Chapter 1: Strategic Compensation MGT 4543 Compensation Management You will need technology for today’s class activity

Chapter 1: Strategic Compensation

MGT 4543 • Compensation Management

You will need technology for today’s class activity.

Be prepared…• Today, I will call on you for answers. Borrow a

book if you do not have one yet.• Please do NOT read from your book. We want

to stay awake!• What if you did not prepare for today’s class?

– My best advice is to follow along, try to keep up, and THINK of a logical answer if you are called on. That is MUCH better than saying the dreaded, “I don’t know” or “I don’t have a book yet.”

What does SHRM stand for???Society for Human Resource Management

http://www.shrm.org/

Opportunities to get involved with HR professionals

• MSU student chapter of SHRM–Sign up to be on the e-mail list if you are interested!

• Golden Triangle Human Resource Association http://gthra.shrm.org/

• SHRM–http://www.shrm.org/

Opportunities to get involved with HR

professionalsWhy join the MSU Student Chapter of SHRM?

•Exposure to HR professionals–Networking opportunities–Opportunities to learn more about HR

•GTHRA & MSU Partnership–Dual membership (if you attend GTHRA meetings)–Mentorship program (pilot kickoff this fall!!!)

Strategic Compensation

• What is compensation?


• Explain each: – base pay

– compensable factors

– COLAs


• Explain each: – seniority pay

– merit pay

– incentive pay


• Explain each: – Pay-for-knowledge

• What type of workers are likely to receive this type of pay?

– Skill-based pay• What type of workers are likely to receive this type of

pay?


• Explain each: – Discretionary benefits

• Give some examples…your book has plenty to choose from!

– Legally-required benefits• Give some examples…your book has plenty to choose

from!

Brief History of Compensation• Industrial revolution

– Division of labor; – Change from work _________________ to _________________

• Scientific management– Productivity measures– Piecework plans

• Welfare practices & Gov regulation– Improving conditions for Ees (e.g., medical insurance for EEs)– Personnel management emerges

• Competitive advantage– Employees viewed as a source of ___________________

• Pay-for-knowledge, pay-for-skill• Emphasis on recruitment and retention

– Pressure of globalized competition


• How do strategy and tactics differ?

• What is strategic management?

Strategic Management & HRM


• Cost leadership– What is cost leadership?– How do Ryanair’s compensation practices help it

achieve its strategy?

• Differentiation– What is differentiation?– Discuss why brand loyalty and research &

development frequently go hand-in-hand with differentiation.

Class Activity

Using your technology, identify two companies – one pursuing a low-cost strategy and one pursuing a differentiation strategy.

1) Get out a piece of paper & write your name on it.

2) Name and describe each company - What good do they produce or what service do they offer?

3) Find each company’s mission and summarize it.

4) List 2 reasons why you believe that each company is pursuing a low-cost or differentiation strategy

Class ActivityLow cost strategy

Company name: _________________________Description:_____________________________Mission:________________________________2 reasons why you believe that the company is

pursuing a low-cost strategy• _____________________________________• _____________________________________

Include this information on your sheet of paper

to TURN in.

Class ActivityDifferentiation strategy

Company name: _________________________Description:_____________________________Mission:________________________________2 reasons why you believe that the company is

pursuing a differentiation strategy• _____________________________________• _____________________________________

Include this information on your sheet of paper

to TURN in.


• What does it mean for compensation systems to be internally consistent?

• Why is internal consistency in compensation important?


• Describe the two processes to achieve internal consistency.

• Market competitiveness in compensation: How is it achieved? Why does it matter?


• Fill in the blank:– pay structures – represent pay rate ____________

for jobs of ___________ worth & the framework for recognizing differences in employee ______________.

• Explain each:– pay grades– pay ranges

Pay Structure

$27,000

Pay Grade 1__________

$20,000

$32,000

Pay Grade 2

$25,000

$37,000Pay Grade 3____________________

$30,000Pay Range 200-400 401-600 601-800

Job evaluation points


• What stakeholders must a compensation system satisfy?

• Why might satisfying various stakeholders be a challenge for HR departments?

Documents

Chapter 1: Strategic Compensation MGT 4543 Compensation Management You will need technology for today’s class activity