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COMPENSATION Third Canadian Edition Milkovich, Newman, Cole

COMPENSATION Third Canadian Edition Milkovich, Newman, Cole. Chapter 1 The Pay Model. Compensation. Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship. Contrasting Perspectives of Compensation.

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COMPENSATION Third Canadian Edition Milkovich, Newman, Cole

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  1. COMPENSATION Third Canadian EditionMilkovich, Newman, Cole Chapter 1 The Pay Model

  2. Compensation Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship.

  3. Contrasting Perspectives of Compensation Society’s Views Stockholders’ Views Global Views Employees’ Views Managers’ Views

  4. Total Returns for Work Total Returns Total Compensation Relational Returns Benefits Learning Opportunities Cash Compensation Recognition & Status Allowances Life, Health, and Disability Insurance Long-term Incentives Employment Security Challenging Work Base Merit/Cost of Living Work/Life Programs Short-term Incentives

  5. Relational Returns from Work Recognition& Status EmploymentSecurity Employee Engagement LearningOpportunities ChallengingWork

  6. THE PAY MODEL TECHNIQUES STRATEGIC POLICIES STRATEGIC OBJECTIVES • EFFICIENCY Performance • Quality • Customers & Stockholders •  Costs • FAIRNESS • COMPLIANCE INTERNAL STRUCTURE ALIGNMENT PAY STRUCTURE COMPETITIVENESS INCENTIVE PROGRAMS CONTRIBUTORS MANAGEMENT EVALUATION

  7. Compensation Objectives Efficiency Fairness Compliance

  8. Medtronic Support Medtronic mission and increased complexity of business Minimize increases in fixed costs Attract and engage top talent Emphasize personal, team and Medtronic performance Recognize personal and family total well-being Ensure fair treatment Whole Foods We are committed to increasing long-term shareholder value Profits are earned every day through voluntary exchange with our customers Profits are essential to create capital for growth, prosperity, opportunity, job satisfaction and job security Support team member happiness and excellence We share together in our collective fate Pay System Objectives at Medtronic and Whole Foods

  9. Pay System Policies • Internal alignment • comparisons between jobs or skill levels inside a single organization • External competitiveness • comparisons of compensation with competitors external to the organization • Employee contributions • relative emphasis placed on employee performance • Management • policies related to managing the pay system

  10. Conclusion • the model presented in this chapter provides a structure for understanding compensation systems • the three main components of the model include: • the objectives of the pay system • the policy decisions that provide the system’s foundation • the techniques that link policies and objectives • two key questions should constantly be asked: • first, why do it this way? ->there is rarely one correct way to design a system or pay an individual • second, so what? ->what does this technique do for us? ->how does it help achieve organizational goals?

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