IMPORTANT

PLEASE SELECT A TABLE AT WHICH NONE OF THE PEOPLE OF YOUR REGULAR GROUP ARE SITTING

GOAL IS TO REARRANGE ALL GROUPS (JUST FOR THIS MEETING)

Introduction into Compensation and Ocean Park Case

Session 18

Agenda What determines pay levels?

Elements of compensation

Ocean Park case discussion

Decisions About Pay Job Structure

Relative pay for different jobs within the organization

Pay level Average amount the organization pays for a

particular job Pay structure

The pay policy resulting from job structure and pay-level decisions

Issues in Developing a Pay Structure

Legal Requirements

Legal Requirements

Market Forces-Product markets

-Labor markets

Market Forces-Product markets

-Labor markets

Organization’s Goals-High-quality workforce

-Cost control

-Equity and fairness

-Legal compliance

Organization’s Goals-High-quality workforce

-Cost control

-Equity and fairness

-Legal compliance

Pay Level DecisionPay Level Decision Job Structure DecisionJob Structure Decision

Pay Structure Decision-Pay rates

-Pay grades

-Pay ranges

-Pay differentials

Pay Structure Decision-Pay rates

-Pay grades

-Pay ranges

-Pay differentials

(Re-arranged from Figure 11.1)

Legal Requirements in Hong Kong Minimum wage

No minimum wage except for foreign domestic helpers. Child labor

Children under to age of 15 are prohibited to work (13 and 14 is allowed in some non-manufacturing industries as part-timers).

Working hours Shift to five-day workweek.

Discrimination Ordinances (EOC)

Economic Influences on Pay Product Markets

Number and diversity of organizations that offer competing goods and services

Labor costs are a key consideration to stay competitive

Labor Markets Companies have to stay competitive with regard

to pay to attract the best employees Cost-of-Living

Employee Judgments about Pay Fairness

What might employees do if they perceive pay unfairness?

Job Structure: Relative Value of Jobs Job evaluation

An administrative procedure for measuring the relative internal worth of the organization's jobs

Hay Guide-Chart Profile Method Method of job evaluation that creates a profile for

each position based on its Required know-how Degree of problem solving Accountability

Pay Structure: Putting it all Together Pay may be in terms of

Salary, hourly rate, piecework rate Pay policy line

Shows the mathematical relationship between job evaluation points and pay rate

Pay Grades Sets of jobs having similar worth or content,

grouped together to establish rates of pay

Sample Pay Grade Structure

Test Your Knowledge To correct a Red-circled employee, I would…..

a. Give them a raise

b. Demote them

c. Give them a bonus, but no raise

d. Move them to a job with a higher pay range

Pay Structure and Actual Pay HR is typically

responsible for setting the pay structure and monitoring it over time

Compa-Ratio: ratio of average pay to the midpoint of the pay range

Figure 11.7

Total CompensationTotal Compensation

Base CompensationBase Compensation

Pay IncentivesPay Incentives

BenefitsBenefits

Elements of Compensation

Base Compensation

The fixed pay an employee receives on a regular basis Salary or hourly wages The most standard part about pay

Pay Incentive

A program designed to reward employees for good performance Bonuses, profit sharing

Indirect Benefit

Benefits Health insurance, housing scheme, annual leaves

Perquisites, perks Car, parking, club member, etc.

Strategic Aspects Compensation constitutes the single most

important cost in the firm 60% or even higher of the total cost

The pay strategy should be consistent with overall business strategy Hi-tech industry: Research & Development

Ocean Park Case Study Small Group Discussion Wrap-up and questions for Mr. Ho

Ocean Park: Key Players

Thomas J. Mehrmann

Chief Executive

Brian Ho

HR Director (and OUR GUEST SPEAKER for next week)

Allan Zeman

Chairman of the Board

Redevelopment Master Plan 2006-2010 HKD 5.5 Billion 33 additional animal species, number of rides will

double to 70. Two new hotels providing 1200-1500 rooms From 4.3 mln visitors in 2004 to 5 mln visitors in

2010 50% of visitors from mainland, 40% local, 10%

overseas.

Growing Number of Mainland VisitorsNumber of Visitors to Hong Kong from Mainland China

(in Millions)

0

24

6

8

1012

14

16

2001 2002 2003 2004 2005 2006

Number ofVisitors

** Over 10 percent annual growth in the number of visitors!

How’s HK Disneyland doing? Not many statistics available Walt Disney revealed in an SEC filing that Hong

Kong Disneyland drew fewer visitors from October to December 2006 than in the same period a year ago.

Missed target of 5.6 million visitors for 2006. Disney also disclosed that if business doesn’t

improve quickly, it will fail to meet performance pledges to its creditors, forcing it to refinance $294 million in debt.

Competitive advantages What are the competitive advantages of

Ocean Park? What are those of Hong Kong Disneyland?