Compensation Issues and Techniques

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Compensation Issues and Techniques
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In this session.

• Well discuss legal requirements for wages and
  salaries
• Well talk about some of the current trends in
  incenting and rewarding employees

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Legislative Pay Concerns

• 1938 Fair Labor Standards Act (FLSA)
• Deals with minimum wage, hours worked, overtime
  pay, equal pay, record-keeping, and child labor
  provisions
• Some employees are exempt from the overtime
  provisions of FLSA, and therefore employers are
  not required to pay overtime to them. Otherwise,
  employees are considered nonexempt, and must be
  paid overtime at a rate of 1½ times their normal
  hourly rate for any hours worked over 40 hour per
  workweek.

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Legislative Pay Concerns

• General discrimination laws also affect
  compensation
• 1963 Equal Pay Act is an amendment to the FLSA
  that states that both genders should be paid
  similarly if they do similar or roughly
  equivalent work
• Civil Rights Act of 1964 and its 1991 revision,
  ADA, and FMLA make it unlawful to discriminate
  against any employee based on protected group
  status, and this includes the areas of
  compensation and benefits

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Current Compensation Trends

• Skill-based Pay (aka Competency-based)
• Comparable Worth
• Merit or Other Incentive Pay
• Team-based incentives
• Stock Options, including ESOPs
• Gain-sharing or Profit-sharing

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Aligning Work Value and Pay
Results
Incentive Pay
Merit Pay
Competencies
Knowledge SkillsAbilities
Base Salary
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Total Reward What Does It Consist Of?
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Incentive Compensation

• Focuses organization on the key results which
  will implement the plan
• Reinforces behaviors
• Keeps fixed base salary low, increases total cash
  upward opportunity when results are achieved
• Is true pay for performance

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Laws of Competency Pay

• If your leaders dont value it, dont do it
• If employees arent talking about it, you're not
  ready for it
• If employees cannot change it, you shouldnt pay
  for it
• If employees cant demonstrate it, you shouldnt
  use it
• If employees cant observe it, you shouldnt
  measure it

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Customized Retention Solutions

• Compensate Based on Value-Added
• Understand the value the employee provides to the
  organization.
• Monitor compensation levels for similar work and
  for similar people.
• Understand what the employee values.
• Understand the impacts and uses of different
  compensation program designs.
• Match the compensation design to what you want to
  reward.
• Job and person
• Results and process
• Short- and long-term
• Internal and market-based
• Deliver appropriate compensation.

Retention Toolkit