Wage Payments

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Wage Payments

• INSY 3021
• Auburn University
• Spring 2007

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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

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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.

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Flexible Compensation Plans (related to output)

• Piecework and standard labor hour plan
• Gainsharing plans
• Employee stock ownership plans (ESOP)
• Profit-sharing plans

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Piecework

• Pays employee strictly by the output generated
  during the pay period
• Outlawed in the United States
• All employees receive a guaranteed minimum wage

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Federal Labor Standards Act (FLSA)

• http//www.dol.gov/esa/regs/compliance/whd/hrg.htm
  1

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Standard Hour Plan

• Workers operate on a daywork plan up to 100
  productivity, then piecework beyond 100
• Guaranteed base rate, established by job
  evaluation

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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

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Productivity (Gain) Sharing Plans (cont)

• 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

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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.)

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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

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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

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Job Evaluation

• Determination of the basic worth of a job.
• Considerations
• Benefit to the company
• Demands of the work on the employee

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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

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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).

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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!

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