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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?