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PRINCE MOHAMMAD BIN FAHD UNIVERSITY HRMT 4333 = Spring Term 2018 COMPENSATION AND BENEFITS Lecturer: Dr Hala Almahmoud Individual Assignment Instructions Sheet Statement Compensating employees represents a critical human resource management practice, so without strategic compensation systems, companies cannot attract and retain the best qualified employees. Thus, in compensating their employees, work organisations try to adopt different pay methods for different jobs. However, the choice of the pay method is subject to various factors, such as: skill, effort, responsibility, working condition, and many other internal and external factors (laws, regulations, competition, market, etc.). Requirement – Content In light of the statement above and course reading, select a job that has more than just a base pay component, and research the different parts of its compensation elements. You need to explain why these compensation elements are important. To do so, you need to provide some form of analysis as to why the compensation package is created the way it is. Requirement – Format Your assignment should be submitted in essay format following the guideline set out in the Assignment Guidelines (see below…). The work must be word-processed and must not exceed 1000 words: only 10% below or above is permitted. Your work should include the cover sheet for this assignment (it is provided below). The font type used for this essay must be ‘Times New Roman’ with a font size of 12. Line spacing of paragraphs should be 1.5. Submission - Deadline The completed assignment should be submitted online via Black Board. Please, note that the deadline date for submission is Wednesday the 14th of March 2018. Academic Guidelines for the Submission of Assignments All your written assignments should adhere to the following guidelines: · Hard copy to be handed in on the due date specified on Blackboard calendar. Soft copy submitted via Safe Assign. Assignments submitted by email will not be accepted. · Black text on white paper, A4 size · Word processed (typed), not handwritten · Maximum font size 12 pt. · Use a normal (non-italicized, non-bolded) font, Times New Roman is recommended · 1.5" spaced paragraphs · Quotations and footnotes may be single-spaced. · Leave a 1" margin on all sides. · The writing should be mechanically correct, meaning (minimally) at a level we expect of university students: proofread, written in complete sentences with correct spelling and punctuation and proper citation of sources. · You do have to cite all sources you used. · Use APA as your main form of citation. In-text citations are mandatory. · Number all pages except for the title page (which is p.i) - the first page of the text is p.1. · Staple the papers at the top left corner. Cheating and Plagiarism: Those who copy or use the work of others without attribution will receive no credit for the assignment involved. More than one incident of cheating and/or plagiarism will trigger University disciplinary action. Plagiarism Policy: · The work you submit for credit must be your original work. · Assignments that are not the original work of the student are considered plagiarized. · Plagiarism occurs when another person’s work, words, or ideas are presented as one’s own without the use of a school-recognized method of citation, such as APA style (e.g., copied from another source such as an author or another student without properly acknowledging the actual writer/author). · Plagiarism also occurs when knowingly giving or allowing one’s own work to be copied or otherwise duplicated by another for academic credit, or when resubmitting one’s own work for academic credit. · All those who violate this policy will receive a zero for the assignment and the case will be turned over to the Dean of Student Affairs for further action. The End…Good Luck PRINCE MOHAMMAD BIN FAHD UNIVERSITY HRMT 4333 COMPENSATION AND BENEFITS 2017-2018 Lecturer: Dr Hala Almahmoud Assignment Cover Sheet FAMILY NAME: ……………AAAAA…………….. FIRST NAME: ……………BBBBB………………. REG NO: ……………………1111111………….. Title:XXXXXXXXXXXXXXXXXXXXXXXXXXX Word Count: 0000 Date: 00/ 00/ 0000 Lecture 1: STRATEGIC COMPENSATION Lecture 1: Core compensation concepts 1 Today's topic is strategic compensation as a component of human resource systems. 1 What Is Compensation? Compensation represents the rewards employees receive for performing their job. They are either: Intrinsic: intrinsic compensation represents employees’ critical psychological states that result from performing their jobs. Extrinsic: extrinsic compensation includes both monetary and nonmonetary rewards. 2 Compensation represents intrinsic and extrinsic rewards employees receive for performing their jobs. Intrinsic compensation represents employees’ psychological mindsets that result from performing their jobs. Extrinsic compensation includes both monetary and nonmonetary rewards for reaching certain performance levels or acquiring new skills and knowledge. 2 Definitions of common terms – wages Used to describe payments made weekly, often based on an hourly rate and/or paid in cash Less likely to involve fringe benefits Expectation of short-term thinking from employees – incentives are usually quick and precise Less emphasis on job security Earning capacity traditionally peaks early Slide 10.3 Margaret Foot and Caroline Hook, Introducing Human Resource Management, 6th Edition, © Pearson Education Limited 2012 Definitions of common terms – salaries Used to describe payments paid monthly, based on an annual salary figure Normally paid directly into a bank Possibility of fringe benefits Long-term prospects seen as more important than immediate incentives Traditionally linked with job security Managerial roles Earning capacity peaks late in life Slide 10.4 Margaret Foot and Caroline Hook, Introducing Human Resource Management, 6th Edition, © Pearson Education Limited 2012 Elements of Core Compensation Base pay - Hourly pay- Annual salary Base pay adjustments COLAs- Seniority pay Merit pay- Skill-based pay Incentive pay - Person-focused pay 5 5 Core compensation consists of base pay and its adjustments. Base pay includes hourly pay wage and annual salary. The other elements of core compensation include cost-of-living adjustments (COLAs), merit pay, incentive pay, seniority pay, skill-based pay, and person-focused pay. Base Pay Adjustments COLAs – a Cost Of Living Adjustment (COLA) is an increase in income that keeps up with the cost of living based on increases in prices as indexed by the Consumer Price Index (CPI) - the federal government's official measurement of inflation, which measures changes in the prices of 80,000 goods and services. . 6 6 Base pay is adjusted periodically for cost-of-living increases. COLAs are base pay adjustments tied to the consumer price index (CPI). They are designed to enable employees to maintain their purchasing power and standard of living. Seniority pay systems reward employees with periodic additions to base pay according to employees’ length of service in performing their jobs. In merit pay systems, employees receive permanent base pay increases due to their job performance. Merit pay is designed to reward exemplary performance to motivate future performance. Base Pay Adjustments Seniority Pay—seniority pay systems reward employees with periodic additions to base pay according to employees’ length of service in performing their jobs Merit Pay—merit pay programs assume that employees’ compensation over time should be determined, at least in part, by differences in job performance. Incentive Pay—incentive pay (or variable pay) rewards employees for partially or completely achieving a predetermined work objective. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 1-7 7 Base pay is adjusted periodically for cost-of-living increases. COLAs are base pay adjustments tied to the consumer price index (CPI). They are designed to enable employees to maintain their purchasing power and standard of living. Seniority pay systems reward employees with periodic additions to base pay according to employees’ length of service in performing their jobs. In merit pay systems, employees receive permanent base pay increases due to their job performance. Merit pay is designed to reward exemplary performance to motivate future performance. Base Pay Adjustments (Cont’d) Pay-for-Knowledge Plans—pay-for-knowledge plans reward managerial, service, or professional workers for successfully learning specific curricula Skill-based Pay—skill-based pay is used mostly for employees who perform physical work and increases these workers’ pay as they master new skills. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 1-8 8 Incentive pay is also known as variable pay. Incentive pay reward employees for achieving predetermined work objectives. Pay-for-knowledge plans reward managerial, service, or professional workers for successfully learning specific curricula. Lastly, skill-based pay is used mostly for employees who perform physical work and increases as workers master new skills. Base Pay Is determined by: An employee’s skill level An employee’s effort An employee’s level of responsibility The severity of the working conditions 9 9 Base pay is influenced by four compensable factors. These factors can be listed as an employee's skill level, an employee's effort, an employee's level of responsibility, and the severity of the working conditions. Employee Benefits Discretionary (Optional) Benefits Legally Required Benefits 10 Employee benefits consist of discretionary benefits and legally required benefits. Each type will be discussed in the following slides. 10 11 Discretionary Benefits Protection programs Paid time-off Services provide family benefits, promote health, unemployment, disability, or serious illness provides employees with pay for time when they are not working (PMU faculty: two months). provides such enhancements as tuition reimbursement and day care assistance to employees and their families Legally-Required Benefits Federal Legislation Designed to: Promote worker safety and health Maintain family income Assist families in crisis Provide assistance in case of Disability Unemployment 12 12 The second component of employee benefits is legally required benefits. They are protection programs that are designed to promote worker safety and health and maintain family income. They assist families in crisis and provide assistance when an employee is disabled or unemployed. WHAT IS COMPENSATION STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 1: Strategic Compensation: A Component of Human Resource Systems © Pearson Education Limited 2015 1-1 1 Learning Objectives Describe what compensation is and give at least three examples of core compensation practices and at least three examples of employee benefits practices. Summarize at least two historical events in the evolution of compensation practice leading to the current strategic compensation era. Discuss at least two differences between strategic and tactical compensation. © Pearson Education Limited 2015 1-2 2 Learning Objectives Name and summarize the goals of compensation professionals. Identify the stakeholders of the compensation and summarize their stake in the work compensation professionals perform. © Pearson Education Limited 2015 1-3 3 Learning Objective 1 Describe what compensation is and give at least three examples of core compensation practices and at least three examples of employee benefits practices. © Pearson Education Limited 2015 1-4 4 What Is Compensation? Compensation represents the rewards employees receive for performing their job. They are either: Intrinsic: intrinsic compensation represents employees’ critical psychological states that result from performing their jobs. Extrinsic: extrinsic compensation includes both monetary and nonmonetary rewards. © Pearson Education Limited 2015 1-5 Oftentimes, many people equate compensation exclusively with pay and