6658468 Compensation Management

8/10/2019 6658468 Compensation Management

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COMPENSATION MANAGEMENT

Compensation Management is an integral part of the management of theorganization. Compensation Management contributes to the overall success

of the organization in several ways. To be effective, the managers must

appreciate the value of competitive pay, their human resources, and have an

investment view of payroll costs. It is of prime importance for an

organization to maintain pay levels that attract and retain quality employees

while recognizing the need to manage payroll costs .

ABOUT COMPENSATION MANAGEMENT

The compensation management policy and the reward system of an

organization are viewed by the employees as indicators of the management

attitude and concern for them. A good compensation management system

should be able to attract and retain employee , give them a fair deal ,eep the

organization competitive and motivate employees to perform their best.

SCOPE OF COMPENSATION MANAGEMENT

I! todays world organizations tries more to asses the worth of an individual

in terms of his performance and contribution to the organizations. "ith the

growing demand of worforce and constant challenges in the business

environment, organizations have to evolve and accurate system for

evaluating #obs and assessing their worth. Compensation management helps

to determine the relative worth of a #ob in an organization in a systematic,

consistent and accurate manner. It also helps in estimating the basic pay for

each #ob in accordance with the importance of the #ob in the organizational

hierarchy .once a basic pay is determined , the rewards , incentives and

benefits attached worth the pay, positions and performance are also

determined . The basic wage, incentives and rewards and benefits, together

form the compensation pacage of an employee


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Ageneralized

compensationpackage acrossthe industries.


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BASE PAY

Base pay is the fixed compensation paid to an employee for performing specific jobresponsibilities. It is typically paid as a salary, hourly or piece rate.

In the State, employee base pay is first determined when hired. hanges to anemployee!s base pay can be made as he"she go through his"her career in these ways#

CHANGE IN JOB

$hen an employee changes job responsibilities, he"she may recei%e a#

Promotion& a change in duty assignment of an agency employee in one job classto another job class in a salary group with a higher minimum salary rate. A promotion toa higher le%el job class re'uires higher 'ualifications such as greater skills or moreexperience and in%ol%es more responsibility. (mployees promoted to positions in SalarySchedules A or B will recei%e at least a one increment increase in salary )or *.+ percentor the minimum salary rate of their new salary group, whiche%er is higher.

Demotion & a change in duty assignment of an agency employee in one job classto another job class that is in a salary group with a lower minimum salary rate. -hesalary of a demoted employee in Schedule A or B must be reduced at least one step )or*.+ percent below the employee!s salary prior to the demotion. owe%er, an agency isnot re'uired to reduce an employee!s salary if the employee accepts a demotion in lieu

of a layoff or is selected for a position in a lower salary group because of applying for theposition.

Lateral transfer& a change in duty assignment of an agency employee that mo%esto another job class in the same salary group.

PAY FOR PERFORMANCE

An employee may also recei%e a change in base pay for their performance in the samejob#

Merit increase& a mo%ement in a Schedule A or B employee!s salary to a higher ratein his"her same salary group. -he employee must demonstrate job performance andproducti%ity that are consistently abo%e what is normally expected or re'uired. -orecei%e a merit, employees must ha%e been with the agency for six continuous monthsand six months must ha%e elapsed since their last promotion, merit, or one&time merit.


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One time merit increase& a lump sum payment to an employee in a classified position.-he same rules for merit increases apply to these increases.

Salar re!"ction& an employee!s salary can be reduced based on poor performance.-he disciplinary reduction in pay can go no lower than the minimum rate of theemployee!s current salary group. (mployees may ha%e their pay restored to any rate inthe same salary group, up to and including their prior rate, as their performanceimpro%es.

DIFFERENTIAL PAY

/ifferential pay is non&performance based pay usually gi%en to accommodate a specificworking condition. -he State offers se%eral types of differential pay to employees.

-here are both state and federal re'uirements on how to address employee o%ertime.-he O#ertime Mana$ement G"i!eaddresses most 'uestions regarding this subject.

I% FLSA O#ertime& federal guidelines for paying employees who work o%ertime.

II% State Com& 'ime& state guidelines for paying employees who work o%ertime.

III% Lon$e#it Pa& state guidelines for paying employees based on state ser%ice time.

I(% S)ift Differential& state guidelines for paying employees that work shifts different

than a normal schedule.

(% Ha*ar!o"s D"t Pa& state guidelines for paying employees based on performingwork that could be hazardous to their health.

(I% On+Call Pa & state guidelines for paying employees for being on&call.

(II% Benefits Re&lacement Pa& state guidelines for paying employees the employer!sportion of Social Security taxes.

VARIABLE PAY

0ariable pay is compensation that is contingent on discretion, performance or results. Itmay be referred to as 1pay at risk.1

En)ance! Com&ensation A,ar!& Agencies that meet certain performance criteriamay grant awards to employees who directly contribute to these performancesuccesses.
http://www.hr.state.tx.us/compensation/overtimemgmtguide.htmlhttp://www.hr.state.tx.us/compensation/overtimemgmtguide.htmlhttp://www.hr.state.tx.us/compensation/flsaovertime.htmlhttp://www.hr.state.tx.us/compensation/flsaovertime.htmlhttp://www.hr.state.tx.us/compensation/comptime.htmlhttp://www.hr.state.tx.us/compensation/longevity.htmlhttp://www.hr.state.tx.us/compensation/shiftdifferential.htmlhttp://www.hr.state.tx.us/compensation/hazardous.htmlhttp://www.hr.state.tx.us/compensation/hazardous.htmlhttp://www.hr.state.tx.us/compensation/oncallpay.htmlhttp://www.hr.state.tx.us/compensation/oncallpay.htmlhttp://www.hr.state.tx.us/compensation/brp.htmlhttp://www.hr.state.tx.us/compensation/brp.htmlhttp://www.hr.state.tx.us/compensation/performanceawards.htmlhttp://www.hr.state.tx.us/compensation/flsaovertime.htmlhttp://www.hr.state.tx.us/compensation/comptime.htmlhttp://www.hr.state.tx.us/compensation/longevity.htmlhttp://www.hr.state.tx.us/compensation/shiftdifferential.htmlhttp://www.hr.state.tx.us/compensation/hazardous.htmlhttp://www.hr.state.tx.us/compensation/oncallpay.htmlhttp://www.hr.state.tx.us/compensation/brp.htmlhttp://www.hr.state.tx.us/compensation/performanceawards.htmlhttp://www.hr.state.tx.us/compensation/overtimemgmtguide.html


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Retention Bon"s& Bonuses paid in order to retain employees in state go%ernment.

Em&loee Reco$nition A,ar!& Awards gi%en to employees for recognition.

I!$I%&CT C'M(&!)ATI'!

PAY FOR TIME AT WORK

Brea-s& 2est periods of short duration, running from 3 minutes to about 45 minutes.-hey are used to promote the efficiency of the employee and are customarily paid for asworking time. -hey must be counted as hours worked. $ithin the State of -exas, thesebenefits are a matter of agreement between the employer and the employee.

A$enc E#ents& Special e%ents or programs planned by an agency to foster andde%elop an agency6s culture planned during an agency6s work hours.

'rainin$ Ho"rs& -he time that employees are allowed for training acti%ities and forwhich they recei%e pay.

NOT AT WORK

)ic leave

State employees are entitled eight hours of sick lea%e per month. Sick lea%e with paymay be taken when an employee is pre%ented from performing duties because ofsickness, injury, or pregnancy and confinement. Sick lea%e may also be taken if anemployee needs to care for a member of his or her immediate family who is actually ill.Sick lea%e may be taken to care for members of an employee!s family who do not residein the same household only if the time taken is necessary to pro%ide care to a spouse,
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child, or parent of the employee who needs such care as a direct result of a documentedmedical condition.

-o be eligible for accumulated sick lea%e with pay for a continuous period of more thanthree working days, an employee must send the administrati%e head of his or her agencya doctor!s certification, or an acceptable written statement of facts, showing the nature ofthe illness.

Agency heads may grant employees extended sick lea%e if they belie%e it is warranted.

(ach agency may establish a sick lea%e pool where employees donate hours to the poolto be used by other employees who experience a catastrophic illness or injury thatforces an employee to use all of their sick lea%e time.

Holi!a

State agency employees are entitled to a paid day off from work on national and stateholidays obser%ed by the state. -hese holidays are specified by the 7egislature eachsession. A state agency must ha%e enough state employees on duty during a stateholiday to conduct the public business of the agency except for those state holidays thatfall on a Saturday or Sunday, the 8riday after -hanksgi%ing /ay, /ecember 4+th, or/ecember 49th.

(mployees who act"all ,or-on a national holiday or a state holiday will be allowedcompensatory time off during the :4&month period following the date of the holiday

worked.

Admin leaveAgency heads are allowed to grant *+ hours of administrative leave per fiscal year to

employees for outstanding performance.

Vacation&mployees receive vacation leave based on length of their service.

Jury Service

An state employee is entitled to serve on a #ury without any deduction from wages.

'fficers or employees of the )enate, the ouse of %epresentatives,or any organization inthe legislative branch of state government establish e-emption from state #ury service.


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Emerency leave

State employees are entitled to time off with pay for a death in the family. An employee!sfamily is defined as the employee!s spouse, the employee!s and the spouse!s parents,and children, brothers, sisters, grandparents, and grandchildren of the employee. Anagency head may also grant emergency lea%e for other reasons determined to be forgood cause.

Income protection program.

MANDATED INCOME PROTECTION PROGRAMS

-here are some federally mandated income protection programs.

.or-ers/ Com&ensation& A benefit paid to an employee who suffers a work&relatedinjury or illness.

0nem&loment Ins"rance& A program designed to pro%ide a financial safety net forindi%iduals who become unemployed through no fault of their own.

Social Sec"rit an! Me!icare 'a1es 2FICA3& -axes intended to help the elderly withretirement and health care costs.

VOLUNTARY INCOME PROTECTION PROGRAMS

-he State of -exas also offers some income protection programs for state employees#

Healt) Ins"rance& insurance against loss by illness or bodily injury.

Life Ins"rance& insurance to be paid to a beneficiary when the insured dies.

Retirement& program designed to pro%ide an income for your retirement and otherfuture financial needs.
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Deferre! Com&ensation Plans& employer deduction from pay where employee doesnot pay tax until they recei%e the distributions at a later date.

NON-FINANCIAL COMPENSATION

;on&financial compensation is different incenti%es gi%en to employees that are not in theform of direct pay.

Alternati#e .or- Sc)e!"les& there are many alternati%es to a traditional 3 day,


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%&TAITypes of incentive compensation

Two types of incentives are commissions and bonuses. A commission is acompensation based on a fi-ed formula such as + percent of sales. /or

e-ample many retail salees people compensation is based on a fic

percentatgeof the merchandise they sale . A bonus is additional

compenestaion awareded periodically baes on an evaluation of the

emploeyess performance . for e-ample store managers often recien0ve

bopnuse aat the end of the year based on their stores performance relative to

its budgeted sales and profit.

1esides incentives based on individual performanece , retail managers often

recive additional income based on their perofmanmnce, these profit sharing

arrancgmenmts can be offered as cash bnonus based on firms f0profit or as a

grant of stoc option that lin additional income to performance of the frims

stoc

A number of retailer such as walmart and home depot use stoc incentives to

motivate and reward all employees, including sales associates. &mployees

are encouraged to buy shares in their companies at discounted price through

pay role deduction plans. This stoc incentives align employees interest with

those of companies and can be very rewarding when company does well.

however if growth of the company stoc price declines , employees morale

declines too, corporate culture is threatened , and demand for higher wagesand more benefit develops .

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6658468 Compensation Management