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 co
ect, meaning (minimally) at a level we expect of university students: proofread, written in complete sentences with co
ect 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 write
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
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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
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Today's topic is strategic compensation as a component of human resource systems.
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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.
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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.
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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
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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.
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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
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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 cu
icula
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
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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 cu
icula. 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
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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
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Employee benefits consist of discretionary benefits and legally required benefits. Each type will be discussed in the following slides.
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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
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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
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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 cu
ent strategic compensation era.
Discuss at least two differences between strategic and tactical compensation.
© Pearson Education Limited 2015
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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
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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
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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
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Oftentimes, many people equate compensation exclusively with pay and