SlideShare ist ein Scribd-Unternehmen logo
1 von 20
Downloaden Sie, um offline zu lesen
7-1
                    External Competitiveness: Determining
Part                the Pay Level
II


      Chapter 7 Defining Competitiveness
      Chapter 8 Designing Pay Levels, Mix,
      and Pay Structures




McGraw-Hill/Irwin              © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-2

 STRATEGIC                                                                         STRATEGIC
                                    TECHNIQUES
  POLICIES                                                                         OBJECTIVES

                   Work     Descriptions     Evaluation/      INTERNAL
  ALIGNMENT        Analysis                  Certification    STRUCTURE

                                                                                      EFFICIENCY
                                                                                      • Performance
COMPETITIVENESS   Market      Surveys      Policy            PAY                      • Quality
                  Definitions              Lines             STRUCTURE
                                                                                      • Customers
                                                                                      • Stockholders
                   Seniority   Performance     Merit         INCENTIVE
                                                                                      • Costs
 CONTRIBUTORS      Based       Based           Guidelines    PROGRAMS
                                                                                      FAIRNESS
                                                                                      COMPLIANCE
ADMINISTRATION      Planning Budgeting Communication EVALUATION



     McGraw-Hill/Irwin                            © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-3


Chap r
    te
  7

            Defining Competitiveness




 McGraw-Hill/Irwin   © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-4

                         Learning Objectives
After studying Chapter 7, students should be able to:
1.   Explain the importance of external
     competitiveness to the pay model.
2.   Discuss the factors that influence external
     competitiveness.
3.   Discuss the difference between labor market,
     product market, and organizational factors in
     determining external competitiveness.
4.   Explain the different pay policy decisions and
     the consequences of using each.
     McGraw-Hill/Irwin            © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-5




          External competitiveness
          refers to the pay relationships
          among organizations - the
          organization’s pay relative to its
          competitors.




McGraw-Hill/Irwin        © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-6


External competitiveness is expressed in
practice by:

1. setting a pay level that is above,
   below, or equal to competitors, and
2. by considering the mix of pay forms
   relative to those of competitors.




     McGraw-Hill/Irwin   © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-7



Pay level refers to the average of the array of
rates paid by an employer.


Σ Base + Bonuses + Benefits + Options / Σ Employees



Pay forms refer to the mix of the various types of
payments that make up total compensation.




  McGraw-Hill/Irwin      © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-8

Pay level and mix focus attention
on two objectives:


              Control Labor Costs




                    Attract and Retain
                        Employees
McGraw-Hill/Irwin          © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7-9


Pay Level Decisions Impact Labor Costs



                         Number of
Labor Costs          =                           x            Pay Level
                         Employees




 McGraw-Hill/Irwin            © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 10

What Shapes External Competitiveness?
LABOR MARKET FACTORS
LABOR MARKET FACTORS
Nature of Demand
Nature of Demand
Nature of Supply
Nature of Supply



PRODUCT MARKET FACTORS
PRODUCT MARKET FACTORS
Degree of Competition
Degree of Competition                           EXTERNAL
                                                EXTERNAL
Level of Product Demand                         COMPETITIVENESS
                                                COMPETITIVENESS
Level of Product Demand




ORGANIZATION FACTORS
ORGANIZATION FACTORS
Industry, Strategy, Size
Industry, Strategy, Size
Individual Manager
Individual Manager


  McGraw-Hill/Irwin        © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 11


                       Labor Demand
! The marginal product of labor is the additional
  output associated with the employment of one
  additional human resource unit, with other
  production factors held constant.
! The marginal revenue of labor is the additional
  revenue generated when the firm employs one
  additional unit of human resources, with other
  production factors held constant.



   McGraw-Hill/Irwin        © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 12
                       Supply and Demand at the Market and Individual
                       Employer Level
                                                 Market level                                                                         Employer level

                                                                                                                                         Ma
                             $100,000                                                                              $100,000                rg
                                             De                                                                                               in
                                               ma                                                                                         pr al r
                                                 nd                                                                                         od ev
                                                                                                                                                uc en
                                                                                                                                                  t ue




                                                                                      Pay for business graduates
Pay for business graduates




                             $50,000                                                                               $50,000
                                                                                                                                    Supply to
                                                ly                                                                                  individual
                                              pp
                                            Su                                                                                      employer


                             $25,000                                                                               $25,000
                                                                                                                              0         5        10      15      20        25

                                        Number of business graduates available                                                    Number of business graduates available


                                  McGraw-Hill/Irwin                              © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 13


     Labor Demand Theories and Implications

    Theory                    Prediction                                  So What?

Compensating            Work with negative                        Job evaluation must collect
differentials           characteristics requires higher           and compensable factors
                        pay to attract workers.                   most capture these negative
                                                                  characteristics.
                        Above-market wages will improve           Staffing programs must have
Efficiency wage
                        efficiency by attracting workers          the capability of selecting the
                        who will perform better and be            best employees. Work must
                        less willing to leave.                    be structured to take
                                                                  advantage of employees’
                                                                  greater efforts.
                        Pay policies signal the kinds of         Pay practices must recognize
Signaling
                        behavior the employer seeks.             these behaviors by better pay,
                                                                 larger bonuses, and other
                                                                 forms of compensation.

    McGraw-Hill/Irwin                        © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 14

   Labor Supply Theories and Implications

    Theory                    Prediction                                 So What?
Reservation wage        Job seekers won’t accept jobs             Pay level will affect ability to
                        whose pay is below a certain              recruit.
                        wage, no matter how attractive
                        other job aspects.
Human capital           The value of an individual’s skills Higher pay is required to
                        and abilities is a function of the  induce people to train for
                        time and expense required to        more difficult jobs.
                        acquire them.

Job competition         Workers compete through               As hiring difficulties increase,
                        qualifications for jobs with          employers should expect to
                        established wages.                    spend more to train new hires.




    McGraw-Hill/Irwin                        © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 15

Competitive Pay Policy Alternatives
             Pay with Competition
                                                         Lead Policy
                    (Match)



                                                            Lag Policy



                                                        Flexible Policies




                                                       Employer of Choice
                     Shared Choice

 McGraw-Hill/Irwin                   © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 16

            Pay Mix Policy Alternatives
          Performance - Driven                          Market Match
    Benefits                                      Benefits
     17%                                           20%
                                    Options 4%
Options               Base 50%                                     Base 70%
 16%                                   Bonus 6%


      Bonus
       17%
          Work - Life Balance                        Security (Commitment)

                                                   Benefits
                                                    20%
    Benefits
     30%
                      Base 50%
                                                                 Base 80%
  Options
   10%
             Bonus
              10%
 McGraw-Hill/Irwin               © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 17

  Some Consequences of Pay Levels
          Contain operating
                                               Increase pool of
          expenses (labor costs)
                                               qualified applicants


                                                Increase quality and
                                                experience
Competitiveness of total
   compensation                                 Reduce voluntary
                                                turnover


                                                 Increase probability of
             Reduce pay-related                  union-free status
             work stoppages
McGraw-Hill/Irwin                  © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 18


                        Summary
! There is no “going rate,” thus managers make conscious
  pay level and mix decisions influenced by several
  factors.
! There are both product market and labor market factors
  that impact the pay level and mix decisions.
! Alternative pay level and mix decisions have different
  consequences.
! Pay policies need to be designed to achieve specific pay
  objectives.
! To achieve the objectives stipulated for the pay system,
  both the pay level and mix must be properly positioned
  relative to competitors.
    McGraw-Hill/Irwin       © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 19


                         Review Questions
1. Distinguish policies on external competitiveness
   from policies on internal alignment. Why is
   external competitiveness so important?
2. What factors shape an organization’s external
   competitiveness?
3. What does marginal revenue product have to do
   with pay?
4. What pay level does the efficiency wage theory
   predict? Does the theory accurately predict
   organization behavior? Why or why not?
     McGraw-Hill/Irwin          © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 20


              Review Questions (continued)
5. What is a relevant market? What difference does it
   make when determining people’s pay?
6. Can you think of any companies that follow a lag
   and/or lead policy? Why do they believe it pays to
   pay differently? Can you think of any companies
   that follow performance-driven and/or work-life
   balance policies?




     McGraw-Hill/Irwin     © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Weitere ähnliche Inhalte

Was ist angesagt?

The Pitfalls of Payrolling Temporary Workers
The Pitfalls of Payrolling Temporary Workers The Pitfalls of Payrolling Temporary Workers
The Pitfalls of Payrolling Temporary Workers Jill Stoppard
 
Outside The Box Distribution - Three Dimensions for Distribution Excellence
Outside The Box Distribution - Three Dimensions for Distribution ExcellenceOutside The Box Distribution - Three Dimensions for Distribution Excellence
Outside The Box Distribution - Three Dimensions for Distribution ExcellenceMichael Hu
 
Chap002 the character of business marketing
Chap002 the character of business marketingChap002 the character of business marketing
Chap002 the character of business marketingHee Young Shin
 
Profarma Casa Saba Brasil Acquisiton Conference Call
Profarma  Casa Saba Brasil Acquisiton  Conference Call Profarma  Casa Saba Brasil Acquisiton  Conference Call
Profarma Casa Saba Brasil Acquisiton Conference Call Profarma
 
Profarma Casa Saba Brasil Acquisiton Conference Call 2
Profarma Casa Saba Brasil Acquisiton Conference Call 2Profarma Casa Saba Brasil Acquisiton Conference Call 2
Profarma Casa Saba Brasil Acquisiton Conference Call 2Profarma
 
Cradle2013 businessmodelcanvas
Cradle2013 businessmodelcanvasCradle2013 businessmodelcanvas
Cradle2013 businessmodelcanvasNextUpAsia
 
Moving Beyond Labor Arbitrage in Banking
Moving Beyond Labor Arbitrage in BankingMoving Beyond Labor Arbitrage in Banking
Moving Beyond Labor Arbitrage in BankingEverest Group
 
Accenture hpb consumer_healthcare_po_v_6 june 2012 v3
Accenture hpb consumer_healthcare_po_v_6 june 2012 v3Accenture hpb consumer_healthcare_po_v_6 june 2012 v3
Accenture hpb consumer_healthcare_po_v_6 june 2012 v3claudy604
 
Chap005 market opportunities current and potential customers
Chap005 market opportunities current and potential customersChap005 market opportunities current and potential customers
Chap005 market opportunities current and potential customersHee Young Shin
 
Macias Rodriguez2013(11)(p.121-129)
Macias Rodriguez2013(11)(p.121-129)Macias Rodriguez2013(11)(p.121-129)
Macias Rodriguez2013(11)(p.121-129)Chompi Macias
 
Making the shift – Moving from transactional service
Making the shift – Moving from transactional serviceMaking the shift – Moving from transactional service
Making the shift – Moving from transactional serviceFabio Aguiar
 
Profitability analysis of dabur nepal
Profitability analysis of dabur nepalProfitability analysis of dabur nepal
Profitability analysis of dabur nepalChhitiz Shrestha
 
Rating criteria-for-smes jan07
Rating criteria-for-smes jan07Rating criteria-for-smes jan07
Rating criteria-for-smes jan07manpreetdhanoa
 
CVP analysis
CVP analysisCVP analysis
CVP analysisoshal1
 
Chap016 customer retention
Chap016 customer retentionChap016 customer retention
Chap016 customer retentionHee Young Shin
 
Improving the Value Proposition for New Products
Improving the Value Proposition for New ProductsImproving the Value Proposition for New Products
Improving the Value Proposition for New ProductsLeveragePoint Innovations
 

Was ist angesagt? (20)

The Pitfalls of Payrolling Temporary Workers
The Pitfalls of Payrolling Temporary Workers The Pitfalls of Payrolling Temporary Workers
The Pitfalls of Payrolling Temporary Workers
 
2012 SaaS Benchmarking Study
2012 SaaS Benchmarking Study2012 SaaS Benchmarking Study
2012 SaaS Benchmarking Study
 
Outside The Box Distribution - Three Dimensions for Distribution Excellence
Outside The Box Distribution - Three Dimensions for Distribution ExcellenceOutside The Box Distribution - Three Dimensions for Distribution Excellence
Outside The Box Distribution - Three Dimensions for Distribution Excellence
 
Chapter 7
Chapter 7Chapter 7
Chapter 7
 
SaaS Benchmarking Study
SaaS Benchmarking StudySaaS Benchmarking Study
SaaS Benchmarking Study
 
Chap002 the character of business marketing
Chap002 the character of business marketingChap002 the character of business marketing
Chap002 the character of business marketing
 
Profarma Casa Saba Brasil Acquisiton Conference Call
Profarma  Casa Saba Brasil Acquisiton  Conference Call Profarma  Casa Saba Brasil Acquisiton  Conference Call
Profarma Casa Saba Brasil Acquisiton Conference Call
 
Profarma Casa Saba Brasil Acquisiton Conference Call 2
Profarma Casa Saba Brasil Acquisiton Conference Call 2Profarma Casa Saba Brasil Acquisiton Conference Call 2
Profarma Casa Saba Brasil Acquisiton Conference Call 2
 
Cradle2013 businessmodelcanvas
Cradle2013 businessmodelcanvasCradle2013 businessmodelcanvas
Cradle2013 businessmodelcanvas
 
Moving Beyond Labor Arbitrage in Banking
Moving Beyond Labor Arbitrage in BankingMoving Beyond Labor Arbitrage in Banking
Moving Beyond Labor Arbitrage in Banking
 
Accenture hpb consumer_healthcare_po_v_6 june 2012 v3
Accenture hpb consumer_healthcare_po_v_6 june 2012 v3Accenture hpb consumer_healthcare_po_v_6 june 2012 v3
Accenture hpb consumer_healthcare_po_v_6 june 2012 v3
 
Chap005 market opportunities current and potential customers
Chap005 market opportunities current and potential customersChap005 market opportunities current and potential customers
Chap005 market opportunities current and potential customers
 
Macias Rodriguez2013(11)(p.121-129)
Macias Rodriguez2013(11)(p.121-129)Macias Rodriguez2013(11)(p.121-129)
Macias Rodriguez2013(11)(p.121-129)
 
Making the shift – Moving from transactional service
Making the shift – Moving from transactional serviceMaking the shift – Moving from transactional service
Making the shift – Moving from transactional service
 
Ch09
Ch09Ch09
Ch09
 
Profitability analysis of dabur nepal
Profitability analysis of dabur nepalProfitability analysis of dabur nepal
Profitability analysis of dabur nepal
 
Rating criteria-for-smes jan07
Rating criteria-for-smes jan07Rating criteria-for-smes jan07
Rating criteria-for-smes jan07
 
CVP analysis
CVP analysisCVP analysis
CVP analysis
 
Chap016 customer retention
Chap016 customer retentionChap016 customer retention
Chap016 customer retention
 
Improving the Value Proposition for New Products
Improving the Value Proposition for New ProductsImproving the Value Proposition for New Products
Improving the Value Proposition for New Products
 

Ähnlich wie Module 6 of compenssation !!!

Module 6 comepensation !!!!!!
Module 6 comepensation !!!!!!Module 6 comepensation !!!!!!
Module 6 comepensation !!!!!!Binty Agarwal
 
Compensation managment Mix and pay levels.pdf
Compensation managment Mix and pay levels.pdfCompensation managment Mix and pay levels.pdf
Compensation managment Mix and pay levels.pdfNano281608
 
E&C Industry Review By Scott Boutwell Jan09
E&C Industry Review By Scott Boutwell Jan09E&C Industry Review By Scott Boutwell Jan09
E&C Industry Review By Scott Boutwell Jan09Scott Boutwell, LEED AP
 
E business strategy
E business strategyE business strategy
E business strategydhasan77
 
Saas Sales Productivity Assessment
Saas Sales Productivity  AssessmentSaas Sales Productivity  Assessment
Saas Sales Productivity AssessmentMichelleRittenberg
 
Performanceleadership
PerformanceleadershipPerformanceleadership
Performanceleadershipmaxvink
 
How To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLSHow To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLSLeveragePoint Innovations
 
Organisational Competitiveness - Presentation
Organisational Competitiveness - PresentationOrganisational Competitiveness - Presentation
Organisational Competitiveness - PresentationSukesh Ned
 
Making total rewards work
Making total rewards workMaking total rewards work
Making total rewards workGirish Kohli
 
Ii 1 externalanalysistools
Ii 1 externalanalysistoolsIi 1 externalanalysistools
Ii 1 externalanalysistoolsRuss Coff
 
Compensation And Minimum Wages
Compensation And Minimum WagesCompensation And Minimum Wages
Compensation And Minimum WagesAvinash Kumar
 
Compensation and minimumwages
Compensation and minimumwagesCompensation and minimumwages
Compensation and minimumwagesjjbmit
 

Ähnlich wie Module 6 of compenssation !!! (20)

Module 6 comepensation !!!!!!
Module 6 comepensation !!!!!!Module 6 comepensation !!!!!!
Module 6 comepensation !!!!!!
 
Compensation managment Mix and pay levels.pdf
Compensation managment Mix and pay levels.pdfCompensation managment Mix and pay levels.pdf
Compensation managment Mix and pay levels.pdf
 
Slideshare
SlideshareSlideshare
Slideshare
 
E&C Industry Review By Scott Boutwell Jan09
E&C Industry Review By Scott Boutwell Jan09E&C Industry Review By Scott Boutwell Jan09
E&C Industry Review By Scott Boutwell Jan09
 
E business strategy
E business strategyE business strategy
E business strategy
 
Week #4 chapter #6
Week #4 chapter #6Week #4 chapter #6
Week #4 chapter #6
 
Simmethod, social media contribution to value, profit and sales
Simmethod, social media contribution to value, profit and salesSimmethod, social media contribution to value, profit and sales
Simmethod, social media contribution to value, profit and sales
 
Saas Sales Productivity Assessment
Saas Sales Productivity  AssessmentSaas Sales Productivity  Assessment
Saas Sales Productivity Assessment
 
Pp chap006
Pp chap006Pp chap006
Pp chap006
 
Simmethod Strategy Execution Performance Predictive Index
Simmethod Strategy Execution Performance Predictive IndexSimmethod Strategy Execution Performance Predictive Index
Simmethod Strategy Execution Performance Predictive Index
 
Performanceleadership
PerformanceleadershipPerformanceleadership
Performanceleadership
 
Mission 2012
Mission 2012Mission 2012
Mission 2012
 
How To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLSHow To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLS
 
Organisational Competitiveness - Presentation
Organisational Competitiveness - PresentationOrganisational Competitiveness - Presentation
Organisational Competitiveness - Presentation
 
Making total rewards work
Making total rewards workMaking total rewards work
Making total rewards work
 
Chpt09
Chpt09Chpt09
Chpt09
 
Ii 1 externalanalysistools
Ii 1 externalanalysistoolsIi 1 externalanalysistools
Ii 1 externalanalysistools
 
Compensation And Minimum Wages
Compensation And Minimum WagesCompensation And Minimum Wages
Compensation And Minimum Wages
 
Compensation and minimumwages
Compensation and minimumwagesCompensation and minimumwages
Compensation and minimumwages
 
Chapter 5
Chapter 5Chapter 5
Chapter 5
 

Mehr von Binty Agarwal

Mehr von Binty Agarwal (20)

Methods of data collection
Methods of data collectionMethods of data collection
Methods of data collection
 
Malhotra04....
Malhotra04....Malhotra04....
Malhotra04....
 
Malhotra03.....
Malhotra03.....Malhotra03.....
Malhotra03.....
 
Malhotra02.....
Malhotra02.....Malhotra02.....
Malhotra02.....
 
Malhotra01.....
Malhotra01.....Malhotra01.....
Malhotra01.....
 
Hypothesis
HypothesisHypothesis
Hypothesis
 
Im ppts
Im pptsIm ppts
Im ppts
 
eprg link
eprg linkeprg link
eprg link
 
Global
GlobalGlobal
Global
 
Final im ppt !!!
Final im ppt !!!Final im ppt !!!
Final im ppt !!!
 
Spanish Ejercicio ser, adjetivos
Spanish Ejercicio   ser, adjetivosSpanish Ejercicio   ser, adjetivos
Spanish Ejercicio ser, adjetivos
 
Exim po...
Exim po...Exim po...
Exim po...
 
Exim po...(1)
Exim po...(1)Exim po...(1)
Exim po...(1)
 
Europe (team full)
Europe (team full)Europe (team full)
Europe (team full)
 
Distribution and logistics mcim
Distribution and logistics   mcimDistribution and logistics   mcim
Distribution and logistics mcim
 
Bcg&ge
Bcg&geBcg&ge
Bcg&ge
 
The concept of export promotion
The concept of export promotionThe concept of export promotion
The concept of export promotion
 
Wage theory !!! mod 1
Wage theory !!!  mod 1Wage theory !!!  mod 1
Wage theory !!! mod 1
 
Module 6 of compenssation !!!(1)
Module 6 of compenssation !!!(1)Module 6 of compenssation !!!(1)
Module 6 of compenssation !!!(1)
 
Module 1 (3rd part)
Module 1 (3rd part)Module 1 (3rd part)
Module 1 (3rd part)
 

Kürzlich hochgeladen

UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGUNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGlokeshwarmaha
 
Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Winbusinessin
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access
 
Mihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZMihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZKanakChauhan5
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfCharles Cotter, PhD
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...IMARC Group
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxJemalSeid25
 
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfChicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfSourav Sikder
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
Project Brief & Information Architecture Report
Project Brief & Information Architecture ReportProject Brief & Information Architecture Report
Project Brief & Information Architecture Reportamberjiles31
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
Lecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toLecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toumarfarooquejamali32
 
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...Brian Solis
 
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John MeulemansBCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John MeulemansBBPMedia1
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023Steve Rader
 
Fabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsFabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsWristbands Ireland
 
7movierulz.uk
7movierulz.uk7movierulz.uk
7movierulz.ukaroemirsr
 
Slicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup BerlinSlicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup BerlinAnton Skornyakov
 
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfAnhNguyen97152
 
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHelene Heckrotte
 

Kürzlich hochgeladen (20)

UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGUNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
 
Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024
 
Mihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZMihir Menda - Member of Supervisory Board at RMZ
Mihir Menda - Member of Supervisory Board at RMZ
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptx
 
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfChicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
Project Brief & Information Architecture Report
Project Brief & Information Architecture ReportProject Brief & Information Architecture Report
Project Brief & Information Architecture Report
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
Lecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb toLecture_6.pptx English speaking easyb to
Lecture_6.pptx English speaking easyb to
 
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
 
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John MeulemansBCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023
 
Fabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsFabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and Festivals
 
7movierulz.uk
7movierulz.uk7movierulz.uk
7movierulz.uk
 
Slicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup BerlinSlicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup Berlin
 
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
 
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
 

Module 6 of compenssation !!!

  • 1. 7-1 External Competitiveness: Determining Part the Pay Level II Chapter 7 Defining Competitiveness Chapter 8 Designing Pay Levels, Mix, and Pay Structures McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 2. 7-2 STRATEGIC STRATEGIC TECHNIQUES POLICIES OBJECTIVES Work Descriptions Evaluation/ INTERNAL ALIGNMENT Analysis Certification STRUCTURE EFFICIENCY • Performance COMPETITIVENESS Market Surveys Policy PAY • Quality Definitions Lines STRUCTURE • Customers • Stockholders Seniority Performance Merit INCENTIVE • Costs CONTRIBUTORS Based Based Guidelines PROGRAMS FAIRNESS COMPLIANCE ADMINISTRATION Planning Budgeting Communication EVALUATION McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 3. 7-3 Chap r te 7 Defining Competitiveness McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 4. 7-4 Learning Objectives After studying Chapter 7, students should be able to: 1. Explain the importance of external competitiveness to the pay model. 2. Discuss the factors that influence external competitiveness. 3. Discuss the difference between labor market, product market, and organizational factors in determining external competitiveness. 4. Explain the different pay policy decisions and the consequences of using each. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 5. 7-5 External competitiveness refers to the pay relationships among organizations - the organization’s pay relative to its competitors. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 6. 7-6 External competitiveness is expressed in practice by: 1. setting a pay level that is above, below, or equal to competitors, and 2. by considering the mix of pay forms relative to those of competitors. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 7. 7-7 Pay level refers to the average of the array of rates paid by an employer. Σ Base + Bonuses + Benefits + Options / Σ Employees Pay forms refer to the mix of the various types of payments that make up total compensation. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 8. 7-8 Pay level and mix focus attention on two objectives: Control Labor Costs Attract and Retain Employees McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 9. 7-9 Pay Level Decisions Impact Labor Costs Number of Labor Costs = x Pay Level Employees McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 10. 7 - 10 What Shapes External Competitiveness? LABOR MARKET FACTORS LABOR MARKET FACTORS Nature of Demand Nature of Demand Nature of Supply Nature of Supply PRODUCT MARKET FACTORS PRODUCT MARKET FACTORS Degree of Competition Degree of Competition EXTERNAL EXTERNAL Level of Product Demand COMPETITIVENESS COMPETITIVENESS Level of Product Demand ORGANIZATION FACTORS ORGANIZATION FACTORS Industry, Strategy, Size Industry, Strategy, Size Individual Manager Individual Manager McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 11. 7 - 11 Labor Demand ! The marginal product of labor is the additional output associated with the employment of one additional human resource unit, with other production factors held constant. ! The marginal revenue of labor is the additional revenue generated when the firm employs one additional unit of human resources, with other production factors held constant. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 12. 7 - 12 Supply and Demand at the Market and Individual Employer Level Market level Employer level Ma $100,000 $100,000 rg De in ma pr al r nd od ev uc en t ue Pay for business graduates Pay for business graduates $50,000 $50,000 Supply to ly individual pp Su employer $25,000 $25,000 0 5 10 15 20 25 Number of business graduates available Number of business graduates available McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 13. 7 - 13 Labor Demand Theories and Implications Theory Prediction So What? Compensating Work with negative Job evaluation must collect differentials characteristics requires higher and compensable factors pay to attract workers. most capture these negative characteristics. Above-market wages will improve Staffing programs must have Efficiency wage efficiency by attracting workers the capability of selecting the who will perform better and be best employees. Work must less willing to leave. be structured to take advantage of employees’ greater efforts. Pay policies signal the kinds of Pay practices must recognize Signaling behavior the employer seeks. these behaviors by better pay, larger bonuses, and other forms of compensation. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 14. 7 - 14 Labor Supply Theories and Implications Theory Prediction So What? Reservation wage Job seekers won’t accept jobs Pay level will affect ability to whose pay is below a certain recruit. wage, no matter how attractive other job aspects. Human capital The value of an individual’s skills Higher pay is required to and abilities is a function of the induce people to train for time and expense required to more difficult jobs. acquire them. Job competition Workers compete through As hiring difficulties increase, qualifications for jobs with employers should expect to established wages. spend more to train new hires. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 15. 7 - 15 Competitive Pay Policy Alternatives Pay with Competition Lead Policy (Match) Lag Policy Flexible Policies Employer of Choice Shared Choice McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 16. 7 - 16 Pay Mix Policy Alternatives Performance - Driven Market Match Benefits Benefits 17% 20% Options 4% Options Base 50% Base 70% 16% Bonus 6% Bonus 17% Work - Life Balance Security (Commitment) Benefits 20% Benefits 30% Base 50% Base 80% Options 10% Bonus 10% McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 17. 7 - 17 Some Consequences of Pay Levels Contain operating Increase pool of expenses (labor costs) qualified applicants Increase quality and experience Competitiveness of total compensation Reduce voluntary turnover Increase probability of Reduce pay-related union-free status work stoppages McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 18. 7 - 18 Summary ! There is no “going rate,” thus managers make conscious pay level and mix decisions influenced by several factors. ! There are both product market and labor market factors that impact the pay level and mix decisions. ! Alternative pay level and mix decisions have different consequences. ! Pay policies need to be designed to achieve specific pay objectives. ! To achieve the objectives stipulated for the pay system, both the pay level and mix must be properly positioned relative to competitors. McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 19. 7 - 19 Review Questions 1. Distinguish policies on external competitiveness from policies on internal alignment. Why is external competitiveness so important? 2. What factors shape an organization’s external competitiveness? 3. What does marginal revenue product have to do with pay? 4. What pay level does the efficiency wage theory predict? Does the theory accurately predict organization behavior? Why or why not? McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 20. 7 - 20 Review Questions (continued) 5. What is a relevant market? What difference does it make when determining people’s pay? 6. Can you think of any companies that follow a lag and/or lead policy? Why do they believe it pays to pay differently? Can you think of any companies that follow performance-driven and/or work-life balance policies? McGraw-Hill/Irwin © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.