英文薪酬教程

1、CHAPTER 10:COMPENSATION AND BENEFIT LEVEL STRATEGIESOverview: Pay tactics of low-wage and high-wage organizations.“ How much do we have to pay in order to attract more machinists for the new project?”“The policy of this company is to be 10 percent above the market. You make sure thatwe are! ”“ But t

2、hissurvey in our professionaljournalindicatesthatwe are15 percentbelow themarket. How can you say we are paying market rates?”“Boy, this pay raise isn't even up to rise in the cost of living!”“With whom should we compete for workers?”“Do we need the best workers, or can we get along with average

3、 ones?”Allthese questionsand comments have to do with how the compensation practices,levels,and strategies of an organization are decided.The compensation and benefit level is the average compensation paid to employees. Thishas two implications. The first is external: how does the organization compa

4、re with other organizations? This question is a strategic one of how the organization wishes to position itself in the marketplace. The second implication is internal. The average compensation is a reflection of the total compensation bill of the organization. Labor is one of theclaimants on organiz

5、ational resources. The size of the compensation and benefits billis a reflection of who gets what within the organization.The decisionon compensation levels(how much willthe organizationpay?) may be the mostimportantpay decisionthe organizationmakes. A potentialemployee's acceptance usuallyturns

6、 on this decision, and a large segment of the employer's costs are determined byit.ORGANIZATION COMPENSATION DECISIONSCompensation decisions are typically micro (individual) or macro (total organization)focused. Although organizations are under no constraint to separate these decisions, acourse

7、of study should.In practice,most unsophisticatedorganizationsmakethe decisionon compensation level (how much to pay) and compensation structure (relationships tocompetitors)at the same time.More administrativelyadvanced organizationsrealizethatindividualdecisionswithina proper administrativestructur

8、eare more consistent,fair,and cost-effective over time.The compensation leveldecision may be consideredthe most important one for individuals.In terms of both employee attraction and cost considerations, it is often considered bymost managers as a primary consideration. Also, it seems essential to r

9、ecognize thatcompensation level decisions can never be completely separate from job-mix, hiringstandards, personal decisions, and internal labor markets/relationships. For thesereasons, compensationlevel decisionsare typicallythe focusof a managers attention.From the organizations perspective,howeve

10、r, one individual s compensation decisiontypically goes unnoticed at the end of the year. Structure decisions (and the level ofthose structures) are what show up on an income statement.The term compensation levelsimply means the average compensation paid to workersat somelevelof analysis,e.g. thejob

11、,the department, theemployingorganization, an industry,or theeconomy. The importanceof thecompensationleveldecisionto organizationsrestson its influence in getting and perhaps keeping the desired quantity and quality ofemployees. If the compensation level is too low, the applicant pool may dry up an

12、drecruitmenteffortsmay meet with littlesuccess. Equallyserious,some employees (oftenthe best ones) may leave. At the extreme, the organization may experience difficultieswith state and federal regulatory bodies administering minimum compensation laws andprevailingwage laws. Also,theorganization may

13、be confrontedwith concerted organizingdrives if no union is present, or pressing compensation demands from existing unions.It is less apparent, but equally real, that a low compensation level may attract onlyless efficient workers, with the result that labor costs per unit of output rise.If, on the

14、other hand, the compensation level is too high, equally undesirable resultsare likely.The competitivepositionof the organizationmay suffer. Turnover ratesmaydrop below some desirable minimum so that the organization tends toward inflexibilityor stagnation. Also, if compensation and salary levels are

15、 too high during periods ofcompensation controls by federal authorities, trouble may be forthcoming from these officials. Frequently, compensation and benefit level decisions are hidden in the type and structure of benefit, fringe, and retirement plans.Changes incompensation levels have the most dra

16、sticeffects on totalpayroll. Of course,other compensation decisions have payroll effects, but usually not nearly as great.Substantialsums of money can be involved, and forthis reason alonean organization mustpay close attention to compensation levels (both competitively and internally).Nor are emplo

17、yees and their representatives any less concerned with compensation leveldecisions. It is here that the absolute amount of the compensation or salary rate is determined. Also, it is here that unions exert their major effect, and here that member loyalty is built or lost.Finally, consumers and the ge

18、neral public have major interests in compensation leveldecisions,the consumer because wages are a major element in prices,and the general publicbecause wages and salaries represent the major portion of national income. Also, toofrequentor too drasticchanges in compensation levelsaffectthe healthof o

19、ur economy.STRATEGIC COMPENSATION LEVEL DECISIONSMost employees are aware that some employers pay more than others for the same type ofskill in the same market.1The actual cost to employers of employee service is total hourly compensation plusbenefits.Unfortunately,laborcost per unitis not informati

20、onthatis easilyobtainedby employers.It must be estimated from in-house information on the average productivity of employee groups and organization units and from the average pay of these groups.The information available on what other employers pay comes only as a result of search.This search takes t

21、he form of compensation surveys conducted or purchased by theorganization. These surveys invariably show a range of compensation paid for the samejob by different employers. This range tends to be narrower for the skilled occupationsand wider forthe semiskilled.One reason forthisis the difficultyof

22、job comparisons.Another is difference in employee quality. But these differences are never as wide ascompensation differences.The major reason for finding out what others are paying for jobs is to decide how to position your organization in relation to others and the labor market.High-Compensation E

23、mployersHigh-pay organizations tend to share a number of characteristics: larger size, higherprofits, a lower ratio of labor costs to total cost, few industry competitors, andunionization. Larger organizations tend to pay higher wages and benefits for a numberof reasons.One is thatthey usuallyare ab

24、le to.Large organizationsoftentend to havesome financial surplus, which they can use in various ways. Another reason is that theymay be willing to pay more to attract a pool of competent applicants. Still another maybe a perceived obligation to counter lower job satisfaction. Finally, those largeorg

25、anizations that are not unionized are continuing targets of union organizers.In addition,higher-profitorganizationsare betterable and perhaps more willingto pay.A lower ratioof laborcosts to other costs maymeanthathigh wages are a less significantcost item. As a consequence, organizations with such

26、a ratio can pay high wages in thehopes of forestalling labor problems and devote their attention to high-cost items.Few industry competitors may mean that the organization faces an inelastic demand foritsproductor service,so thatitcan pass on costpressuresas priceincreaseswithoutreducing sales. Also

27、, especially under union conditions, the few competitors may tendto pay equal compensation rates to "take labor out of competition."2Because of theirpolicyof the "standardrate,"unions tryto equalizewages in the sameproduct market. Unions don t necessarily do this for business pur

28、poses and the goals that drive a profit-oriented business. Often union policies are based upon equity considerations as well as practical ones.Note that all of these reasons, except for size, suggest that high-wage employers tendto group by industry (product market). Thus there is a compensation hie

29、rarchy amongcompanies thatis relatedat leastpartiallyto the industryto which the companies belong.The high-wage employer may be part of a national organization whose major compensationdecisions are made at the corporate level. For example, New York headquarteredcorporationsoften appear to pay higher

30、 than localcompetitors.Also, unionizedemployersmay have a uniform compensation scale, dictated by the labor agreement, in all company establishments.Quite naturally,high-wage employers hope to gain severaladvantages from theirhigh-wageposition:higherworker qualityas a resultof higherhiringstandards,

31、abilityto insiston higher performance standards, lower turnover, time savings for management becausecompensation changes do not have to be considered as frequently, insurance againstunionization, fewer labor disputes in unionized companies, and company prestige. It isconceivablethatthe lastof these

32、(which appears to be non-economic) may bear more weightthan economic advantages.Low-Compensation EmployersLow-pay employers tend to be relatively small, to occupy competitive product markets,to have low profit margins, and to be typically nonunion. They have low-paying abilitybecause of the constrai

33、nts of their product market. Most of their compensation decisions may be explained by this low ability to pay.Low-pay employers may gauge their positionby comparing themselves with thelargestandmost visibleemployers.Using compensation surveys,they usuallypay attentionto ratesforspecificjobs forwhich

34、 thereis an activeoutsidemarket.The startingratefornewproduction workers may be particularly significant. Jobs on which attention is focusedobviously varies by industry.The minimum feasible compensation is one that will obtain just enough employees tomaintain desired employee levels for some period,

35、 typically six months. But oftenorganizations pay above this minimum, hoping to obtain employees of higher quality; lower their turnover rates; and lower their recruitment, hiring, and training costs.Market Rate EmployersProbably themost commoncompensation levelstrategyfollowedby organizationsisto&q

36、uot;paythe market."These organizationswish to treattheiremployees fairly and yet notto raisetheircostssignificantlymore than theircompetitors.Inshort,theseorganizationsaretrying to average out the advantages and disadvantages of the high- and low-payingstrategiesby stayinginbetween. This strate

37、gyshouldenablethe organizationtorecruitand retainan adequate but notoutstandingwork force.Ina tightlabormarket,theyarelikelyto be affectedmore likethe low-paying organizationand need to engage inconcertedrecruitment activities to obtain new employees. At the same time, internal adjustments must be m

38、ade to retain current employees. Often this adjustment is made after some of the best employees have already left.The typesoforganizationsthatchoose to“pay themarket rate ” areharder to identifythanhigh-and low-payingorganizations.Many organizationswith thecharacteristicsofhigh-payingorganizationswi

39、llchoose topay the market insteadsincethisstrategywillstillsupplythem with an adequate work force. High-payingorganizationsare more likelyto be those in which it is clear to management that human effort can make a differencein organizational success. Low-paying organizationsmaywish topay market rate

40、s but oftenare unable to do so.To pay the market ratean organizationmust collectcompensation data and determinefromthat data exactly what the market rate is. This strategy can be characterized as beingreactive to the market, so the organization needs to keep constantly in touch with organizations to

41、 find out what changes are occurring in employee pay. This strategyother alsorequires that the organization carefully identify where to obtain compensationinformation; that is, the organization must identify what the market is.Because employing organizations differ in employment-expansion plans, non

42、-salary/wagecharacteristicsof jobs,quitrates,and recruitmentand trainingefforts,compensationlevels will always differ from company to company.LABOR MARKETS AND COMPENSATION LEVEL STRATEGIESLabor markets fluctuate in terms of the number of employees and employee hours needed.These swings in labor dem

43、and affect employer compensation decisions and compensationdifferentials among companies. High-pay employers are less affected by these swingsbecause their compensation is high enough above the area level so that they are littleaffected by short-run changes. They try to limit compensation level chan

44、ges to once ayear and tend to set pricesby a percentage markup over average unitcosts of production.Low-pay organizationsadjustto changes in labordemandby decidinghow farthey can lagbehind high-paying organizations. During an economic upswing, high-pay employers willbe increasingwages, salaries,bene

45、fits,and employment. Low-pay employers,to hold downturnoverand to increaseemployment, willhave to raise compensation more than high-payingfirms. The compensation gap between high-paying and low-paying firms thereby narrowsduring an upswing.During a downswing, high-pay firms stop hiring and may lay o

46、ff employees. Low-pay firmsfind that they have more and better applicants and less turnover. This means they canlag further behind the compensation leaders and that the inter-company differential widens.But althoughthese swings in labordemand compress and expand the differential,itneverdisappears. T

47、he reason is that although some labor markets are tight in upswings, mostare quite loose (they have more unemployment than job vacancies) most of the time.Fluctuations in demandalso change hiring standards. Whenan employer's pool of applicants begins to dry up, the employer may raise compensatio

48、n or lower hiring standards. Pressureto lower hiring standards is felt first by low-pay firms. During a downswing, hiringstandards are raised. It is usually easier, quicker and perhaps less costly to change hiring standards than to change wages. As a result employers may prefer changing hiring stand

49、ards in the short run to changing wages.Obviously, swings in labor demand have their greatest effects on the less-preferredmembersof the laborforce.Tightlabormarkets increasethe hiringof these groups.Looselabor markets discourageit.Organizationspaying market rates can expect to have to reactto most

50、of these changes like the low-paying organizations but not to the same degree.An employer's compensation levelis typically,inthefinalanalysis,a matter ofpolicy.Organizations take positions in labor markets and try to maintain them, at the marketor so much above or below it. Most companies most o

51、f the time pay more than they wouldneed toinorder to meet theiremployment objectives,but they rationjobsthroughhiringstandards.Preferred groupsare hiredfirst,less-preferredgroupsnext.Many firmscanquicklyexpand employment atpresentcompensationlevelsby merelyannouncing openings.In thisway, employees c

52、an flowfrom lower-wage tohigher-wage employers and sectorswithno change in differentials.During an upswing, low-pay employers will try to expand employment just as high-payemployers do. People areattractedfrom low-paying to high-payingfirms. At somepoint,the low-pay employer must raise compensation

53、and probably also lower hiring standards.Eventually all employers must do the same. The reverse process occurs in a downswing.INTERNAL LABOR MARKETSSo far we have been describing the process of determining or adjusting the (average)compensation levelof an organization.But most companies have many differentjobs,eachwithitsown compensation rate. Someki