Copyright 2001 David A. Wheeler, Ph.D., PHR, CMT   Last updated 09/19/05 01:54 PM

File: compensation.htm

Strategic Reasons for Compensation

  • Attract

  • Motivate

  • Retain

Job Evaluation: the process of determining value of a job

  • Survey of external market

  • Job Ranking

  • Classification**

    • Pay range

  • Factor Comparison

    • Compensible Factors **

  • Point Factor System

  • Hay Method

Direct Pay

Base Pay

Hourly (usually nonexempt)

Salary (usually exempt)

Commission: percent of sales

Base plus commission

Base plus tips

Skill-Based (knowledge Based)

Piece Rate

Merit System based on performance evaluations

Gainsharing - when productivity improves

Profit Sharing - profits split among workers

Bonus Payment - not tied to company performance but to whim of management

Indirect Pay and Benefits

Legally Required

  1. Social Security

  2. Unemployment Compensation

  3. Workers Compensation

Supplemental Income

Defined Benefit: Guaranteed Payout

Defined Contribution

Pension 401(k), 403(b)


Stock Purchase Plans

Stock Options


Life Insurance



Health clubs

Tuition Reimbursement

Cafeteria Plans (Flexible benefits)

Pay for Time not Worked

NonFinancial Rewards

Personal Work Factors

Physical Conditions

Management Styles

Company Image

Perquisites of the Job



Send mail to CompanyWebmaster with questions or comments about this web site.
Copyright 2005 CompanyLongName
Last modified: 10/04/05