Hospitality Human Resources

1
HospitalityHuman Resources

• Chapter 8
• Compensation Administration

2
What Youll Learn

• Types of Compensation and Compensation Plans
• Compensation Plan Design
• Determining Job Worth
• Establishing Pay Structures
• Compensation Administration

3
Compensation
Cash...and Non-Cash Rewards

• Direct Compensation
• Payment in the form of money
• Immediate base, merit, incentive, bonus, piece
  rate, etc
• Deferred earned nowpaid later (golden
  handcuffs)
• Indirect Compensation
• Given as a condition of employment
• Health plans, vacation, protection plans,
  savings, etc
• Deferred Compensation Plans
• With or without employer matching
• Tax-advantaged programs set aside money and
  allow it to grow such as 401(k) plans

Perks
4
Compensation as a Motivator

• Content Theories
• People are motivated by common needs
• Maslows Hierarchy of Needs
• Herzbergs Two-Factor Theory
• McClellands N-Achievement Theory
• Process Theories
• Identify factors in any situation that determine
  whether an individual will become motivated
• Expectancy Theory
• Equity Theory
• Reinforcement Theory

5
Determining Job Worth

• External
• Base pay rates on similar companies
• Perform pay survey (typically by consultant)
• Compare compensable factors
• Internal
• Determining different pay rates for different
  positions
• Job Evaluation Methods
• Ranking hardest, most skilled, most important
  (paired comparison)
• Classification also called job grading
• Point Method most widely used method
• Factor Comparison

6
Establishing Pay Structures

• Pay Structures
• Competitive Pay Policies
• Pay Leader pay more than the market average
  (best employee)
• Pay Follower pay below market average (higher
  profits)
• Meet the Competition pay the prevailing wage
• Pay Grades Determined during the job evaluation
  process
• Establish pay rates for each pay grade
• Seniority vs. Merit Pay
• Two-Tier Wages
• Typically used by unions
• Higher pay structure for existing employees
  lower for new-hires
• Skill-Based/Knowledge-Based Pay
• As employee adds skill/knowledge, pay increases

On-Call Pay
7
Quick Question

• Which of the following is not considered a form
  of perquisite compensation (perk)?
• Company vehicle
• Free meals
• Sales commissions
• Travel allowances

Answer C
8
Issues Surrounding Compensation

• Pay Secrecy
• Should pay grades/ranges be kept
  secretlegality???
• Wage Compression and Expansion
• Compression unequal pay resulting from paying
  new hires more than current employees based on
  demand going rates
• Expansion raising current employees rates to
  keep in line with new hires creates labor cost
  issues
• Comparable Worth
• Equal pay for men and women performing jobs that
  requires essentially the same skills base on
  job classifications)
• Wage and Hour Audits
• Must comply with Fair Labor Standards Act and
  other applicable laws

9
Quick Question

• George, a hotel manager, is considering his
  options for establishing pay structures for the
  hotel. All of the following are among his options
  except
• A skill based pay system
• A factor comparison pay system
• A two-tier wage system
• A knowledge based pay system

Answer B
10
What You Know

• What are internal and external factors that
  influence compensation programs?
• How does motivation relate to compensation?
• What are four job evaluation methods?
• What factors should a company consider when
  establishing pay structures?
• What is the difference between pay-for-performance
  and seniority-based compensation systems?
• Why is wage compression expansion such a
  difficult situation to address with employees?