NEW JERSEY INSTITUTE OF TECHNOLOGY
SCHOOL OF MANAGEMENT

HRM 303 Human Resource Management
Dr. Naomi Rotter
Session 17: Compensation Strategy & Structure

Objectives

1. To understand how compensation strategy relates to business strategy
2. to understand the factors that determine pay level and structure
3. To be familiar with the interaction of equity issues and organizational reward systems
4. To understand external and internal considerations in determining pay

I. Strategic role of compensation

    A. Link to business plan

    B. Internal pay structure

    C. External equity

    D. Administrative policies

    E. Performance focus

II. What determines pay?

    A. Organizational differences

    B. Work differences

    C. Employee differences

    D. Market and country differences

III. Reward system objectives

    A. Improving productivity

    B. Controlling costs

    C. Fair treatment

    D. Legal compliance

IV. External considerations

    A. Legislation

    B. Labor unions

    C. Labor markets

    D. What competitors are paying

    E. Salary surveys

V. Internal considerations

    A. Organizational considerations

    B. Traditional job evaluation

    C. Skill based job evaluation