # Incumbents Annual Salary Total Salary A 2 $55,000 $110,000 B 1 $60,000 $60,000 C 2 $65,000 $130,000 D 5 $70,000 $350,000 E 1 $75,000 $75,000 5* 11** $325,000* $725,000** Unweighted average=$65,000 / Weighted average=$65,909 Median number in the middle Mode most frequently occurring number 35

36 05 Pricing, Pay Structure, Admin Data Analysis Quartiles and percentiles Show dispersion or how groups of data relate to each other Organizations use to determine whether they lead, lag or match external market First Quartile Second Quartile Third Quartile Fourth Quartile Q1 Q2 Q3 Q4 $ 55,000 $ 59,999 $ 60,000 $ 64,999 $ 65,000 $ 69,999 $ 70,000 $ 75,000 Min Midpoint / 50th Perc Max 36

37 05 Pricing, Pay Structure, Admin Broadbanding Advantages Wider pay ranges permits employee movement between jobs without being overly limited by pay ranges Reduces number of pay grades Supports flatter organization; reduces number of reporting levels Provides more autonomy to line managers in pay decisions Enhances employee mobility can transfer without requiring a change in assigned pay range Broadbanding Disadvantages Creates overly broad pay ranges; less control of pay costs if no mechanism to tie pay growth of individual employees to skills needed for next higher level position Reduces value of pay ranges as parameters for governing pay rates Fewer pay grades lessens promotions to another pay grade; can lead to retention issues Risks deviation from market pay practices; Paying too little=higher turnover Paying too much=higher product costs Hard to justify salary diff if 2 employees in same broad pay band doing similar work; can lead to pay inequity perception potential pay discrimination charges 37

38 Compensation Knowledge Progress Check Which of the following measures uses number of incumbents and pay? A. Weighted Average B. Unweighted Average C. Median D. Mode 38

39 The End Contact me with questions Summary of Focus Topics (end of outline) SPHR overview 39

40 06 International Comp Executive Comp Stock Plans 40

41 Compensation Knowledge Progress Check Compensation discrepancies between expatriates are most likely to occur with which compensation approach? A. Negotiation approach B. Headquarters-based balance sheet approach C. Home-country-based balance sheet approach D. Pure localization approach 41

42 Compensation Knowledge Progress Check A third-country national is someone who is a person who: A. lives in one country and works in another country B. was born in one country, educated in a second country but working in a third country C. was born in one country but contracted to work in three different countries D. is transferred from his/her home country to another country but working for a company which is located in a third country 42

43 The End Contact me with questions 43