TRADITIONAL COMPENSATION SYSTEM

1
TRADITIONAL COMPENSATION SYSTEM

• PAYMENT BASED ON TASKS
• ASSUMES STABILITY OF EMPLOYMENT
• REWARDS INDIVIDUAL CONTRIBUTIONS
• PRIMARILY WAGES, SALARIES, BENEFITS, SOME BONUSES
• RIGID, RESISTANT TO CHANGE

2
EQUITY ISSUES

• INDIVIDUAL EQUITY
• COMPARE MY OUTCOME/INPUT RATIO WITH SOME OTHERS
  OUTCOME/INPUT RATIO
• INTERNAL EQUITY
• RELATIVE WORTH OF JOB WITHIN ORG
• JOB EVALUATIONS
• EXTERNAL EQUITY
• MARKET FORCES
• SUPPLY/DEMAND
• CONDUCT SALARY SURVEYS

3
TRADITIONAL COMPENSATION PAYING JOBS (A)

• JOB ANALYSIS
• JOB DESCRIPTIONS
• JOB RELATED INFORMATION ONLY
• JOB SPECIFICATIONS
• PERSON RELATED INFORMATION ONLY
• KSAs, EDUCATION, EXPERIENCE, CERTIFICATIONS
• JOB EVALUATION
• IDENTIFIES THE RELATIVE WORTH OF THE JOB TO THE
  ORGANIZATION
• NOT PERFORMANCE APPRAISAL

4
TRADITIONAL COMPENSATION PAYING JOBS (B)

• PAYING JOBS
• JOB EVALUATION FOR PAY RANGE (HOURLY, WEEKLY,
  MONTHLY, YEARLY)
• INDIVIDUAL SALARY DETERMINATION
• SENIORITY
• COST OF LIVING ADJUSTMENTS
• MERIT/PERFORMANCE
• BONUSES (ALL TYPES)
• SOME GROUP PLANS
• SECRECY/MANAGERIAL DISCRETION
• RELATIVELY STATIC MODEL

5
TRADITIONAL COMPENSATION PAYING JOBS (C)

• JOB EVALUATION
• ASSUMES PAY JOBS, NOT PAY PEOPLE
• SYSTEMATIC METHOD OF COMPARING JOBS
• CREATES PAY RANGE FOR JOB, NOT PERSON
• TIE TO JOB DESCRIPTION
• LEGAL, PRACTICAL SUPPORT
• MAY BREAK JOB INTO COMPONENTS, OR JOB FACTORS
• SKILL, EFFORT, RESPONSIBILITY, WORKING CONDITIONS
  (from EPA (1963)/FLSA (1938)
• EXTERNAL SALARY SURVEYS
• IDENTIFY MARKET RATES
• SUPPLY AND DEMAND FOR SKILLS

6
JOB EVALUATION SYSTEMS

• TYPE OF COMPARISON
• PART
• OF
• JOB

JOB vs. JOB JOB vs. STANDARD
WHOLE JOB RANKING (p. 247) CLASSIFI-CATION (p. 250)
SPECIFIC JOB FACTORS FACTOR COMPAR-ISON (p. 255) POINT FACTOR (p. 263)
7
JOB EVALUATION SYSTEMS

• COMPARES WHICH PART OF JOB
• WHOLE JOB
• RANKING
• CLASSIFICATION
• SPECIFIC JOB FACTORS
• FACTOR COMPARISON
• POINT FACTOR

• TYPE OF COMPARISON MADE
• JOB vs. JOB
• RANKING
• FACTOR COMPARISON
• JOB vs. STANDARDS
• CLASSIFICATION
• POINT FACTOR