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CHAPTER 11 ESTABLISHING A PAY STRUCTURE

Fundamentals of human resource management 5 th edition By R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright. CHAPTER 11 ESTABLISHING A PAY STRUCTURE. Decisions About Pay. Legal Requirements for Pay: Equal Employment Opportunity.

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CHAPTER 11 ESTABLISHING A PAY STRUCTURE

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  1. Fundamentals of human resource management 5theditionBy R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright CHAPTER 11 ESTABLISHING A PAY STRUCTURE

  2. Decisions About Pay

  3. Legal Requirements for Pay:Equal Employment Opportunity • Employers must not base differences in pay on an employee’s age, sex, race, or other protected status. • Any differences in pay must be tied to such business-related considerations as job responsibilities or performance. • The goal is for employers to provide equal pay for equal work.

  4. Legal Requirements for Pay:Minimum Wage Minimum wage –lowest amount that employers may pay under federal or state law, stated as an amount of pay per hour. Fair Labor Standards Act (FLSA) – federal law that establishes a minimum wage and requirements for overtime pay and child labor.

  5. Legal Requirements for Pay:Overtime Pay Overtime rate under FLSA is 1½ times employee’s usual hourly rate, including any bonuses, and piece-rate payments. • Exempt employees – managers, outside salespeople, and other employees not covered by FLSA requirement for overtime pay. • Nonexempt employees – employees covered by FLSA requirements for overtime pay.

  6. Employee Judgments About Pay Fairness • Employees compare their pay and contributions against three yardsticks: • What they think employees in other organizations earn for doing the same job. • What they think other employees holding different jobs within the organization earn for doing work at the same or different levels. • What they think other employees in the organization earn for doing the same job as theirs.

  7. Pay Equity If employees conclude that they are under-rewarded, they are likely to make up the difference in one of three ways: • They might put forth less effort (reducing their inputs). • They might find a way to increase their outcomes (e.g., stealing). • They might withdraw (by leaving the organization or refusing to cooperate). • Employees’ beliefs about fairness also influence their willingness to accept transfers or promotions.

  8. Job Structure: Relative Value of Jobs Job Evaluation Compensable Factors Administrative procedure for measuring relative internal worth of the organization’s jobs. • 5 characteristics of a job that the organization values and chooses to pay for. • Experience • Education • Complexity • Working conditions • Responsibility

  9. Job Structure: Defining Key Jobs Key Jobs – jobs that have relatively stable content and are common among many organizations. • Organizations can make the process of creating the job and pay structures more practical by defining key jobs. • Research for creating the pay structure is limited to key jobs that play a significant role in the organization.

  10. Pay Structure: Putting It All Together

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