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Compensation Management
Preparing Salary Matrix
- Salary Matrix is a chart that can be used to determine the annual salary award & rate of salary progression of an individual Employee.
- A Salary Matrix allows 2 variables to be taken into account in deciding the level of award – - The individual’s performance rating & - The position already attained within the salary range.
- Ex: An individual with a Fully acceptable performance rating could receive a 5% increase when at the Bottom of the range, a 3% increase at the mid-point & 1% above the mid point.
Steps in preparing a Salary
Matrix
Develop a matrix that lists each grade, the positions included
in each grade & the no. of levels considered appropriate for each grade.
Then determine salary ranges for each level.
Each year, salary schedule should be reviewed to see whether
it needs adjustment.
Importance
- A salary matrix can provide a relevant structure by which to
assist a human resource department in establishing appropriate pay for both new hires & tenured employees.
- The employees will know how their pay fits into the schedule
as well as their opportunities for future pay hikes.
- The staff will also see that the manager’s approach to setting
salaries is unbiased.
- A salary schedule provides essential structure for practices that
plan to expand or merge
Davis- Bacon act.
- The act was passed in 1931.
- It requires contractors & sub- contractors with contracts in excess of $2000 with the federal government to pay their workers a minimum wage that at least equal to the local prevailing wages & to provide them with the local prevailing benefits
Walsh- Healey Public Contracts act
- The act was passed in 1936.
- It applies to contracts over $10000 who are involved in either manufacturing or providing goods & services to the U.S government.
- The firms must pay their workers the federal minimum wage for the first 40 hours they work in a particular week & 1.5 times the minimum wage for any additional hours they work during the week.
FLSA
The objectives of this act involves:
- Minimum Wage.
- Child Labor
- Exempt & Non- Exempt status.
- Overtime
- Compensatory Time – off
- Independent Contractor regulations.
- Equal pay & pay Equity,
- Industrial Wage Boards.
- Wage boards are of 2 types
a. Statutory Wage Board : It means a body set up by law or with legal authority to establish minimum wages & other standards of employment which are then legally enforceable in particular trade or industry to which board’s decision relate b. Tripartite wage Board : It means a voluntary negotiating body set up by discussion between organized employers, workers & government to regulate wages, working hours & related conditions of employment.
Wage board decisions are not final & are subjected to
either executive or judicious review.
- Pay commissions :
- 1st: 1946- Conditions of service of central govt
employees
- 2 nd:1957-norms for fixing a need based minimum
wage setup.
- 3 rd:1973- System in which pay adjustments will
occur automatically upon an upward movement
in CPI.
- 4 th: 1986-Examine structure of all central govt
employees, including those in union territories.
- 5 th: 1996-Recommendations regarding restricting
of pay scales.
Significant Compensation Issues
- Issue of Equal pay for Comparable worth
- Problem of measuring comparability.
- Issue of low salary budgets.
- Issue of Wage- Rate Compression
Compensation as Retention
Strategy
- Salary & Monthly Wage.
- Bonus.
- Economic Benefits.
- Long – term Incentives
- Health Insurance.
- After Retirement.