Solution Manual For Compensation 6CE Margaret Yap, Jerry Newman, Bruce Gerhart Chapter 1-13 CHAPTER 1 THE PAY MODEL
LEARNING OUTCOMES After studying Chapter 1 students should be able to:
Define the term compensation. Describe how compensation is viewed differently by society, stakeholders, managers, and employees in Canada and around the world. Discuss major components of total rewards. Identify and explain the three strategic objectives of compensation. Describe the four strategic policies in the pay model and the techniques associated with them.
CHAPTER SUMMARY 1. Compensation refers to all forms of financial returns and tangible services and benefits that employee receive as part of an employment relationship. 2. People may have different perspectives on compensation. From the societal perspective, compensation is viewed as a measure of justice and a cause of increased taxes and price increases. Stakeholders believe that paying employees in stock creates a sense of ownership that will improve organizational performance. Managers view compensation as a major expense and a means to influence employee behaviour. Employees view compensation as a return in exchange with their employer, or a reward. In other countries, compensation relates to being taken care of. 3. The two major components of total rewards are total compensation and relational returns. Total compensation is composed of cash compensation (base pay and incentives) and benefits. Relational returns include psychological aspects of work such as recognition and status, challenging work, and learning opportunities. 4. The strategic objectives of compensation are (1) efficiency in performance and quality, satisfying customers and stockholders, and controlling costs, (2) fairness, and (3) compliance with laws and regulations. 5. The four strategic policies in the pay model are internal alignment, external competitiveness, employee contributions, and management. The internal structure 8-1 Yap, Compensation 6th Canadian Edition | © 2021 McGraw Hill