MHR 523 Lecture Notes - Lecture 11: Prevailing Wage
2 Jul 2018
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Chapter 11: Strategic Pay Plans
Employee Rewards
Aligning Total Rewards with Strategy
● The compensation plan should first advance the firm’s strategic aims - management
should produce an aligned reward strategy.
● This means creating a compensation package (including wages, incentives, and
benefits) that produces the employee behaviours that firms need to achieve its
competitive strategy.
Five Components of Total Rewards
1. Compensation (Incentives)
2. Benefits
3. Work-life programs
4. Performance and recognition
5. Development and career opportunities
●Employee Compensation includes all forms of pay going to employees and arising
from their employment.
●Financial Payments
○Direct → wages, salaries, incentives, commissions, and bonuses.
○Indirect → financial benefits like employer-paid insurance and vacations.
Basic Considerations in Determining Pay Rates
● Legal considerations in compensation
○ Employment/Labour Standards Act
○ Pay Equity Act
○ Human Rights Act
○ Canada/Quebec Pension Plan
● Union influences
● Compensation policies
● Equity and its impact on pay rates
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Document Summary
The compensation plan should first advance the firm"s strategic aims - management should produce an aligned reward strategy. This means creating a compensation package (including wages, incentives, and benefits) that produces the employee behaviours that firms need to achieve its competitive strategy. Five components of total rewards: compensation (incentives, benefits, work-life programs, performance and recognition, development and career opportunities. Employee compensation includes all forms of pay going to employees and arising from their employment. Direct wages, salaries, incentives, commissions, and bonuses. Indirect financial benefits like employer-paid insurance and vacations. Equity and its impact on pay rates. A systematic comparison to determine relative worth of jobs within a firm. Benchmark job critical to operations or commonly found in ot. Compensable factors fundamental, compensable element of a job. Grade/group decision: outlines level of compensable factors required by each job. Identify compensable factors (skills, effort, working conditions, etc). Determine the degree to which each factor is present in each job: conduct wage/salary survey.
