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
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
The FLSA is managed and implemented by the Wage and Hour division of the United States Department of Labor. “The Wage and Hour Division (Wage-Hour) administers and enforces FLSA with respect to private employment, State and local government employment, and Federal employees of the Library of Congress, U.S. Postal Service, and Postal Rate Commission. The FLSA is enforced by the U.S. Office of Personnel Management for employees of other Executive Branch agencies, and by the U.S. Congress for covered employees of the Legislative Branch.” “The law generally applies to all employees of specific enterprises having workers engaged in interstate commerce, producing goods for interstate commerce, or handling, selling, or otherwise working on goods or materials that have been moved in or produced for interstate commerce.” However, workers that are not covered by the FLSA may still be subject to its minimum wage, overtime pay, recording, and child labor provisions if they are individually engaged in interstate commerce or in the production of goods for interstate commerce, or in any closely-related process or occupation directly essential to such production.
Once the system has been put into place, it is rather easy to use. The main advantage of the point system is that it is a more precise way to evaluate a job. It is a more comprehensive job evaluation system in that it includes the talents, energies, duties and working environments from one job to the next. Financial responsibility, leadership, collaboration and other key indicators are included as well. The fourth type of system is the Work Evaluation system and this system measures a job’s value through its importance to the business and the goals set forth. By using this type of system, an energetic business can truly see how a job contributes and relevance in attaining the company goals or objectives. The disadvantage to this type of evaluation is that certain jobs that are important and needed are overlooked due to the main focus on its worth to helping the company achieve its
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 Equal Pay Act was established on June 10, 1963(“The Equal Pay Act of 1963”). It is also referred to as the EPA. It was established to protect men and women who perform substantially equal work in the same establishment from sex based wage discrimination (“Federal Laws Prohibiting Job Discrimination Questions and Answers”). Determining if two employees who are doing the same job are difficult for one or the other is a way to help the government develop a decision that will not oppose the EEOC laws for that specific job. This law states that equal pay is required only for jobs held in the same geographic area. Furthermore, the law also specifies that jobs are the same if they are equal in terms of skill, effort, responsibility and working conditions. It is permissible to pay one employee more than another if the first employee has significant job duties. Companies are permitted to pay for differences ...
This is all determined by the "Fair Labor Standards Act of 1938 which covers all employees (with some exceptions) of companies engaged in the interstate commerce or in the production of goods for interstate commerce. The FLSAs major provisions are minimum wage, hours of work and child labor". Compensations Staff, pg. 553-554, Penn Foster. This law is based on an exempt/non-exempt basis. Most salaried positions are exempt as they are usually offered at a higher wage which is "above the exemption line of $23 600/ year." FLSA.com, Coverage under the FLSA, http://www.flsa.com/coverage.html. When a position is exempt the employer now has the ability to set the wage but not the maximum hours worked. When creating a salaried position the employee must have a set wage that cannot be adjusted based on hours worked, whether it be higher or lower than the generalized 40 hour work week. Any salaried employee must also be given a number of annual sick days, bereavement pay and holiday pay etc." .FLSA.com, Coverage under the FLSA, http://www.flsa.com/coverage.htmlThe only adjustment that may be made to the base pay must be considered permissible. An example of a permissible adjustment to the base pay would be an employee using more than their allotted sick time. It is clear that this law was created to protect workers
This group of workers are covered by the rules and regulations of the Fair Labor Standards Act where exempt employees are not. However,
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).
Reward systems have been evolving and growing throughout the years, but there are many types that have always been there. Base pay is the most common, which is an employee’s base wages and salary that they are paid on hourly, weekly, monthly, or annually (Luthans, 2011, p.94). Merit based pay is another type of incentive, which rewards and motivates an individual to perform their jobs to the standards of their employers. According to the text Organizational Behaviors, by Fred Luthans, there are three other options for paying an employee for their performance: individual incentives pay plans, using of bonuses, and the use of stock options. Individual based pay plans are based on the employees output and/or quality. Some organizations use bonuses as incentives to their employees. These are offered sometimes as op...
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
According to Chaneta (2014), job evaluation is the process of analyzing and assessing the relative worth of various jobs in an organization for the purpose of comparison and pay grading, and based on qualifications and skills required for a range of jobs. In other words, it forms the basis for pay and benefits negotiation. It helps to compensate employees accurately based on their job grades or values, and hence avoid issues of inequity and indifference at the workplace. To ensure effective job evaluation process, market-driven and job worth systems are largely used. While market-driven system is determined by the existing pay grade or structure in the opened market based on workforce demand and availability for particular positions, job-worth system depends on the value of the job or position to the organization. Both systems can be influenced by the external labor market and there become difficult for managers to apply as they would be torn between fulfilling internal and external demands. Another significant resemblance between market-driven and job worth systems is that they both require the same qualifications and other characteristics from the job performer as the basis for occupying a specific position. For instance, before HR practitioners decide on which system to use to determine Quality Specialist 's pay, they must make sure the potential worker has the job requirements and competencies to execute the job. One of the criteria for rewarding an employee is his or her ability to complete tasks in a proficient, productive, and effective way (Kaifi, Khanfar, Nafei, & Kaifi,
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.