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Compensation

Chapter 9
by

Carolyn Elbert

on 10 November 2015

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Transcript of Compensation

Compensation
What factors aside from money, impacts your decision to take a job?
Federal Compensation Laws
Fair Labor Standards Act (FLSA)
State Compensation Laws
Many states have there own minimum wage laws
Factors Affecting Compensation
Revenue Levels
Compensation
Labor is a controllable cost and often the largest category of cost
Compensation
Chapter 9
Compensation: the return for the work you do
Gross Pay vs. Actual pay
How compensation programs are managed impacts the:
Culture
Profitability
Managers are stuck between employees & owner
**Manager Bonus**
Controllable vs. noncontrollable
There are three broad types of labor costs:
Wages: number of hours worked
Salary: by week or by month (not based off hours)
Benefits: vacation, sick time, insurance
second largest:products purchases
Competitive Wages
Tips
Benefits
Required Benefits
Unemployment Insurance
: temporary source of income, funded with money paid by the employer while the person was employed

Social Security
: supplemental retirement system, funded by payroll taxes

Medicare
: federal medical insurance, over 65 years old or younger persons with disabilities

Workers' Compensation
: state regulated insurance, pays medical bills for people injured at work
Voluntary benefits
Holiday, Vacation, Medical/Dental, Retirement
Stay competitive
Ask employees what benefits they want
Overtime, over 40 hours, hourly rate plus 50%
Example: Hourly Rate $10, Overtime Rate $15
tipped employees are included within the scope of this law
Equal Pay act
Equal Pay for Equal Work
Iowa Minimum Wage = Federal
Do you think minimum wage laws are a good idea?
Higher the revenue volume, Higher the pay scale can be
Payroll Standards
How much total *expected
revenue can be spent on labor
30% labor cost means
30% of all revenue generated can be spent on labor
**Importance of Accurate Forecasts and budgeting**
What is your competition paying?
Higher knowledge and skills = higher pay
Pay Increases as Production/Service Rise
Compensation Policies and
Procedures
Equal consideration for all parties involved
Control Process for Compensation
1. Analyze factors affecting compensation
2.Establish standards and procedures based on the compensation analysis
3. Train staff to follow established standards and procedures
4. Monitor employee performance and compare actual performance with established standards
5. Take actions to resolve any deviations from the established standards
6. Monitor factors to keep up to date on compensation issues
Management Compensation Increases
How do you determine a pay increase?
Merit Pay Plan: paid based on skills and performance
Four factors involved in merit pay decisions:
job performance-performance standards
accomplishments-"beyond the call of duty"
current pay rate-top of pay range/competitive wages
contributions to business goals-meeting/exceeding
Cost of Living..Pay increase
related to the index created by the us bureau of labor
Payroll information is Private
Are you aware of what other employees are making?
Should pay information be shared with other employees?
Public vs. Private Employees
Payroll Services
Internal vs. Outsourcing
Performance Appraisals
Quarterly, Semi-Annual or Annual (anniversary date)
Employee compensation is typically discussed
performance score sheet
met or exceed agreed-upon standards
set expectation for next appraisal
$7.25
.78 to every $1
Full transcript