Compensation of special groups
This presentation is the property of its rightful owner.
Sponsored Links
1 / 23

Chapter 14 PowerPoint PPT Presentation

  • Uploaded on
  • Presentation posted in: General

Compensation of Special Groups. Chapter 14. Chapter Topics. Who are Special Groups? Compensation Strategy for Special Groups Your Turn: Compensation of Special Groups. Who Are Special Groups?. Supervisors Corporate directors Top management executives Professional employees Sales staff

Download Presentation

Chapter 14

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript

Compensation of special groups

Compensation of Special Groups

Chapter 14

Chapter topics

Chapter Topics

  • Who are Special Groups?

  • Compensation Strategy for Special Groups

  • Your Turn: Compensation of Special Groups

Who are special groups

Who Are Special Groups?

  • Supervisors

  • Corporate directors

  • Top management executives

  • Professional employees

  • Sales staff

  • Contingent workers

Characteristics of special groups

Characteristics of Special Groups

  • Tend to be strategically important to a company

  • Positions tend to have built-in conflict that arises because different factions place incompatible demands on members of group

Issues supervisory pay

Issues: Supervisory Pay

  • Caught between demands of:

    • Upper management in terms of production and

    • Employees in terms of rewards, reinforcements, and counseling

  • Major challenge in paying supervisors

    • Equity

  • Provide incentives to entice nonexempt employees to accept challenges of being a supervisor

Strategies supervisory pay

Strategies: Supervisory Pay

  • Pay strategies

    • Key base salaries of supervisors to an amount exceeding highest paid employee

    • Pay supervisors for scheduled overtime

  • Trend in supervisory compensation

    • Increased use of variable pay

    • More than half of all companies have a variable pay component for supervisors

Corporate directors

Corporate Directors

  • Stockholders blame corporate directors for excessively high executive compensation

    • Directors are much more active in decision making and somewhat less prone to grant huge salaries to the CEO

    • Approximately two-thirds of boards now include more outside directors than inside directors

    • In exchange for meeting at least quarterly a typical director receives about $55,000 in cash and incentives and a total of about $150,000



  • Pay is linked to company performance

    • Company performance exceeds industry standards, big bonuses and stock payouts follow

    • Poor financial performance means much smaller pay packages

  • Ways to rein in executive compensation

    • Use of tally sheet

    • Increase government regulation

      • Stockholders can vote/ propose limits to compensation

Explanations for ceo compensation

Explanations for CEO Compensation

  • Social comparisons

    • Executive salaries bear a consistent relative relationship to pay of lower-level employees

  • Economic approach

    • Value of CEO should correspond to some measure of organizational success

  • Agency theory

    • Incorporates political motivations

    • CEO compensation should be designed to ensure executives focus on best interests of firm and stockholders

Components of an executive compensation package

Components of an Executive Compensation Package

  • Base salary

  • Short-term (annual) incentives or bonuses

  • Long-term incentives and capital appreciation plans

  • Executive benefits

  • Perquisites

Exhibit 14 4 breakdown of executive compensation components

Exhibit 14.4: Breakdown of Executive Compensation Components

Exhibit 14 7 description of long term incentives for executives

Exhibit 14.7: Description of Long-Term Incentives for Executives

  • Incentive stock options

  • Non-qualified stock options

  • Phantom stock plans

  • Stock appreciation rights

  • Restricted stock plans

  • Performance share/unit plans

Exhibit 14 8 popular perks offered to executives

Physical exam

Company car

Financial counseling

Company plane

Income tax preparation

First-class air travel

Country club membership

Luncheon club membership

Estate planning

Personal liability insurance

Spouse travel

Chauffeur service

Reserved parking

Executive dining room

Home security system

Car phone

Financial seminars

Loans at low or no interest

Legal counseling

Exhibit 14.8: Popular PerksOffered to Executives

Scientists and engineers in high technology industries

Scientists and Engineers in High-Technology Industries

  • Scientists and engineers are classified as professionals

  • Problems in designing pay

    • Salary plateaus due to knowledge obsolescence of mature professionals

      • Dual-Career Ladder

    • Question of equity

Reward components professional employees

Reward Components: Professional Employees

  • Dual-career ladders

  • Performance-based incentives

    • Profit sharing

    • Stock ownership

  • Bonuses

    • Completion of projects on or before deadlines

    • Patents

    • Publications

    • Elections to professional societies

    • Attainment of professional licenses

  • Perks based on unique needs of professional employees

Exhibit 14 9 ibm dual ladders

Exhibit 14.9: IBM Dual Ladders

Exhibit 14 10 maturity curve years since last degree relative to salary

Exhibit 14.10: Maturity Curve: Years Since Last Degree Relative to Salary

Conflicts faced by sales staff

Conflicts Faced by Sales Staff

  • Often go for extended periods in field with little supervision

  • Challenges

    • Staying motivated

    • Continuing to make sales calls despite little supervision

Exhibit 14 11 sales compensation components

Exhibit 14.11: Sales Compensation Components

Key factors designing a sales compensation plan

Key Factors: Designing a Sales Compensation Plan

  • Nature of people who enter sales profession

  • Organizational strategy

  • Market maturity

  • Competitor practices

  • Economic environment

  • Product sold

Sales compensation packages

Sales Compensation Packages

  • Guaranteed base salary

  • Guaranteed base salary + commission

  • Guaranteed base salary + bonus

  • Guaranteed base salary + commission + bonus

  • Commission only

  • Combination plan

Contingent workers

Contingent Workers

  • Types include a person who works

    • Through a temporary help agency

    • On an on-call basis

    • As an independent contractor

  • Typical salary arrangements

    • Workers in first two categories often earn less than workers in traditional arrangements

    • Independent contractors often earn more

Key issues in contingent workforce compensation

Identify ways to deal with equity issues

View workers as pool ofcandidates for morepermanent hiring status

Champion idea ofboundary less careers

Key Issues in Contingent Workforce Compensation

  • Login