Strategic Compensation : A Human Resource Management Approach,9780134409832

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Strategic Compensation : A Human Resource Management Approach

by Joseph J. Martocchio

Edition:

1st

ISBN13:

9780134409832

ISBN10:

0134409833

Format:

Hardcover

Pub. Date:

6/1/1997

Publisher(s):

Simon & Schuster Adult Publishing Group

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What version or edition is this?

This is the 1st edition with a publication date of 6/1/1997.

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The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any CDs, lab manuals, study guides, etc.

Summary

This new book is a thoroughly modern approach to compensation that addresses the strategic uses and applications of compensation by organizations. This major new entry addresses traditional aspects of compensation--job analysis, salary surveys, pay structure, and so on. Then it moves beyond these issues to address HOT TOPICS--knowledge-based pay, variable pay, compensation for contingent workers, executive compensation. International aspects are highlighted. There are 2 boxes: "Reflections of Compensation," and "The Flip Side." Includes a for-sale student workbook with Windows-based software. Website at >.

Preface

xxv

(4)

Introduction

xxix

PART 1 SETTING THE STAGE FOR STRATEGIC COMPENSATION

(74)

Chapter 1 Compensation: A Component of Human Resource Systems

(26)

CHAPTER OUTLINE

(1)

LEARNING OBJECTIVES

(1)

EXPLORING AND DEFINING THE COMPENSATION CONTEXT

(4)

What Is Compensation?

(1)

The Meaning of Money

(1)

Core Compensation

(2)

"Fringe" Compensation, or Employee Benefits

(1)

COMPENSATION PROFESSIONALS' GOALS WITHIN A HUMAN RESOURCE DEPARTMENT

(5)

How Human Resource Professionals Fit into the Corporate Hierarchy

(3)

How the Compensation Function Fits into HR Departments

(2)

The Flip Side of the Coin: Early Retirement Incentives Backfire

(2)

The Compensation Department's Main Goals

(1)

Reflections: Balancing Compensation Objectives

(1)

HOW COMPENSATION PROFESSIONALS RELATE TO VARIOUS CONSTITUENCIES

(1)

Employees

(1)

Line Managers

(1)

Executives

(1)

Unions

(1)

U.S. Government

(1)

THE CHANGING COMPENSATION ENVIRONMENT: FIVE ASSUMPTIONS THAT UNDERLINE THIS BOOK

(2)

Compensation Systems in a State of Transition

(1)

Compensation Practices as a Strategic Tool

(1)

Incremental Change

(1)

Current Practices of Meeting Market Pay Rates Regardless of Overall Company Strategy

(1)

Controlling Benefits Costs and Changing the "Entitlement" Mentality

(1)

SUMMARY

(1)

DISCUSSION QUESTIONS

(1)

KEY TERMS

(1)

ENDNOTES

(2)

Chapter 2 Strategic Compensation: Attaining a Competitive Advantage

(28)

CHAPTER OUTLINE

(1)

LEARNING OBJECTIVES

(1)

A HISTORICAL PERSPECTIVE ON COMPENSATION: THE ROAD TOWARD STRATEGIC COMPENSATION

(2)

STRATEGIC VERSUS TACTICAL COMPENSATION

(5)

Competitive Strategy Choices

(1)

Tactical Decisions That Support the Firm's Strategy

(2)

FACTORS THAT INFLUENCE COMPANIES' COMPETITIVE STRATEGIES AND COMPENSATION PRACTICES

(3)

National Culture

(3)

Organizational Culture

(1)

The Flip Side of the Coin: Japanese Lifetime Employment Possibly Short-Lived

(7)

Organizational and Product Life Cycles

(3)

Reflections: JVC and American Express Reinvent Themselves

(1)

EVALUATING THE EFFECTIVENESS OF COMPENSATION STRATEGIES

(5)

Measuring Employee Performance: Vital Information

(1)

Performance Appraisals

(1)

Periodic Compensation System Review: Is It Doing What We Want It to Do?

(3)

SUMMARY

(1)

DISCUSSION QUESTIONS

(1)

KEY TERMS

(1)

ENDNOTES

(3)

Chapter 3 Contextual Influences on Compensation Practice

(26)

CHAPTER OUTLINE

(1)

LEARNING OBJECTIVES

(1)

COMPENSATION AND THE SOCIAL GOOD

(2)

Employees' Goals

(1)

Employers' Goals

(1)

Government's Goals

(1)

EMPLOYMENT LAWS THAT INFLUENCE COMPENSATION PRACTICES

(3)

Income Continuity, Safety, and Work Hours

(2)

Reflections: The Minimum Wage Debate

(4)

Pay Discrimination

(5)

The Flip Side of the Coin: Affirmative Action Doesn't Break Glass Ceiling

(3)

Accommodating Disabilities and Family Needs

(1)

Prevailing Wage Laws

(1)

CONTEXTUAL INFLUENCES ON THE FEDERAL GOVERNMENT AS AN EMPLOYER

(1)

LABOR UNIONS AS CONTEXTUAL INFLUENCES

(2)

National Labor Relations Act of 1935

(1)

Compensation Issues in Collective Bargaining

(1)

MARKET INFLUENCES

(1)

SUMMARY

(1)

DISCUSSION QUESTIONS

(1)

KEY TERMS

(1)

ENDNOTES

(3)

PART 2 BASES FOR PAY

(78)

Chapter 4 Traditional Bases for Pay: Seniority and Merit

(28)

CHAPTER OUTLINE

(1)

LEARNING OBJECTIVES

(1)

SENIORITY, OR LONGEVITY, PAY

(5)

Historical Overview

(1)

Who Participates?

(1)

Effectiveness of Seniority Pay Systems

(1)

Design of Seniority Pay and Longevity Pay Plans

(1)

Advantages of Seniority Pay

(2)

Fitting Seniority Pay with Competitive Strategies

(1)

MERIT PAY

(2)

Who Participates?

(1)

Exploring the Elements of Merit Pay

(1)

PERFORMANCE APPRAISAL

(11)

Types of Performance Appraisal Plans

(7)

Exploring the Performance Appraisal Process

(4)

STRENGTHENING THE PAY-FOR-PERFORMANCE LINK

(1)

Link Performance Appraisals to Business Goals

(1)

Analyze Jobs

(1)

Communicate

(1)

Establish Effective Appraisals

(1)

Empower Employees

(1)

Differentiate among Performers

(1)

POSSIBLE LIMITATIONS OF MERIT PAY PROGRAMS

(1)

The Flip Side of the Coin: Merit Pay Equals Cost-of-Living Adjustment

(1)

Failure to Differentiate among Performers

(1)

Poor Performance Measures

(1)

Supervisors' Biased Ratings of Employee Job Performance

(1)

Reflections: Merit Pay for Nonperformance

(2)

Lack of Open Communication between Management and Employees

(1)

Undesirable Social Structures

(1)

Factors Other Than Merit

(1)

Undesirable Competition

(1)

Little Motivational Value

(1)

LINKING MERIT PAY WITH COMPETITIVE STRATEGY

(1)

Lowest-Cost Competitive Strategy

(1)

Differentiation Competitive Strategy

(1)

SUMMARY

100

(1)

DISCUSSION QUESTIONS

100

(1)

KEY TERMS

101

(1)

ENDNOTES

101

(2)

Chapter 5 Incentive Pay

103

(28)

CHAPTER OUTLINE

103

(1)

LEARNING OBJECTIVES

104

(1)

CONTRASTING INCENTIVE PAY WITH TRADITIONAL PAY

105

(2)

INDIVIDUAL INCENTIVES

107

(5)

Who Participates?

108

(1)

Defining Individual Incentives

108

(1)

Types of Individual Incentive Plans

109

(2)

Advantages of Individual Incentive Pay Programs

111

(1)

Disadvantages of Individual Incentive Pay Programs

111

(1)

Reflections: Culture Influences Incentive Pay Effectiveness

112

(1)

GROUP INCENTIVES

113

(8)

Defining Group Incentives

113

(1)

Team-Based, or Small Group, Incentive Plans

114

(1)

Gain Sharing

115

(5)

Advantages of Group Incentives

120

(1)

Disadvantages of Group Incentives

121

(1)

COMPANYWIDE INCENTIVES: PROFIT SHARING

121

(3)

Defining Profit Sharing Plans

121

(1)

Calculating Profit Sharing Awards

122

(1)

Advantages of Profit Sharing Plans

123

(1)

Disadvantages of Profit Sharing Plans

124

(1)

DESIGNING INCENTIVE PAY PROGRAMS

124

(2)

Group versus Individual Incentives

124

(1)

Level of Risk

125

(1)

Complementing or Replacing Base Pay

125

(1)

Performance Criteria

126

(1)

The Flip Side of the Coin: "On the Folly of Rewarding A, While Hoping for B"

126

(1)

Time Horizon: Short Term versus Long Term

127

(1)

LINKING INCENTIVE PAY WITH COMPETITIVE STRATEGY

127

(1)

Lowest-Cost Competitive Strategy

127

(1)

Differentiation Competitive Strategy

128

(1)

SUMMARY

128

(1)

DISCUSSION QUESTIONS

128

(1)

KEY TERMS

129

(1)

ENDNOTES

130

(1)

Chapter 6 Pay-for-Knowledge and Skill-Based Pay

131

(22)

CHAPTER OUTLINE

131

(1)

LEARNING OBJECTIVES

132

(1)

DEFINING PAY-FOR-KNOWLEDGE AND SKILL-BASED PAY

132

(2)

USAGE OF PAY-FOR-KNOWLEDGE PROGRAMS

134

(1)

REASONS TO ADOPT PAY-FOR-KNOWLEDGE PROGRAMS

135

(2)

Technological Innovation

135

(1)

Increased Global Competition

136

(1)

VARIETIES OF PAY-FOR-KNOWLEDGE PROGRAMS

137

(5)

Reflections: Judging Pay-for-Knowledge Program Effectiveness

142

(1)

CONTRASTING PAY-FOR-KNOWLEDGE WITH JOB-BASED PAY--Merit Pay and Incentive Pay

143

(2)

ADVANTAGES OF PAY-FOR-KNOWLEDGE PROGRAMS

145

(1)

Advantages to Employees

145

(1)

The Flip Side of the Coin: Pay-for-Knowledge Programs Help the Competition

146

(1)

Advantages to Employers

147

(1)

DISADVANTAGES OF PAY-FOR-KNOWLEDGE PROGRAMS

148

(1)

LINKING PAY-FOR-KNOWLEDGE WITH COMPETITIVE STRATEGY

148

(2)

Lowest-Cost Competitive Strategy

149

(1)

Differentiation Competitive Strategy

149

(1)

SUMMARY

150

(1)

DISCUSSION QUESTIONS

150

(1)

KEY TERMS

151

(1)

ENDNOTES

151

(2)

PART 3 DESIGNING COMPENSATION SYSTEMS

153

(100)

Chapter 7 Building Internally Consistent Compensation Systems

153

(36)

CHAPTER OUTLINE

153

(1)

LEARNING OBJECTIVES

154

(2)

JOB ANALYSIS

156

(16)

Steps in the Job Analysis Process

157

(5)

Legal Considerations for Job Analysis

162

(1)

Job Analysis Techniques

162

(2)

U.S. Department of Labor (DOL) Job Analysis Method

164

(8)

Reflections: Relevance of the DOL Method in the 1990s

172

(2)

JOB EVALUATION

174

(3)

Compensable Factors

174

(1)

The Job Evaluation Process

175

(2)

JOB EVALUATION TECHNIQUES

177

(7)

The Point Method

177

(4)

Alternative Job Content Evaluation Approaches

181

(3)

Alternatives to Job Evaluation

184

(1)

INTERNALLY CONSISTENT COMPENSATION SYSTEMS AND COMPETITIVE STRATEGY

184

(1)

The Flip Side of the Coin: Job Evaluation Hinders Competitive Advantage

185

(1)

SUMMARY

185

(1)

DISCUSSION QUESTIONS

186

(1)

KEY TERMS

186

(1)

ENDNOTES

187

(2)

Chapter 8 Building Market-Competitive Compensation Systems

189

(34)

CHAPTER OUTLINE

189

(1)

LEARNING OBJECTIVES

190

(1)

MARKET-COMPETITIVE PAY SYSTEMS: THE BASIC BUILDING BLOCKS

190

(1)

STRATEGIC ANALYSIS

191

(8)

External Market Environment

193

(5)

Internal Capabilities

198

(1)

The Flip Side of the Coin: The Peril of Strategic Analyses

199

(1)

COMPENSATION SURVEYS

200

(14)

Preliminary Considerations

200

(1)

Using Published Compensation Survey Data

201

(4)

Compensation Surveys: Strategic Considerations

205

(1)

Compensation Survey Data

206

(8)

INTEGRATING INTERNAL JOB STRUCTURES WITH EXTERNAL MARKET PAY RATES

214

(4)

Reflections: The Comparable-Worth Debate Rages On

218

(2)

COMPENSATION POLICIES AND STRATEGIC MANDATES

220

(1)

SUMMARY

221

(1)

DISCUSSION QUESTIONS

221

(1)

KEY TERMS

221

(1)

ENDNOTES

222

(1)

Chapter 9 Building Pay Structures That Recognize Individual Contributions

223

(30)

CHAPTER OUTLINE

223

(1)

LEARNING OBJECTIVES

224

(1)

CONSTRUCTING A PAY STRUCTURE

224

(10)

Step 1: Deciding on the Number of Pay Structures

225

(1)

Step 2: Determining a Market Pay Line

226

(1)

Step 3: Defining Pay Grades

227

(1)

Step 4: Calculating Pay Ranges for Each Pay Grade

228

(5)

Step 5: Evaluating the Results

233

(1)

DESIGNING MERIT PAY SYSTEMS

234

(3)

Merit Increase Amounts

234

(1)

Timing

235

(1)

Recurring versus Nonrecurring Merit Pay Increases

235

(1)

Present Level of Base Pay

235

(2)

The Flip Side of the Coin: Best-Laid Plans Fail because of Insufficient Funding

237

(1)

Rewarding Performance: The Merit Pay Grid

235

(3)

DESIGNING SALES INCENTIVE COMPENSATION PLANS

238

(4)

Alternative Sales Compensation Plans

238

(2)

Sales Compensation Plans and Competitive Strategy

240

(1)

Determining Fixed Pay and the Compensation Mix

241

(1)

DESIGNING PAY-FOR-KNOWLEDGE PROGRAMS

242

(1)

Reflections: Ethics of Incentive Pay

243

(4)

Establishing Skill Blocks

243

(1)

Transition Matters

244

(1)

Training and Certification

245

(2)

PAY STRUCTURE VARIATIONS

247

(3)

Broadbanding

247

(2)

Two-Tier Pay Structures

249

(1)

SUMMARY

250

(1)

DISCUSSION QUESTIONS

250

(1)

KEY TERMS

251

(1)

ENDNOTES

251

(2)

PART 4 EMPLOYEE BENEFITS

253

(58)

Chapter 10 Legally Required Benefits

253

(20)

CHAPTER OUTLINE

253

(1)

LEARNING OBJECTIVES

254

(1)

COMPONENTS OF LEGALLY REQUIRED BENEFITS

255

(5)

Social Security Act of 1935

255

(5)

Reflections: Inadequacy of Social Security Funding

260

(8)

State Compulsory Disability Laws (Workers' Compensation)

263

(4)

Family and Medical Leave Act of 1993

267

(1)

THE IMPLICATIONS OF LEGALLY REQUIRED BENEFITS FOR STRATEGIC COMPENSATION

268

(1)

The Flip Side of the Coin: FMLA May Create Cost Burden

269

(1)

SUMMARY

270

(1)

DISCUSSION QUESTIONS

270

(1)

KEY TERMS

270

(1)

ENDNOTES

271

(2)

Chapter 11 Discretionary Benefits

273

(38)

CHAPTER OUTLINE

273

(1)

LEARNING OBJECTIVES

274

(2)

AN OVERVIEW OF DISCRETIONARY BENEFITS

276

(2)

COMPONENTS OF DISCRETIONARY BENEFITS

278

(9)

Protection Programs

278

(9)

Reflections: Covering Uninsureds' Health Care Costs

287

(1)

Pay for Time-Not-Worked

288

(1)

The Flip Side of the Coin: Sick Leave Benefits Extend Vacation

288

(5)

Services

290

(3)

LAWS THAT GUIDE DISCRETIONARY FRINGE COMPENSATION

293

(3)

Employee Retirement Income Security Act of 1974 (ERISA)

293

(1)

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

294

(2)

Additional Pertinent Legislation

296

(1)

UNIONS AND FRINGE COMPENSATION

296

(1)

DESIGNING AND PLANNING THE BENEFITS PROGRAM

297

(6)

Determining Who Receives Coverage

298

(1)

Deciding Whether to Include Retirees in the Plan

298

(1)

Probationary Period

299

(1)

Financing

299

(1)

Employee Choice

299

(3)

Cost Containment

302

(1)

Communication

302

(1)

THE IMPLICATIONS OF DISCRETIONARY BENEFITS FOR STRATEGIC COMPENSATION

303

(2)

SUMMARY

305

(1)

DISCUSSION QUESTIONS

306

(1)

KEY TERMS

306

(1)

ENDNOTES

307

(4)

PART 5 CONTEMPORARY STRATEGIC COMPENSATION CHALLENGES

311

(82)

Chapter 12 International Compensation

311

(30)

CHAPTER OUTLINE

311

(1)

LEARNING OBJECTIVES

312

(1)

COMPETITIVE STRATEGIES AND HOW INTERNATIONAL ACTIVITIES FIT IN

313

(1)

Lowest-Cost Producers' Relocation to Cheaper Production Areas

313

(1)

Differentiation and the Search for New Global Markets

313

(1)

The Flip Side of the Coin: NAFTA: Job Gain or Job Loss?

314

(1)

HOW GLOBALIZATION IS AFFECTING HR DEPARTMENTS

315

(1)

The Complexity of International Compensation Programs

315

(1)

PRELIMINARY CONSIDERATIONS

315

(2)

Host Country Nationals, Third Country Nationals, and Expatriates: Definitions and Relevance

316

(1)

Term of International Assignment

316

(1)

Staff Mobility

317

(1)

Equity: Pay Referent Groups

317

(1)

COMPONENTS OF INTERNATIONAL COMPENSATION PROGRAMS

317

(1)

SETTING BASE PAY FOR U.S. EXPATRIATES

317

(3)

Methods for Setting Base Pay

318

(1)

Purchasing Power

319

(1)

INCENTIVE COMPENSATION FOR U.S. EXPATRIATES

320

(2)

Foreign Service Premiums

320

(1)

Hardship Allowances

321

(1)

Mobility Premiums

322

(1)

ESTABLISHING FRINGE COMPENSATION FOR U.S. EXPATRIATES

322

(3)

Standard Benefits for U.S. Expatriates

323

(1)

Enhanced Benefits for U.S. Expatriates

324

(1)

BALANCE SHEET APPROACH FOR U.S. EXPATRIATES' COMPENSATION PACKAGES

325

(10)

Housing and Utilities

326

(1)

Goods and Services

327

(1)

Discretionary Income

328

(1)

Tax Considerations

329

(5)

Illustration of the Balance Sheet Approach

334

(1)

REPATRIATION COMPENSATION ISSUES

335

(1)

Reflections: Gaining Control of International Compensation Programs

335

(1)

HOST COUNTRY NATIONAL AND THIRD COUNTRY NATIONAL COMPENSATION ISSUES

336

(1)

SUMMARY

337

(1)

DISCUSSION QUESTIONS

338

(1)

KEY TERMS

338

(1)

ENDNOTES

339

(2)

Chapter 13 Compensating Executives

341

(26)

CHAPTER OUTLINE

341

(1)

LEARNING OBJECTIVES

342

(1)

PRINCIPLES OF EXECUTIVE COMPENSATION: IMPLICATIONS FOR COMPETITIVE STRATEGY

342

(1)

DEFINING EXECUTIVE STATUS: KEY EMPLOYEES AND HIGHLY PAID EMPLOYEES

343

(1)

Key Employees (IRS Guidelines)

343

(1)

Highly Paid Employees (IRS Guidelines)

343

(1)

EXECUTIVE COMPENSATION PACKAGES

343

(9)

Components of Current Core Compensation

345

(2)

Components of Deferred Core Compensation: Stock Compensation

347

(3)

Components of Deferred Core Compensation: The Golden Parachute

350

(1)

Components of Fringe Compensation: Enhanced Protection Program Benefits and Perquisites

350

(2)

PRINCIPLES AND PROCESSES FOR SETTING EXECUTIVE COMPENSATION

352

(4)

The Key Players in Setting Executive Compensation

353

(1)

Theoretical Explanations for Setting Executive Compensation

354

(2)

The Flip Side of the Coin: Should Tax Laws Drive Executive Compensation Programs?

356

(1)

EXECUTIVE COMPENSATION DISCLOSURE RULES

356

(2)

ARE U.S. EXECUTIVES PAID TOO MUCH?

358

(4)

Comparison between Executive Compensation and Compensation for Other Worker Groups

358

(1)

A Strategic Question: Is Pay Commensurate with Performance?

359

(1)

An Ethical Consideration: Is Executive Compensation Fair?

359

(2)

International Competitiveness

361

(1)

Reflections: In Defense of U.S. Executive Compensation Practices

362

(2)

SUMMARY

364

(1)

DISCUSSION QUESTIONS

364

(1)

KEY TERMS

365

(1)

ENDNOTES

365

(2)

Chapter 14 Compensating the Flexible Work Force: Contingent Employees and Flexible Work Schedules

367

(26)

CHAPTER OUTLINE

367

(1)

LEARNING OBJECTIVES

368

(1)

THE CONTINGENT WORK FORCE

369

(4)

Groups of Contingent Workers

369

(4)

Reflections: Independent Contracting: The Best of Both Worlds

373

(8)

Reasons for U.S. Employers' Increased Reliance on Contingent Workers

373

(2)

The Flip Side of the Coin: Contingent Employment Compromises Employee Loyalty

375

(1)

CORE AND FRINGE COMPENSATION FOR CONTINGENT WORKERS

376

(7)

Part-Time Employees

376

(2)

Temporary Employees

378

(2)

Leased Employees

380

(1)

Independent Contractors, Free-Lancers, and Consultants

380

(3)

FLEXIBLE WORK SCHEDULES: FLEXTIME, COMPRESSED WORK WEEKS, AND TELECOMMUTING

383

(2)

Flextime Schedules

383

(1)

Compressed Work Week Schedules

384

(1)

Telecommuting

384

(1)

Balancing the Demands of Work Life and Home Life

385

(1)

CORE AND FRINGE COMPENSATION FOR FLEXIBLE EMPLOYEES

385

(2)

Core Compensation

385

(1)

Fringe Compensation

386

(1)

UNIONS' REACTIONS TO CONTINGENT WORKERS AND FLEXIBLE WORK SCHEDULES

387

(1)

STRATEGIC ISSUES AND CHOICES IN USING CONTINGENT AND FLEXIBLE WORKERS

388

(1)

Lowest-Cost Competitive Strategy

388

(1)

Differentiation Competitive Strategy

389

(1)

SUMMARY

389

(1)

DISCUSSION QUESTIONS

390

(1)

KEY TERMS

390

(1)

ENDNOTES

391

(2)

Glossary of Key Terms

393

(18)

Author Index

411

(6)

Subject Index

417

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9780134409832

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