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The document discusses the importance of understanding compensation in organizations, detailing its various forms such as cash compensation and benefits. It explains job evaluation methods used to determine the value of jobs and establish pay rates, including job ranking, classification, and the point method. Additionally, it covers employee benefits, including mandatory programs like Workers' Compensation, Canada Pension Plan, and Employment Insurance, along with changes to parental leave policies.

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0% found this document useful (0 votes)
12 views48 pages

week+7

The document discusses the importance of understanding compensation in organizations, detailing its various forms such as cash compensation and benefits. It explains job evaluation methods used to determine the value of jobs and establish pay rates, including job ranking, classification, and the point method. Additionally, it covers employee benefits, including mandatory programs like Workers' Compensation, Canada Pension Plan, and Employment Insurance, along with changes to parental leave policies.

Uploaded by

annaqiaojiali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 48

Week 7

Why is Learning about Compensation


Important?

• Compensation will matter A LOT to you


• Compensation is a big issue for managers and
owners of organizations
• Pay affects productivity
What is Compensation?

Compensation refers to all


forms of financial returns
and tangible services and
benefits employees receive
as part of an employment
relationship.
Total Rewards
• Total Compensation
• Cash compensation: wage, salary, pay for performance
• Benefits: health benefits, allowances, life insurance
• Relational Returns 也很重要
• Recognition and status
• Employment security
• Challenging work
• Learning opportunities
Determining Compensation: Job
Evaluation
• Worth of a job is determined through a job evaluation
– Process of systematically determining the relative value of jobs
• Value of job is then used to create a hierarchy of jobs
internal to the organizatio 建立内部工作的层次结构
• Hierarchy helps determine a rate of pay by indicating which
jobs should be paid more/less than others in the
organization (Internal equity) 层次结构通过指示应该比组织中的其他职位多
付 / 少付的工作来帮助确定薪资水平(内部股权
Job Evaluation Methods
• 确定 relative value 的方法:
• Job Ranking –easy to complete
– Raters examine job description and arrange jobs according to their value to
the company 比较挑选哪个 job 更 value
– Two ways of ranking: alternation ranking (正 1 倒 1 正 2 倒 2. 。。 and paired
comparison methods(subjective
• Job Classification
– Classes or grades are defined to describe a group of jobs 把 job 放入类别 grade
one/two/.. ; - 同一类别的薪酬都是一样的
– less subjective than our job ranking but still subjective and bias
• Point Method (most common method
– Numerical values (points) are assigned to specific job components
(compensable factors)
– Sum of values provides quantitative assessment of the job’s worth
Job Ranking: 2 Paired Comparison
Example

Busser Hostess Server Total


Busser - 0 0 0
Hostess 1 - 0 1
Server 1 1 - 2
2 Job Classification Example
Pay Characteristics of Typical Job
Grade
1 Works under direct supervision. Tasks are simple, repetitive and require little
initiative. When made, mistakes or errors are easily detected and are not costly.
Minimal level of education and training required. Examples: janitor, file clerk, general
labourer.
2 Works under direct supervision. Tasks generally are simple and repetitive, although
some training is required. Little initiative is necessary. Although easily detected, some
mistakes or errors can be costly. Examples: switchboard operator/receptionist,
accounting clerk, trenching machine operator.
3 Generally, but not always, works under direct supervision. Although most tasks are
routine, some required use of discretion. Mistakes or errors may not be easily
detected and can by costly. Minimum of high school education and/or substantial
training required. Example: customer service representative, senior accounting clerk,
control room monitor.
4 Frequently does not work under direct supervision. Some tasks are complicated and
require considerable education or training. Considerable use of independent
judgment may be required. Consequences of error may be severe and/or costly. May
involve supervision of others. Examples: accountant, senior control room monitor,
3 Job Evaluation: Point Method Example
Value and Value and
Secretary Shipper/ Receiver
J ob rate J ob rate

Skill 25 Skill 18

Effort 13 Effort 17

Responsibility 32 Responsibility 25

Working Conditions 5 Working Conditions 15

J ob Value 75 J ob Value 75

J ob Rate $13.75/ hr J ob Rate $15.00/ hr


Before Pay Equity

J ob Rate $15.00/ hr
After Pay Equity
Point Method Process:
they first need to develop a plan
Step One: Conduct Job Analysis

Step Two: Determine Compensable Factors


• Must determine which factors to include (usually SWER-skills, working
conditions, effort and responsibility ), how many and consider the issue
of “small numbers” (applying compensable factor from benchmark job 基
准工作 when it is not relevant to the focal job 重点工作, 应用基准工作中的可补偿
因素) )
we are creating our job evaluation plan based on a benchmark job.

SWER use in_pay equity legislation. /And in fact, in Ontario pay equity
legislation requires organizations to evaluate their jobs on the basis of

Compensable Factors
Characteristics in the work that the organization values; reflect how work adds value to the
organization
• Based on the work performed (what is done) and the strategy and values of the organization (what
is valued)
• based on the work content, so what is what is required of the job, but also, we are picking out the
compensable factors of that job that are most important to the organization in terms of that
organization's meeting meeting its objectives, and its organizational strategies
• Eg 人类学教授 - 出行 -compensable factor- 这属于 aspects of that benchmark job that might not relevant
• Factors are broken down into three3 major categories:
1. Universal Factors (SWER) 薪酬平等 ( because of pay equity legislation )
2. Sub-Factors (分解 And then we break those sub factors down further into degrees or levels. So let‘s, for
example, say, for skills, we’re going to look at computer skills, we then start to determine Well, what is a
very high level computer skill? 给出了人力资源的例子。那么,该工作负责管理的是员工、财务资源、信息资源、物质资源等工作条件,这就是该
工作正在完成的环境。
3. Degrees or Levels ( eg 开始看计算机技能的不同级别,什么是高水平的计算机技能,什么是低水平的计算机技能,所以我们开始确定它是什么样子
的。
Compensable Factors
Point Method Process:

Step Three: Scale the Factors


• Description of several different degrees or levels of a sub-
factor in jobs 子因素的几个不同程度或级别的描述
• A different number of points is associated with each
degree/level 打分
• Use examples to anchor descriptions 使用示例锚定描述
Levels of Sub-factors: Example
Sub-Factor: Problem solving
Description: Scope for initiative and judgment
Degree Points
A some degree of judgment and initiative required 25-50
B moderate degree of judgment and initiative required 51-76
C significant degree of judgment and initiative required 77-102
D high degree of judgment and initiative required 103-128
Point Method Process:
Step Four: Weight the Factors
• Weighting assigned to each factor to reflect differences
in importance attached to each factor by the employer
• For example:
– Skill 40%
– Effort 30%
– Responsibility 20%
– Working Conditions 10%
100%
Point Method Process:
Step Five: Communicate the Plan
• Develop manual: develop a manual so that it is clear to those who are conducti
ng the job evaluation, exactly what purpose the job evaluation is used for, and
how the job evaluation should be conducted.
- The purpose/objectives of the policy
- Roles and responsibilities for implementing the policy
- A step-by-step list of procedures for the evaluation process
- An appeal process for employees to follow
- Example plan: link
• Train users-- we train our job evaluation committe 委员会员 , with the plan and
the manual and train them on how to conduct the job evaluation
• Communicate plan to all employees
Establishing Pay Rates
• Job evaluation systems serve as a basis for wage-rate
determination; They do not determine wage rate
• To determine wage-rate:
1. Group similar jobs into pay grades
2. Conduct salary survey to gauge what other employers pay
for comparable jobs
3. Price pay grades using wage curves
4. Determine pay policy - lead, meet or lag (External equity)
5. Fine-tune pay rates - develop pay ranges, minimum,
maximum and midpoint
Linking Job Evaluation to Pay Rates
Salary
$ 125,000 Maximum
$ 120,000
$ 115,000
$ 110,000
$ 105,000 Maximum Midpoint
$ 100,000 -----------------------
$ 95,000
$ 90,000 Maximum
$ 85,000
Midpoint
$ 80,000
---------------------
$ 75,000
$ 70,000 SG3 Minimum
Midpoint
$ 65,000 Maximum
-----------------------
$ 60,000
$ 55,000 Minimum
$ 50,000 Maximum Midpoin t
$ 45,000 ------------ ---------
$ 40,000 Minimum
$ 35,000 Midpoint
$ 30,000 - - - - - - - - - - - - - - - - - - - - - - - Minimum
$ 25,000
$ 20,000
Minimum
300 400 500 600 700 800 900 1000 1100 1200 1300 1400

Mail Clerk Accounting Clerk Engineer I Maint. Supervisor Director IT


Receptionist Shipper/Receiver HR Analyst Engineer II Director Finance
Truck Driver Administrative Assistant Foreman Marketing Manager Director Sales
Technicians
Pay-for-Performance Plans
• Pay that varies with some measure of individual, team or
organizational performance
• As of 2016, 91% of private-sector employers and 54% of public-
sector employers use at least one variable pay plan
• Have a positive impact on performance and decrease turnover if
they are designed well/they can increase performance, and
decrease turnover

• Several types (short and long term plans)


Short Term Pay-for-Performance Plans
• Focus on performance within a one-year period
– Merit pay
– Lump-sum bonuses
– Individual incentive plans
– Group incentive plans
Merit Pay
• Links increases in base pay to how highly employees are
rated on a performance appraisal
– Past performance is assessed and rewarded each year the
employee is with the organization
• Issues:
– Expensive
– Differentials between performance levels is not enough to
motivate performance 员工良好和优秀之间的差距太小不足以刺激
Lump Sum Bonuses
• One time lump sum paid to an employee based on
achieving a performance goal within a one year
period
• One -time payment 一次性奖金
• Not built into base pay
• Increasingly used as a substitute for merit pay
• Less expensive than merit pay over the long run
Individual Incentive Plans
• Offer a promise of pay for some objective, pre-established
level of performance
• Common feature – An established standard against which
employee performance is compared to determine
magnitude of incentive pay
• 不够也给奖励,只是少一点
• E.g., Straight piecework system:
– Pay rate determination is based on units of production per time
period, and wages vary directly as a function of production level
Group Incentive Plans
• A standard is established against which team
performance is compared to determine the
magnitude of the incentive pay

• E.g., Profit Sharing Plans


- Variable pay plans requiring a corporate profit target
to be met before any payouts occur
Long-term Incentive Plans
• Focus on performance beyond a one-year period
• Stock Options- are commonly used for executive pay.
– A stock option is the right to purchase stock at a specified (exercise) price
for a fixed time period
• Broad-Based Option Plans (BBOPs)
– Stock grants whereby the company gives all employees stock options
over some time frame
• Employee Stock/Share Ownership Plans (ESOPs)
– Plans that offer employees the opportunity to purchase stock, often
partially or fully matched by employer
– link
Agenda

1.Categorization of benefits
2.Workers’ Compensation
3. Canada Pension Plan
4.Employment Insurance
5.Changes to EI
Categorization of Employee
Benefits
1. Legally required benefits
– Workers’ Compensation
– Canada/Quebec Pension Plan
– Employment Insurance
So employees don't pay into workers compensation only the employer
pays for worker and compensation. It's a no fault insurance plan
no fault bit – 无过错 也得付
Employer-sponsored (i.e., voluntary) benefits
- Various types; Organization-specific
1- collective liability fund- 你的雇主向这个基金投资,然后由政府管理。
-65
Workers’ Compensation
• A mandator 强制 , government-sponsored, employer-
paid no-fault insurance plan that provides
compensation for injuries and diseases that arise out
of, and while in the course of, employment
• Provides benefits for
– Lost earnings due to temporary disability (up to age 65)
– Lost earnings due to permanent disability (up to age 65)
– Health care expenses
– Survivor benefits after fatalities
• Compensation varies from 75 to 90 percent of net
earnings (ONT= 85% of wages depending on injury up
to a maximum of $102,800)
Canada/Quebec Pension Plan
CPP
• A mandatory, government-sponsored pension plan
• Funded equally by employers and employees
– From 2019 to 2023, the contribution rate for employees will
gradually increase from 4.95% to 5.95% of gross income between
$3,500 and $61,600
– Gross income- 税前
• Provides benefits upon:
– Retirement: 1/3 of average work earnings (max is $1,203.75 if
start at 65; average is $689.17 as of Oct 2020)
– Disability: Fixed amount of $510.85 plus amount based on how
much you contributed to the CPP
– Death: If older than 65, survivor will receive 60% of deceased
contributor’s CPP; if younger than 65, survivor will receive a flat
rate plus 37.5% of deceased contributor’s CPP
Employment Insurance EI
• A mandatory government-sponsored plan for all
employed Canadians that provides workers with
temporary income replacement as a result of
employment interruptions due to circumstances
beyond their control
• Funded by employer and employee contributions
– Employees’ contribution is $1.58 per $100 of earnings
up to a max amount of $56,300), employer contributes
1.4 times employee’s contributions
• Basic benefit is 55% of average insurable earnings
(max insurable earning is $56,300 -~$595 per week)
• Payable for a maximum of 45 weeks (some exceptions)
Types of Employment Insurance
• EI regular benefits:
– For those who lose their jobs due to shortages or layoffs
• EI special benefits:
– For those who are sick, pregnant or recently gave birth, are
caring for a newborn/newly adopted child , are caring for
someone who is ill, injured or needs end-of-life care
• EI fishing benefits:
– For self-employed fishers actively seeking work
• EI work-sharing benefits:
– For those who work a reduced work week due to temporary
reduction in business activity in order to avoid layoffs
EI Parental Leave Changes
• As of Dec 3rd, 2017 changes to maternity and parental
leave were put in place
– Pregnant women can receive benefits up to 12 weeks
before their due date
– Optional extended benefit up to 61 weeks (~ 18 months)
at 33% of insurable earnings (standard is 35 weeks at
55%)
• Addition of extended parental sharing benefits
– Additional 5 weeks to the standard benefit option
– Additional 8 weeks to the extended parental benefit
option
EI Caregiver Changes
• Several types:
– Family caregiver benefits for adults (18+): 15 weeks
of benefits now available
– Family caregiver benefits for children : 35 weeks of
benefits for parental and non-parental
caregivers (previously only available to parents)
– Compassionate care benefits: 26 weeks of benefits
for caregivers providing end-of-life care to a person
of any age
Agenda

1.Employer-sponsored benefits
2.Flex benefits
3.Next week
Employer-sponsored Benefits
• A choice by employers
• Vast array of options, such as
- Parenting benefits
- Income security benefits
- Pension plans
- Life Insurance
- Medical plans
- Pay for time not worked
- Employee assistant plans
- Child and eldercare assistance
Employer-sponsored Parenting
Benefits
• Many employers “top” the amount of parental
leave benefits provided under EI
– Examples:
o City of Toronto: 75% of salary for 78 weeks for new
mothers and fathers – the best in the country!
o KPMG: 100% of salary for 17 weeks for new mothers;
$20,000 adoption subsidy
o Fidelity Canada: IVF subsidy of up to $15,000
Income Security Benefits
• Short-term disability plans
• Sick leave plans: provide specified number of paid
sick days per month or per year (3 unpaid days
required by law)

• Short-term disability plans: provide continuation of


part or all of earnings during absence due to non-
work related illness or injury

• Long-term disability plans: provide continuation of


part of earnings during long-term absence due to
non-work related illness or injury
Employer-sponsored Pension Plans
• % of workers covered by an employer-sponsored
pension plan has drastically decreased
• Two types:
– Defined benefit plans: employer agrees to provide a
specific level of retirement pension expressed either as a
fixed dollar or percentage of earning (either % of last 3-5
years of earnings or % of average career earning)
– Defined contribution plans: employer agrees to provide
specific contributions but the final benefit is unknown 养
老金
Life Insurance
• Various forms:
– Group life insurance
– Accidental death and dismemberment insurance
– Dependent life insurance
– Retiree life insurance
Employer-sponsored Medical Plans
• Cover expenses not payable under
provincial/territorial plans
• Prescription drug coverage considered most
important benefit by employees
• Medical cost control is biggest issue facing benefits
managers today
• Cost control through
– Deductibles, coinsurance
– Preventive health care/wellness programs
Employer-sponsored Medical Plans
• Dental Insurance
– Typically covers the full or partial cost of basic
preventive maintenance such as checkups and fillings
– 50 to 80 percent of major restorative work
• Vision Care
– Most plans are non-contributory and cover part or all of
the costs of eye examinations, lenses, frames, and
contact lenses
Pay For Time Not Worked
• Paid rest periods, coffee breaks, travel time
• Vacations
• Holidays
• Leaves
• Bereavement leave
• Jury duty
Employee Assistance Plans (EAPs)
• Provide confidential counseling and/or treatment
programs for personal problems including
addiction, stress, and mental health issues
• Number of EAPs in Canada is growing
Other Benefits
• Childcare
– Can include resource and referral services, programs for
sick children/emergency childcare, childcare subsidies
and onsite day care centres
• Eldercare
– Counselling and referral services for employees
providing care for elder parents
Flexible Benefits
• Allows employee say in their benefits
• 3 types:
– Complete flexibility
– Flexibility with core benefits
– Offer different packages employees can choose
Flexible Benefits: Advantages
• Employees choose packages that best satisfy their
unique needs
• Flexible benefits help firms meet the changing needs
of a changing workforce
• Increased involvement of employees improves
understanding of benefits
• Flexible plans make introduction of new benefits less
costly
• Cost containment - organization sets dollar maximum;
employee chooses within the constraint
Flexible Benefits: Disadvantages

• Employees make bad choices and find themselves not


covered for predictable emergencies
• Administrative burdens and expenses increase
• Adverse selection - employees pick only the benefits
they will use; the subsequent high benefit utilization
increases its cost
Next Week
• Occupational Health and Safety
- Read Chapter 3

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