TEXT 22

Determining Compensation

(1) To set up a compensation system, a company must gather two sets of data. For one, it must determine, through wage and salary surveys, what comparable organizations pay some specific jobs. Second, by using a job evaluation method, the organization must determine the worth of each job to the organization itself. Individual employees are then paid according to the worth of the job to the organization, how much comparable firms pay the same job, and how well or how long they have done that job.

(2) The Wage and Salary Survey. A wage and salary survey tells the company how much compensation comparable firms are paying for specific jobs that firms have in common. For example, a small manufacturing firm in Seattle that recruits its work force from the Seattle metro area may exchange information on a regular basis through wage and salary surveys with other firms – usually in the same industry – that employ workers with the same skills and are within geographic regions that would allow employees to relocate or commute.

(3) The wage and salary survey gathers information about key jobs – that is, jobs that are stable over time, are similar among the companies participating in the survey, and are at various levels in the organization. Although questions used in wage and salary surveys vary, they usually ask about direct wages, benefits, other forms of compensation, regular hours worked, and number of overtime hours. As a result of this survey, participating firms obtain data about pay in their relevant labour markets which they can use to determine compensation for their own employees.

(4) Job Evaluation Methods. A major principle in setting up a compensation system is that jobs, rather than the individuals who work in the jobs, are the primary basis for compensation. Some jobs, such as that of a vice president, are more valuable to the company than others and therefore are compensated at higher levels. Job evaluation methods determine the value of an organization’s jobs and arrange these jobs in order of pay according to their value.

(5) Although there are many job evaluation methods, the three most often used are ranking, the point method, and the job grading method. Ranking, used mainly in small companies, involves a committee of managers and compensation specialists reviewing the information gathered from job analyses and ranking each job according to its overall worth or criticalness to the company. The point method evaluates jobs quantitatively, assigning points to jobs depending on how much of certain factors a job requires. For example, jobs may be assigned 50,100, or 150 points depending on how much education is necessary to do the work. The points a job is assigned indicate its worth to the organization. The job grading method, used primarily by governments, groups all jobs into grades depending on the complexity of the job duties. Grades with more complex job duties are more highly compensated than grades with less complex job duties.

(6) In most compensation systems, similar jobs are grouped together and treated similarly in terms of compensation. For example, in the job grading method, all jobs within the same grade receive similar compensation. In the point method, all jobs with similar points receive the same compensation. For example, in the point system, the jobs of research technician and computer specialist may be placed in a job group that has a pay range of $25,000 to $35,000 a year.

(7) Compensation for Individuals. The pay range for a group of jobs defines the upper and lower limits of how much every employee who has one of those jobs can earn. In our previous example, all research technicians and computer specialists would earn between $25,000 and $35,000. The compensation within this range for any one employee usually depends on either seniority or performance. Seniority is the basis for differential pay in most government and unionized[6] systems. Those individuals in a job grade who have more tenure usually earn more than those individuals with less tenure. Many private companies, however, try to use performance as the basis for differential pay by giving larger raises to those who receive higher performance appraisals.

(8) A third way of paying individuals differently is skill-based pay plans, which have been introduced by both public and private institutions. Essentially, skill-based pay links jobs together into hierarchies of related but increasingly difficult tasks. As a worker learns to perform more tasks, compensation increases. Procter & Gamble has such plans in 30 plants, and Polaroid is becoming the first corporation to pay almost all employees with this system.

3. Comprehension check.

Work in pairs.

1) Here are eight questions, one for each paragraph. Which question goes with which paragraph?

2) What do the words underlined refer to?

a. What information do they usually try to get?

b. How are they arranged and paid in most compensation systems?

c. How can it find out what similar organizations pay for some specific jobs?

d. How are especially important ones compensated?

e. What other firms may it exchange information with?

f. Who has introduced these pay plans?

g. What kind of information do they review in ranking?

h. In what way do they use performance as the basis for differential pay?

3) Now answer the questions.

Writing

Write the summary of text 22.

Vocabulary 2

Use your dictionary to look up any new words.

1. Write the following words in the correct column.

2) Working in pairs, form as many noun phrases as possible, combining a word in A with a word in B.

E.g. protection program, mandatory program, optional program, federal program, health program, exercise program, etc.

A B

Reading

1. Read text 23 about such an important part of the American compensation system as benefits. Fill each gap in the text with one of these words.

Date: 2015-01-02; view: 899