compensation & benfits

8/3/2019 Compensation & Benfits

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PRESENTATIONON

COMPENSATION MANAGEMENT


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Presented By

Jibran Ahmed Sheikh272017

Syed Sadequain Akber272025


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Compensation

Compensation refers to all formsof pay & rewards going to

employees and arising from their

employment.


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Main Components of Compensation

Direct Financial Payments Wages,

Salaries, Incentives, Commissions andBonuses.

Indirect Financial Payments Employer-paid Insurance and Vacations.


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Equity & its impact on Pay

Rates

Based on

Equity Theory of Motivation


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Equity Theory of Motivation

......if a person perceives an inequity, atension or drive will develop in theperson's mind, and the person will bemotivated to reduce or eliminate the

tension and perceived inequity.


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Forms of Equity

External equityrefers to how a job'spay rate in one company compares tothe job's pay rate in other companies.


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Forms of Equity

Internal equityrefers to how fair thejob's pay rate is, when compared toother jobs within the same company.


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Forms of Equity

Individual equityrefers to the

fairness of an individual's pay ascompared with what his or her co-workers are earning for the same or very

similar jobs within the company, basedon each individual's performance.


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Forms of Equity

Procedural equity refers to theperceived fairness of the processesand procedures used to make decisions

regarding the allocation of pay.


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Establishing Pay Rates

1)Conduct a Salary Survey

2)Job Evaluation

3)Group similar jobs into Pay Grades

4)Price each pay grade by using wage curves

5)Fine-tune pay rates


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Step 1: Salary Survey

A survey aimed at determining prevailing wage

rates. A good salary survey provides specificwage rates for specific jobs. Formal written

questionnaire surveys are the mostcomprehensive, but telephone surveys and

newspaper ads are also sources of information.


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Salary Survey

* Benchmark Job

A job that is used to anchor the employer's payscale and around which other jobs are arranged in

order of relative worth.


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Step 2: Job Evaluation

A systematic comparison done in order todetermine the worth of one job relative to another


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Job Evaluation Methods

1. Ranking Method2. Job Classification (or grading) method3. Point Method4. Factor Comparision


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Ranking Method

The simplest method of job evaluation thatinvolves ranking each job relative to all other jobs,

usually based on overall difficulty.


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Job Classification(or grading)method

A method for categorizing jobs into groups. The

groups are called classes, or grades if theycontain jobs that are similar in difficulty but

otherwise different.


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Classes

Group jobs based on a set of rules for each groupor class, such as amount of independent

judgment, skill, physical efforts, and so forth,required. Classes usually contain similar jobs.


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Grades

A job classification system like the class system,

although grades often contain dissimilar jobs,such as secretaries, mechanics, and firefighters.

Grade descriptions are written based oncompensable factors listed in classification

systems.


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Point Method

The job evaluation method in which a number ofcompensable factors are identified and then thedegree to which each of these factors is present

on the job is determined.


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Factor Comparison Method

A widely used method of ranking jobs according toa variety of skills and difficulty factors, then addingup these rankings to arrive at an overall numerical

rating for each given job.


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Step 3: Group similar jobs into Pay

Grades

A pay gradeis comprised of jobs of approximately equal

difficulty.


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Step 4: Price each Pay Grade-WageCurves

The wage curve shows the relationship betweenthe value of the job and the average wage paid for

this job.


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Step 5: Fine-Tune Pay Rates

A series of steps or levels within a pay grade,usually based upon years of service.


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Competency Based Pay

Where the company pays for the employee'srange, depth, and types of of skills and

knowledge, rather than for the job title he or sheholds.

Sample Case


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Sample Case

Compensation Policies

University of Alabama

The following policies supersede all compensation policies andstatements previously issued. These pay policies and practices are tohelp ensure that The University of Alabama complies with all Federal,State and Local legislature pertaining to pay. All personnel actions thatinvolve the establishment or change in compensation are subject to the

review of the Department of Human Resources and the appropriateUniversity of Alabama Vice President and/or President.

P P li i d P ti f th


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Pay Policies and Practices for thosein the Staff

1. Pay Structure2. Hiring Rates

3. Promotional Increases4. Lateral Transfers5. Demotions6. Effective Dates of Reclassifications


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Hiring Rates

The hiring official should determine an appropriate starting pay ratebased on the candidates experience and skills, existing pay rates for

current employees and the availability of funds. For candidates who arecurrent employees, consideration needs to also be given based on

whether the hiring action will be a promotion, lateral transfer or demotionfor the employee. Specific guidelines related to each of these situationsare defined in the next few sections. For recommendations above the 1st quartile of the appropriate salary range the following factors should be

considered: (1) qualifications of the candidate; (2) number of qualifiedcandidates in the pool (3) cost and length of time associated with the

recruiting campaign and (4) relevant salaries of other employees with thesame job title and/or in positions within the same pay grade who possess

similar qualifications as the candidate.


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Hiring Rates

Approval Level Starting PaySupervisor Minimum to 1stQuartileDirector/Dean 1st Quartile toMidpoint*Vice President Midpoint - 3rdQuartile**President 3rd Quartile -Maximum**


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Hiring Rates

* For departments in Academic Affairs, approval from theAssistant Academic Vice President for Administration is

required to hire above the 1 st quartile of the salary

range. For departments in Student Affairs, approval fromthe Assistant Vice President for Student Affairs is

required to hire above the 1 st quartile of the salaryrange.

** A recommendation from the Department of HumanResources should be obtained prior to obtaining approvalfrom the Vice President or President.


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Promotional Increases

All promotions (moving up one or more grades) should resultin a salary increase of at least 5%. The appropriate increaseshould be determined by the hiring manager but it should notexceed the greater of 15% or the top of the first quartile.* Any

promotional increase above the recommended guidelinesrequire approval of the appropriate Vice President and/orPresident with a prior recommendation from the Department

of Human Resources.* For departments in Academic Affairs, approval is required

above the 1 st quartile from the Assistant Academic VicePresident for Administration. For departments in StudentAffairs, approval is required above the 1 st quartile from the

Assistant Vice President for Student Affairs.


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Lateral transfers

No increase in pay is recommended. Requests forsalary increases must be approved by the

appropriate Vice-President with a priorrecommendation from the Department of Human

Resources.


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Demotions

Demotions are discouraged in normal situations.

Consideration for pay as it relates to transfers to alower pay grade will be handled on an exceptionbasis by the department head, the Department of

Human Resources and the appropriate Vice

President.


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Pay Policies and Practices for those

in the Maintenance Pay Plan

1. Hiring Rates

2. Job Movement within the Maintenance PayPlan


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Hiring Rates

Candidates should be hired in at the established Entry Rateor Job Rate (if no entry rate exists) for that job. For thosehired in at the established Entry Rate, their rate of pay should

be increased after meeting all criteria to qualify for the JobRate. It should be clearly communicated to the candidate thatin certain jobs they may be eligible for a pay increase basedon established criteria but it is not a guaranteed pay increase.The hiring official may request to hire a candidate at the Job

Rate rather than the Entry Rate based on the qualifications ofthe candidate but such requests should have prior approvalby the Department of Human Resources.

Job Movement within the


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Job Movement within theMaintenance Pay Plan

When an employee moves up the pay hierarchy into a newposition, the employee should be paid the established single ratefor the new position. Exceptions to this apply to promotions toLevel IIIB positions in the skilled trades and promotions to TeamLeader promotions in the Custodial and Grounds Career Ladders.

In these situations, employees should receive the applicable LevelIIIB or Team Leader rate or a 5% increase, whichever is greater. Ifthe individual does not perform satisfactorily in the new positionand the decision is made to return the employee to their formerposition, the employee should be paid the established single rateof the position to which they are demoted.

When an employee moves to a position that is lower in the payhierarchy, the employee should be paid at the established singlerate for the lower level job.


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Other Pay Policies and Practices

1. Market Adjustments (no change in duties/responsibilities)2. Shift Differentials

3. Call-Out Pay4. Special Event Pay5. On-Call Pay6. Timesheets and Record-keeping7. Other Staff Compensation Related Policies8. Procedures for Reporting Errors in Pay

Market Adjustments


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Market Adjustments(no change in duties/responsibilities)

With prior approval from the appropriate Vice President,departments may make recommendations to the Department ofHuman Resources for market pay rates or ranges to be developedfor certain positions. Consideration will be given to marketadjustments for the following reasons:

1. Documented recruiting difficulties have beenexperienced;

2. Market salary fluctuations necessitate an adjusted pay

rate or pay range; or

3. Market adjustments necessary to address the retentionof qualified individuals.

Shif Diff i l


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Shift DifferentialsIt is the policy of The University of Alabama to pay shift differentials to

non-exempt employees who work evening and night shifts on a regularlyscheduled basis. Effective September 24, 2006, the appropriate amountsare $.40 per hour for evening shifts and $.55 for night shifts. All eligibleemployees should be paid a shift differential for the entire shift for workperformed on the evening or night shift. Shift differentials for eligibleemployees are also paid during all periods of paid leave, such as

holidays, sick leave or annual leave.For the purpose of applying shift differentials, shifts are defined asfollows:a. Day shift (first shift) is the shift where 50% or more of the regularlyscheduled hours are worked between 6:00 a.m. and 6:00 p.m.b. Evening shift (second shift) is the shift where 50% or more of the

regularly scheduled hours are worked between 6:00 p.m. and 12:00midnight.c. Night shift (third shift) is the shift where 50% or more of the regularlyscheduled hours are worked between midnight and 6:00 a.m.

Call Out Pay


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Call-Out Pay

When overtime has not been scheduled inadvance, and non-exempt employees are called

back to work after their regularly scheduled hoursor on their off days, they should be paid a

minimum of four (4) hours at their overtime rate orthe actual overtime hours worked, whichever is

greater, and will be paid as such for each call-out.

S i l E t P


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Special Event Pay

When non-exempt employees work a special event which isheld outside of their scheduled work hours*, they should bepaid at their overtime rate for the time actually worked at the

special event. Examples of these events include, but are notlimited to, athletic events, events at the Bryant ConferenceCenter and special events for Admissions.

*Departmental supervisors and managers may modify

employee work schedules in order to meet the businessneeds of the department.

O C ll P


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On-Call Pay

There are situations when non-exempt employees are expected tobe available via phone or beeper for work related emergencies.

The Department of Human Resources will make the determinationbased on information provided by the department if this time

should be considered hours worked and, therefore, compensable

time.If hourly paid employees are required to be on-call but it is not

considered to be compensable time (as determined by theDepartment of Human Resources), the department may, but is not

required to, pay the employees a set rate of remuneration as

recommended by the department and approved by HR and theappropriate vice president. If hourly paid employees are called intowork, the employees should be paid using the guidelines for Call-

Out Pay as defined above.

Ti h t d R d k i


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Timesheets and Record-keeping

All non-exempt employees are required to complete timesheetsand accurately record all time worked and leave taken. Timesheetsare the basic source of information for payroll purposes; therefore,time worked must be reflected accurately. Falsification oftimesheets is a serious offense and can result in disciplinary action

up to and including termination. Timesheets should be checked bysupervisors and department heads for accuracy. No changes,corrections, or notations are to be made on the timesheets exceptwith the written approval and signature of a department head orsupervisor. Specific questions regarding completion of time records

for non-exempt employees should be directed to the HumanResources Service Center. It is the responsibility of the HumanResources Service Center to make the final determination on howto accurately record hours worked.


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