Compensation and Benefits

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|ECPI University | |Compensation and Benefits | |Human Resource Management Coures | | Employee compensation and benefits are critical factors in the new hire acceptance process and in employee retention. Firms must develop and offer exceptional compensation and benefit programs to attract and retain the best and most talented employees while making them feel…show more content…
These include: basis for pay, skill-based pay, pay-for-knowledge programs or differential pay within a specific job, seniority based pay, performance based pay, or pay rates relative to market rates (market rate, above market rate, or below market rate). These strategies carry significant financial costs as well as employee morale, motivation, and productivity costs (DeNisi etal, 2008, pp. 288-290). In order to develop an effective and competitive pay system four basic tools are needed; updated job descriptions, a job evaluation method, pay surveys, and pay structure. Having an updated job description gives key tools in the design of pay systems to identify important characteristics of each job to determine worth to identify, define, and weigh compensable factors. The job evaluation method allows organizations to rate the worth of all jobs using a predetermined system. Pay surveys identify and survey pay rates in relevant labor markets to obtain the fair market value. Lastly, a pay structure establishes pay grades or ranges characterized by a point spread from minimum to maximum for each grade (Cascio, 2006, pp. 424-430). The traditional job evaluation methods used are classification, point, and factor comparison. Classification uses categories, or classes, of similar job content and value. Examples of categories include executive, managerial, skilled and semi-skilled. The number of categories and
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