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?

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

Documents

compensation management

differentiation strategy

strategic management

strategic compensation

type of pay

skillbased pay

shrm http

lowcost strategy