Wage Payments INSY 3021 Auburn University Spring 2007
Fringe Benefits • Retirement plans, 401K plans, paid time off (vacation, holiday, personal, bereavement), insurance's (medical, dental, vision, life, disability), educational benefits, Jury, FMLA, and other perks. • Can be up to about 40% of the direct labor cost
Day Work Plans • Compensate the employee on the # of hours worked times an established hourly pay rate • Advantages include: guaranteed wage, not production based, fringe benefits,and high base rates • Disadvantage: allow to broad a gap between employee benefits and productivity. Benefits get taken for granted.
Flexible Compensation Plans (related to output) • Piecework and standard labor hour plan • Gainsharing plans • Employee stock ownership plans (ESOP) • Profit-sharing plans
Piecework • Pays employee strictly by the output generated during the pay period • Outlawed in the United States • All employees receive a guaranteed minimum wage
Federal Labor Standards Act (FLSA) • http://www.dol.gov/esa/regs/compliance/whd/hrg.htm#1
Standard Hour Plan • Workers operate on a daywork plan up to 100% productivity, then piecework beyond 100% • Guaranteed base rate, established by job evaluation
Productivity (Gain) Sharing Plans • Rewards are paid to employees in the form of bonuses (immediate or deferred) based on the the following: Quality improvement, lower costs, beneficial suggestions, reduced labor content, etc…
Productivity (Gain) Sharing Plans (con’t) • Typically shared either 50% - 50% (or 33% -66%) with the company • Scanlon, Rucker & IMPROSHARE plans are mentioned in the text. • Many types and varieties exist
Employee Stock Ownership Plan • Involve a trust that holds company stock for the employees • Many companies participate in this type of plan • Some entire companies are totally employee owned (AVIS, Southwest Airlines, etc.)
Profit Sharing • An employer pays employees special pay based on the prosperity of the company • Can be in the form of cash plans, deferred plans, or a combination of the two • Payment can be spread to all employees equally, or prorated based on their annual base salary
Non-financial Performance Motivation Plans • Include rewards that have no relation to pay • Conferences, picnics, afternoon off, recognition, committee involvement, etc… • Treat all employees the way that you expect to be treated
Job Evaluation • Determination of the basic worth of a job. • Considerations: • Benefit to the company • Demands of the work on the employee
Four Formal Approaches • Job Classification (civil service grades): Not quantitative. • Job Ranking (pair-wise comparison of jobs):Not quantitative. • Job Factor Comparison • Job Point Plans
Job Factor Analysis • Factors should be related to the job (not the worker) • Factors must be non-discriminatory • Should measure aspects of difficulty and value to the organization • Rarely takes more than ten (10).
Key Jobs • Create families of related jobs that encompass similar factors. • Be consistent. • Committee structure works best for these plans. • GET MORE TRAINING before you attempt to do this!