Strategic Compensation: A Human Resource Management Approach

Cover......Page 1
Title......Page 5
Copyright......Page 6
Contents......Page 7
Preface......Page 16
Part ISetting the Stage for Strategic Compensation......Page 21
  A Component of Human Resource Systems......Page 22
   Core Compensation......Page 23
   Employee Benefits......Page 25
  A Historical Perspective on Compensation: The Road Toward Strategic Compensation......Page 27
  Strategic Versus Tactical Decisions......Page 29
   Competitive Strategy Choices......Page 31
   How HR Professionals Fit into the Corporate Hierarchy......Page 32
   How the Compensation Function Fits into HR Departments......Page 33
   The Compensation Department’s Main Goals......Page 37
   Line Managers......Page 38
  COMPENSATION IN ACTION......Page 39
  Discussion Questions......Page 40
  Endnotes......Page 41
 Chapter 2 Contextual Influences on Compensation Practice......Page 43
  Employment Laws that Influence Compensation Tactics......Page 44
   Income Continuity, Safety, and Work Hours......Page 45
   Pay Discrimination......Page 49
   Civil Rights Act of 1964......Page 51
   Accommodating Disabilities and Family Needs......Page 55
   Prevailing Wage Laws......Page 56
   Internal Revenue Code......Page 57
   Employee Retirement Income Security Act of 1974 (ERISA)......Page 58
   Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)......Page 59
   Pension Protection Act of 2006......Page 60
   Patient Protection and Affordable Care Act of 2010 (PPACA)......Page 61
  Contextual Influences on the FederalGovernment as an Employer......Page 62
  Labor Unions as Contextual Influences......Page 63
  Market Influences......Page 65
  Key Terms......Page 67
  CASE: Exempt or Nonexempt?......Page 68
  Endnotes......Page 69
Part II Bases for Pay......Page 71
  Seniority and Longevity Pay......Page 72
   Historical Overview......Page 73
   Design of Seniority Pay and Longevity Pay Plans......Page 74
   Fitting Seniority Pay with Competitive Strategies......Page 76
   Exploring the Elements of Merit Pay......Page 77
   Types of Performance Appraisal Plans......Page 80
   Exploring the Performance Appraisal Process......Page 85
   Empower Employees......Page 89
   Undesirable Social Structures......Page 91
   Little Motivational Value......Page 92
  Key Terms......Page 93
  CASE: Appraising Performance at Precision......Page 94
  Endnotes......Page 95
  Exploring Incentive Pay......Page 97
  Contrasting Incentive Pay with Traditional Pay......Page 98
  Individual Incentives......Page 100
   Types of Individual Incentive Plans......Page 101
   Advantages of Individual Incentive Pay Programs......Page 103
  Group Incentives......Page 104
   Types of Group Incentive Plans......Page 105
   Advantages of Group Incentives......Page 110
   Defining Companywide Incentives......Page 111
   Types of Companywide Incentive Plans......Page 112
   Level of Risk......Page 114
   Time Horizon: Short Term versus Long Term......Page 115
  COMPENSATION IN ACTION......Page 116
  Discussion Questions......Page 117
  Endnotes......Page 118
  Defining Person-Focused Pay: Competency-Based, Pay-for-Knowledge, and Skill-Based Pay......Page 120
  Usage of Person-Focused Pay Programs......Page 122
   Technological Innovation......Page 123
   Increased Global Competition......Page 124
  Varieties of Person-Focused Pay Programs......Page 125
  Contrasting Person-Focused Pay With Job-Based Pay......Page 129
   Advantages to Employees......Page 131
  Disadvantages of Person-focused Pay Programs......Page 132
  COMPENSATION IN ACTION......Page 133
  Key Terms......Page 134
  CASE: Person-Focused Pay at Mitron Computers......Page 135
  Endnotes......Page 136
Part IIIDesigning Compensation Systems......Page 137
  Internal Consistency......Page 138
   Steps in the Job Analysis Process......Page 140
   Legal Considerations for Job Analysis......Page 145
   U.S. Department of Labor’s Occupational Information Network (O*NET)......Page 147
   Compensable Factors......Page 152
   The Job Evaluation Process......Page 153
   The Point Method......Page 154
   Alternative Job-Content Evaluation Approaches......Page 158
  Internally Consistent Compensation Systems and Competitive Strategy......Page 159
  COMPENSATION IN ACTION......Page 160
  Discussion Questions......Page 161
  CASE: Internal Consistency at Customers First......Page 162
  Endnotes......Page 163
  Market-Competitive Pay Systems: The Basic Building Blocks......Page 164
   Preliminary Considerations......Page 165
   Using Published Compensation Survey Data......Page 166
   Compensation Surveys: Strategic Considerations......Page 169
   Compensation Survey Data......Page 171
   Updating the Survey Data......Page 176
  Integrating Internal Job Structures with External Market Pay Rates......Page 178
   Pay Level Policies......Page 181
   Pay Mix Policies......Page 182
  COMPENSATION IN ACTION......Page 183
  Discussion Questions......Page 184
  Endnotes......Page 185
  Constructing a Pay Structure......Page 195
   Step 3: Defining Pay Grades......Page 196
   Step 4: Calculating Pay Ranges for Each Pay Grade......Page 198
   Step 5: Evaluating the Results......Page 202
   Merit Increase Amounts......Page 203
   Recurring versus Nonrecurring Merit Pay Increases......Page 204
   Rewarding Performance: The Merit Pay Grid......Page 205
   Merit Pay Increase Budgets......Page 206
   Alternative Sales Compensation Plans......Page 209
   Determining Fixed Pay and the Compensation Mix......Page 211
  Designing Person-focused Programs......Page 212
   Establishing Skill Blocks......Page 213
   Transition Matters......Page 214
   Training and Certification......Page 215
   Broadbanding......Page 216
   Two-Tier Pay Structures......Page 217
  Summary......Page 219
  CASE: A New Sales Representative......Page 220
  Endnotes......Page 221
Part IV Employee Benefits......Page 223
  An Overview of Discretionary Benefits......Page 224
   Protection Programs......Page 226
   Paid Time Off......Page 229
   Services......Page 230
  The benefits and costs of Discretionary Benefits......Page 233
  COMPENSATION IN ACTION......Page 234
  Discussion Questions......Page 235
  CASE: Time Off at Superior Software Services......Page 236
  Endnotes......Page 237
  Exploring Retirement Plans......Page 238
   Trends in Retirement Plan Coverage and Costs......Page 239
   Minimum Standards for Qualified Plans......Page 240
   Minimum Funding Standards......Page 242
  Defined Contribution Plans......Page 243
   Section 401(k) Plans......Page 244
   Employee Stock Ownership Plans......Page 245
   Origins of Health Insurance Benefits......Page 246
   Health Insurance Coverage and Costs......Page 247
  Fee-for-Service Plans......Page 248
   Features of Fee-for-Service Plans......Page 249
   Features of Health Maintenance Organizations......Page 251
  Specialized Insurance Benefits......Page 253
   Features of Mental Health and Substance Abuse Plans......Page 254
  Consumer-Driven Health Care......Page 255
  COMPENSATION IN ACTION......Page 256
  Key Terms......Page 257
  CASE: A Health Savings Account at Frontline PR......Page 258
  Endnotes......Page 259
  An Overview of Legally Required Benefits......Page 260
   Social Security Act of 1935......Page 261
   State Compulsory Disability Laws (Workers’ Compensation)......Page 267
   Family and Medical Leave Act of 1993......Page 271
  The benefits and costs of Legally Required Benefits......Page 272
   Determining Who Receives Coverage......Page 273
   Employee Choice......Page 274
   Communication......Page 276
  Summary......Page 279
  CASE: Benefits for Part-Time Workers......Page 280
  Endnotes......Page 281
Part V Contemporary Strategic CompensationChallenges......Page 283
 Chapter 12 Compensating Executives......Page 284
   Who Are Executives?......Page 285
   Components of Current Core Compensation......Page 287
   Components of Deferred Core Compensation......Page 289
   Employee Benefits: Enhanced Protection Program Benefits and Perquisites......Page 293
  Principles and Processes for Setting Executive Compensation......Page 294
   The Key Players in Setting Executive Compensation......Page 295
   Theoretical Explanations for Setting Executive Compensation......Page 296
  Executive Compensation Disclosure Rules......Page 298
  Other Benefits......Page 300
  Say on Pay......Page 301
   Ethical Considerations: Is Executive Compensation Fair?......Page 302
  COMPENSATION IN ACTION......Page 304
  Summary......Page 305
  CASE: CEO Pay in the News......Page 306
  Endnotes......Page 307
  Contingent Employees and Flexible Work Schedules......Page 309
   Groups of Contingent Workers......Page 310
   Reasons for U.S. Employers’ Increased Reliance on Contingent Workers......Page 315
  Pay and Employee Benefits for Contingent Workers......Page 317
   Part-Time Employees......Page 318
   Temporary Employees......Page 319
   Independent Contractors, Freelancers, and Consultants......Page 320
  Flexible Work Schedules: Flextime, Compressed Workweeks, and Telecommuting......Page 321
   Telecommuting......Page 323
   Pay......Page 324
   Employee Benefits......Page 325
  Unions’ Reactions to Contingent Workers and Flexible Work Schedules......Page 326
  Strategic Issues and Choices in Using Contingent and Flexible Workers......Page 327
  COMPENSATION IN ACTION......Page 328
  Discussion Questions......Page 329
  Endnotes......Page 330
Part VICompensation Issues around the World......Page 333
 Chapter 14 Compensating Expatriates......Page 334
   How Globalization Is Affecting HR Departments......Page 335
   Host Country Nationals, Third Country Nationals, and Expatriates: Definitions and Relevance for Compensation Issues......Page 336
   Equity: Pay Referent Groups......Page 337
   Methods for Setting Base Pay......Page 338
   Purchasing Power......Page 339
   Hardship Allowances......Page 340
  Establishing Employee Benefits for U.S. Expatriates......Page 341
   Standard Benefits for U.S. Expatriates......Page 342
   Enhanced Benefits for U.S. Expatriates......Page 343
  Balance Sheet Approach for U.S. Expatriates’ Compensation Packages......Page 344
   Housing and Utilities......Page 345
   Tax Considerations......Page 346
  Repatriation Pay Issues......Page 347
  COMPENSATION IN ACTION......Page 348
  Discussion Questions......Page 349
  CASE: Jenkins Goes Abroad......Page 350
  Endnotes......Page 351
 Chapter 15 Pay and Benefits outside the United States......Page 352
   Canada......Page 353
   Mexico......Page 356
   Brazil......Page 357
  Europe......Page 358
   Germany......Page 359
   India......Page 360
  People’s Republic of China......Page 362
  Summary......Page 364
  CASE: North American Expansion for Threads Apparel......Page 365
  Endnotes......Page 366
 Epilogue......Page 369
 Chapter 16 Challenges Facing Compensation Professionals......Page 370
   What Is an Economic Recession?......Page 371
  Underemployment: Implications for Compensation......Page 372
   The Compensation–Productivity Gap......Page 374
  Rising Wages in China......Page 376
  Challenges in Health Care Reform......Page 377
   Relevance for Employee Benefits......Page 378
  Marriage between Same-Sex Individuals and the U.S. Supreme Court Ruling on the Defense of Marriage Act......Page 379
  Key Terms......Page 381
  Endnotes......Page 382
Glossary......Page 383
Author Index......Page 401
Subject Index......Page 403