After reading this chapter, you should be able to: List the major decision areas and concepts in employee compensation management, describe the major administrative tools used to manage employee compensation, explain the importance of competitive labor-market and product-market forces in compensation decisions,. | 1 Pay Structure Decisions After reading this chapter, you should be able to: List the major decision areas and concepts in employee compensation management. Describe the major administrative tools used to manage employee compensation. Explain the importance of competitive labor-market and product-market forces in compensation decisions. Discuss the significance of process issues such as communication in compensation management. Chapter 11 Pay Structure Decisions Describe new developments in the design of pay structures. Explain where the United States stands from an international perspective on pay issues. Explain the reasons for the controversy over executive pay. Describe the regulatory framework for employee compensation. Chapter 11 Introduction From the employer’s point of view: Pay is critical in attaining strategic goals. Pay has a major impact on employee attitudes and behaviors. Employee compensation is typically a significant organizational cost. From the employee’s point of view: Policies having to do with wages, salaries, and other earnings affect their overall income and thus their standard of living. Both level of pay and fairness compared with others’ pay are important. Pay Decisions Pay structure refers to the relative pay of different jobs (job structure) and how much they are paid (pay structure). Pay level is the average pay in organizations, including wages, salaries, and bonuses. Job structure is the relative pay of jobs in organizations (., the range of pay often expressed by salary grades). Pay policies are attached to jobs, not individuals. Equity Fairness Two types of employee social comparisons of pay are especially relevant in making pay-level and job structure decisions: Pay Structure Decision Area Pay Level Job Structure Administrative Tool Market pay surveys Job evaluation Focus of Employee Pay Comparisons External equity Internal equity Consequences of Equity Perceptions External employee movement, labor costs, employee attitudes . | 1 Pay Structure Decisions After reading this chapter, you should be able to: List the major decision areas and concepts in employee compensation management. Describe the major administrative tools used to manage employee compensation. Explain the importance of competitive labor-market and product-market forces in compensation decisions. Discuss the significance of process issues such as communication in compensation management. Chapter 11 Pay Structure Decisions Describe new developments in the design of pay structures. Explain where the United States stands from an international perspective on pay issues. Explain the reasons for the controversy over executive pay. Describe the regulatory framework for employee compensation. Chapter 11 Introduction From the employer’s point of view: Pay is critical in attaining strategic goals. Pay has a major impact on employee attitudes and behaviors. Employee compensation is typically a significant organizational cost. From the employee’s point of
