Compensation management principles and practices

Compensation Management

What changes are occurring in the workforce relative to the kinds of work employees are performing?

Employers are more apt to bestow performance-based pay because of the greater competition in the global marketplace, the greater need for skilled employees, and the shift to more service-based and knowledge-based work (Henderson, 2005, p.5).

Discuss what is meant by the term exempt employee and the various exemption criteria established for identifying this group of workers.

An exempt employee, also known as a salaried employee, receives an annual specified salary paid in specified increments and is exempt from wage and hourly regulations, such as mandates that workers receive overtime pay (Exempt employee, 2010, About.com).

Q3. Briefly describe the three major classes of society and their seven subsets.

The three major social classes are: the poor, the middle-class, and the wealthy (Henderson, 2005, pp.10-12).

The poor: Individuals who subside on minimum-wage or illegal jobs and require government support for basic necessities like healthcare and housing.

The working poor: Minimum-wage workers, often using food stamps and other government programs to 'get by' and hold onto their minimal assets.

The lower middle class: Mortgage payments and utility bills can comprise up to 40% of their salaries -- they are only one catastrophe (such as a lost job or illness) away from poverty.

The middle class: Often earning between $50,000-$55,000, depending on where they live in the country, their mortgage payments and utility bills comprise 14% of their income, and they often have a small amount left over for 'frivolities.'

The upper middle class: A family of four with an income in excess of $100,000 with enough money to worry about 'quality' of their purchases and to make financial investments.

The wealthy: Successful professionals, businesses people, and those who have inherited their wealth with savings of 5-10 years of annual income and little to worry about financially.

Q4. Why is it necessary to perform a job analysis?

A job analysis is an analysis of the specific needs of the job, not the person who is filling or will fill the position. The analysis necessary in developing an appropriate recruitment, training, compensation, and evaluation process for the job. For example, a job that demands highly specialized professional training will require different recruitment strategies and venues, a higher level of compensation, and more rigorous forms of performance assessment than one that does not (Job analysis, 199, HR).

Q5: What is meant by internal equity? What is the relationship between internal equity and job evaluation?

The concept of internal equity is based in recent equal opportunity and civil rights legislation. It suggests that individuals in similar jobs should have similar levels of pay; otherwise illegal discrimination may be an issue at the workplace. Internal equity demands that the jobs being compared have similar levels of skill (such as two engineers, versus an engineer and a clerical worker), skill sets (a registered dietician vs. A registered nurse would not be 'equal,' because of the greater level of education and knowledge of the RD, for example), effort and time devoted to the job (part-time vs. full-time workers are not equitable), responsibility (workers being compared should have similar leadership positions and number of duties), and working conditions (workers on the graveyard shift are not comparable to day workers in most instances). (Internal equity, 2010, U.S. Legal Definitions)

Q6. Define a compensable factor and give a few examples.

A compensable factor is a common element, such as hours per day or number of units assembled by which pay or other types of remuneration may be calculated (Compensable factor, 2010, Business dictionary).

Q7. What is the role of a job evaluation committee in job evaluation and who should be included in the committee?