To attract and retain high quality talent, an organization should design a compensation package to appeal to qualified applicants. An organization should address pay, benefits, and non-monetary rewards. In return, the employee should perform to a level that benefits the employer. A high-quality compensation package can make your organization more competitive in the recruiting process. The business owner, HR, and employees should be mindful of the ethical issues and the laws concerning compensation. Pay practices are regulated by Federal law, but states can make their own laws regarding pay, age, overtime pay, minimum wage, and hours of work. The Fair Labor Standards Act focus on the main issues; Minimum wage, limits on the use of child labor, …show more content…
Criteria for exempt status includes executive, administrative, Professional, Computer, and outside sales. Pretty much everyone else must be paid overtime accordingly. Overtime pay for nonexempt employees is 1.5 times the regular amount of hourly pay for all hours worked over 40 in a week. The equal pay act of 1963 prohibits companies from using different wage criteria for men and women performing the same job. Pay differences can be justified based on merit, seniority, quality of work, or other factors. Classifying an employee as an independent contractor has lots of advantages. The employer does not have to pay Social Security, workers compensation, or unemployment benefits, but an employer should be careful how they classify because this can result in a …show more content…
Strategic decisions that influence compensation plans are the Entitlement Philosophy. This assumes that an individual who has worked another year in the organization are entitled to a raise. Most employees receive the same, or near the same percentage increase. The Performance Philosophy bases raises on performance. Higher performing employees are compensated better than average performers regardless of tenure with the company. Below standard performers are denied a pay raise. This model is being increasingly used in the workforce and is a good way to motivate employees to do their best. A shared interest in the success of a business is beneficial to both parties. Competency-based pay rewards employee for the skills they acquire as they learn to do other jobs in an organization. For example, the employee can start off with a base pay and receive raises as they become cross-trained, making them for valuable to the business. Job evaluation methods is a formal process to determine the workers worth to the company. The point factor method combines education and experience to determine the compensation for a potential recruit. The amount of education is worth so many points, the amount of experience is worth so many points, then added together the pay is
Let’s begin by defining exempt and non-exempt. Non-exempt employees are those that are paid on an hourly basis and receive overtime compensation at one and one-half times their base pay for all hours worked in excess of some standard threshold. In most cases this “threshold” is 40 hours, but that is not always the case. Dividing the annual salary by 2080 to give a base hourly amount can derive the base pay for most, not all but most, employees. Exempt employees are those that do not receive compensation of any kind for hours worked in excess of whatever the threshold maybe. By definition of law exempt employees must be paid on a salary basis and job duties performed by said employee must be high-level such as executive, administrative or professional. To decide whether an employee meets the criteria for being exempt, there are two tests – the duties test and the salary basis test.
To resolve the gender wage gap, the government should consult with employers in federally-regulated sectors to apply a gender-based analysis to the design, development, implementation and evaluation of the policy. The law should clearly outline the systematic discrimination that women face in the workforce. This policy would entail employers to determine whether gender-based disparities exists and reevaluate the current pay system from an equity perspective to ensure and promote pay transparency. The law of ensuring pay equity should first be applied to the public sector, including federal public servants, employees of Crown cooperation and federally regulated companies. After this law has been found to be effective, it is also recommended that private corporations follow the same suit and comply with the pay equity
In management, the activities in which managers engage, to attract and to retain employees and to ensure that they perform at a high level of competence and contribute to the accomplishment of organizational goals are part of what make up an organization's Human Resources Management system. In addition, to the complexity of Human Resources Management, increases local, state and national laws and regulations by which managers and organizations must abide. It is called Equal Employment Opportunity (EEO), which ensures that citizens have an equal opportunity to obtain employment regardless of their gender, race, and country of origin, religion or disabilities. One of the major Equal Employment Opportunity Laws affecting HRM is the Equal Pay Act. The Equal Pay Act of 1963 is an amendment to the Fair Labor Standards Act that forbids gender-based pay discrimination of those performing substantially equal work for the...
Pfadenhauer, Diane M. Wage and Hour Law a Guide to the FAir Labor Standards Act and State Wage and Hour Laws. New York: DataMotion, 2013. Print.
Performance related pay is a financial reward given to employees whose work is considered to have reached a required standard or is above average. “PRP criteria can relate to the individual employee, to work groups or to the organization as a whole” (Armstrong, 2002). It is fair to provide people with financial rewards as a means of paying them according to their contribution (Armstrong 1993:86). The primary purpose of performance related pay in any organization is to recruit, retain and motivate the workforce. It also helps in focusing employees’ minds on particular goals (Protsik, 1966); communicate to employees an organization’s core values, and change the culture of that organization (Kessler and Purcell, 1991).
The foundation for effective job performance and compensation system can be traced to effective job analysis process. Fundamentally, a job analysis should consist of a thorough examination of the job 's duties and knowledge, skills, abilities, and qualities that are required in order to be successful in a specific position, upon which appropriate rewards or compensation can be determined. For many perspectives, jobs are usually made up of requirements and rewards, where rewards may be regarded as a major recruitment strategy for motivating potential employees in order to influence them to stay the organization for a longer period as well as enhance their performance. The most common or basic form of rewards which attracts employees is extrinsic
Throughout the years the United States has faced many challenges with equal employment opportunities for everyone. The United States has developed The Equal Employment Opportunity Commission, also known as the EEOC, to enforce laws that help prevent everyone from being treated unfairly when it comes to employment options. The EEOC has established stipulations and overlooks all of the federal equal employment opportunity regulations, practices and policies (“Federal Laws Prohibiting Job Discrimination Questions and Answers”). Some laws that have been passed are the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964 and Age Discrimination in Employment Act of 1967. Although some discrimination is still a problem, all of these laws have helped the United States citizens become treated more equally in the work force.
Corporations are looking for new ways to improve employee performance as well as remain competitive. Pay for performance is one method some businesses are utilizing to improve employee performance. Performance-based compensation exists when compensation is tied directly to that portion of an individual’s performance that can be effectively measured. There are a number of ways in which this may be accomplished and a number of examples as well how it is applied. One of the oldest examples is taken from the ancient Egyptians, where slaves working in the pyramids were given bread for superior performance. Payment of commission for sales production is one of the methods used today.
The above examples of pay show that the more skills, experience employees are with the organization the more they are compensated. Organizations would benefit by utilizing the same practice’s Disney extends to their workforces. For those businesses whose primary purpose of their plan is to only meet compliance requirements could greatly benefit by developing a comprehensive benefit plan. This could help increase their return on investment. The value I believe a business may gain from Disney’s compensation plan is to appeal to competent workers, to maintain those workers, and to motivate workers to direct their energies towards achieving the goals of the organization. Companies can set up policies to conduct a market study on a regular basis to implement a real performance appraisal system and then work on retaining good employees and elimination of poor performing workers. By following Disney’s lead of in obtaining those who best fit their company’s culture and supporting the company’s Mission. To guarantee that the pay structure is externally competitive, a pay survey should be shown. The results of a survey to be valid, the market pay data must be from the relevant labor market for each benchmark job. I would advise that a survey of regional and global pay data should be collected from the company, because for example, most of the office support, HR and operations jobs will be filled by local applicants. A job analysis is the procedure of reviewing jobs in an alike business. The result of this process is a job description “that includes the job title, a summary of the job tasks, a list of the essential tasks and responsibilities, and a description of the work context “(Burke, 2008). A job description consists of the knowledge, skills and aptitudes necessary to do the job. A job evaluation is the process of adjudicating the comparative value of job within a company
In large organisation, competition is not only in the market for goods and services but also for the quality of employees. As such, a large organization can only become attractive to the most skilled and high quality workers if it has an effective compensation and benefit plan. The key purpose of an effective compensation and benefit system is to provide employees with the right rewards for their work and right behavior in the workplace. Typically, organizational success is determined by the quality of employees an organization has. In turn, the organization can only attract such quality workers and maintain them through effective compensation and benefit
Merit pay is a vehicle for employers recognizing individual performance and motivating employees to reach higher achievement. Competition is a natural human instinct and healthy competition compels employees to perform at their highest level. Employees must have clear, attainable goals and supervisors must provide continuous feedback, publicly praising employees to motivate performance. Additionally, employers that recognize and reward individuals for their exceptional performance in tangible ways, ultimately increase employee’s self-esteem and encourage them to maintain a high level of commitment to the organization. Employees are more apt to stay with a company when they feel that their hard work is appreciated and compensated. When employees are highly driven, it decreases absenteeism, tardiness, and results in a positive work attitude. In fact, employers use merit pay not only to retain highly motivated performance individuals, but also to attract new employees who are motivated by monetary rewards cultivating a productive workforce. Personally, I think merit pay plans are a great incentive if they are implemented fairly, equitable, and based on individual performance. Furthermore, I feel nothing demoralizes a high performing employee faster than knowing that all employees who contribute less to performance will receive the exact pay increase. If merit pay programs are instituted, they must ensure that
Tomax Corporation has 400 employees and wishes to develop a compensation policy to correspond to its dynamic business strategy. The company wishes to employ a high-quality workforce capable of responding to a competitive business environment. Suggest different compensation objectives to match Tomax’s business goals.
Compensation for today 's average worker has always been a highly sensitive topic for any employer. Determining fair compensation can be a overbearing task as there are many contributing factors that make up the general pay scale. When determining pay a company must always consider the hourly amount, the benefits that may be offered, any incentive that could potentially be incurred and ensuring that their employee have an established work life balance. For an employer to be successful in determining compensation for their associate they must remain grounded around 1 key principle. An employees compensation is determined by expertise, education and the daily duties performed by the employee.
The total pay package has a direct impact on the successful recruitment, selection and the retention of staff within any organization. This pay package is critical for any business to remain competitive in today’s business world. Competitive compensation packages are vital to both large and small organizations as they encourage the retention of talented staff.
Holland Enterprises is on a new strategic direction, to attract and retain the most talented employees and to reduce turn over. Human resource department has came up with a new compensation plan. In the propose compensation and benefits system plan , I will explain a new compensation plan for Holland Enterprises, also I will explain the components of the compensation and benefit system plan in order to attract and motivate employees to be productive . In order for the compensation and benefits system plan to be operational, the package should include a necessary level of compensations to fulfill basic needs, equity with the external labor market, equity within the organization (Henderson, 2006).