Chapter 8 - Compensation programs. The learning objectives for this chapter include: Describe the differences between extrinsic and intrinsic rewards as they relate to employee compensation programs; explain how compensation programs are affected by federal, state, and local laws; list and describe the most common forms of direct financial compensation;. | 1 Compensation Programs Chapter 8 2 Learning Objectives Describe the differences between extrinsic and intrinsic rewards as they relate to employee compensation programs. Explain how compensation programs are affected by federal, state, and local laws. 3 Learning Objectives List and describe the most common forms of direct financial compensation. List and describe the most common forms of indirect financial compensation. List and describe some of the most common forms of nonfinancial compensation. 4 Compensation Management Compensation package: The sum total of the money and other valuable items given in exchange for work performed. 5 Compensation Management Extrinsic rewards: Financial, as well as non-financial, compensation granted to a worker by others (usually the employer). Intrinsic rewards: Self-initiated compensation. For example, pride in one’s work, a sense of professional accomplishment, or enjoying being part of a work team. 6 Compensation Management 7 Compensation Management The goal of any effective compensation management program should be to attract, motivate, and retain competent employees. Compensation management: The process of administrating an organization’s extrinsic and intrinsic reward system. 8 Compensation Management Important when developing a compensation system: Categorizing of jobs Pay range: The lower and upper limit of hourly wages or salary paid for a specific job. 9 Compensation Management Important when developing a compensation system: (cont.) Comparison of employee pay to the local labor market Local wage rate: The prevailing pay range for distinct job categories in a specific community or labor market. Salary survey: A comprehensive review of local wage rates and pay ranges paid for one or more individual job categories. 10 Compensation Management Important when developing a compensation system: (cont.) Management of internal pay equity Linkage of pay to job performance Merit pay system: A compensation program that links . | 1 Compensation Programs Chapter 8 2 Learning Objectives Describe the differences between extrinsic and intrinsic rewards as they relate to employee compensation programs. Explain how compensation programs are affected by federal, state, and local laws. 3 Learning Objectives List and describe the most common forms of direct financial compensation. List and describe the most common forms of indirect financial compensation. List and describe some of the most common forms of nonfinancial compensation. 4 Compensation Management Compensation package: The sum total of the money and other valuable items given in exchange for work performed. 5 Compensation Management Extrinsic rewards: Financial, as well as non-financial, compensation granted to a worker by others (usually the employer). Intrinsic rewards: Self-initiated compensation. For example, pride in one’s work, a sense of professional accomplishment, or enjoying being part of a work team. 6 Compensation Management 7 Compensation .
