F+-+e-Comp+&+Benefits


 * Web-Based Compensation Planning**

__Introduction__

Compensation systems were one of the first HR applications to be automated. In the 1960s, mainframe-based systems were used to track salaries for payroll and reporting purposes. In the 1980s, PC software automated tedious manual tasks in the HR department, such as job evaluation and corporate salary planning. In the first decade of the 21st century, the universal corporate intranet has propelled to a third revolution: line manager compensation.

Software tools (mostly web-based) which allow managers to effectively design, administer, and communicate compensation programs.
 * e-Compensation**

__Compensation Plan Components__

Web-based compensation systems should be able to deliver compensation plans providing for both __fixed__ and __variable__ compensation as well as stock.


 * Fixed Compensation**

__Fixed compensation__ is the base or "fixed" pay of an employee and excludes all variable compensation, such as overtime, incentives, bonuses, and so on. It also covers any adjustments to base pay. the determination of base pay encompasses such processes as setting merit increases, defining and evaluating a position, establishing appropriate salary structures, specifying the skills, knowledge, and behaviors required to perform a job or fill a role, and providing appropriate adjustments based on such things as geography, inflation, and market forces.


 * Fixed Compensation** components include:
 * 1) Base Pay
 * 2) Merit Increases
 * 3) Across-the-board adjustments (e.g. cost of living)
 * 4) Progression/step increases
 * 5) Equity adjustments
 * 6) Promotion adjustments
 * 7) Skill premiums
 * 8) Shift differentials
 * 9) Geographic differentials
 * 10) Expatriate premiums

The **reference markers** for determining fixed pay are:
 * Grade/band ranges
 * Market pay levels
 * Competency levels
 * Job evaluation


 * Variable Compensation**

__Variable compensation__ is the cash portion of an employee's compensation, which is added to the fixed portion and "varies" on the basis of the achievement of certain goals or results. The purpose of variable compensation programs is to tie rewards to business goals and to align employee performance with business strategy.

Included in this category are:
 * 1) Individual, group/team, business unit, and corporate incentive program
 * 2) Sales commissions or incentives
 * 3) Various forms of cash long-term programs that are incentive-based


 * Variable Compensation Components**


 * Individual incentive compensation
 * Bonuses
 * Commissions
 * Performance shares
 * Variable merit/lump-sum incentives
 * Business unit/division/corporate incentives
 * Team/group incentives
 * Profit sharing
 * Gain sharing/productivity incentives
 * Cash recognition awards


 * Stock**

is a form of reward that carries with it an equity position, or ownership, in the company.

stock compensation usually takes the form of a long-term incentive that rewards recipients for increases in the company's stock price, but it also can be used as "currency" in lieu of cash to pay all or a portion of annual incentives or even salary

Stock components include:


 * Stock options
 * Stock appreciation rights
 * Stock grants
 * Phantom stock
 * Stock purchase (qualified or non-qualified)
 * Restricted stock


 * Compensation Planning and Budgeting**

The goals and objectives for automated compensation analysis and delivery systems remain largely the same: to bring the needed information to those who must make pay decisions, and do so quickly, accurately, and in the form in which they can best use the information. Web-based systems do all of that better than any previous system.


 * Getting Ready--Determine the Manager's Population**

Before a manager can administer the compensation plan, the population must be determined. Because it is role-based, the Web-based application must "know" who is a manager and to whom he or she directly reports.


 * Getting Ready--Rating Employees**

The manager now accesses the rating that was generated during the performance management process or, if that process was not Web-enabled or the data are not in machine-readable form, enters the appropriate performance rating into the application for each employee.


 * Compensation Planning--The Performance vs. Position-in-Range Matrix**

__Performance/increase percentage matrix__ Contains a list of performance categories and increase percentages, and highlights one employee. The guidelines in the range quartiles show the suggested percentage increases that could be given by a manager to an employee depending on the employee's position in the range.

__Position-in-Range Matrix__ Its a function of current pay vs. external market benchmarks, internal jobs deemed to be of similar value to the organization, or both.

Armed with these two types of matrix's, the manager is properly prepared to plan actual compensation changes.


 * Planning New Base Salaries**

When the performance rating vs. position-in-range matrix is finalized, the manager can proceed with compensation planning. The manager can enter either the percentage increase provided by the matrix or an actual dollar amount. Running totals are maintained for total compensation amounts and for the budgeted pool amount, offset by the amount the manager allocates to each individual, along with the remaining total available. The manager then plans each employee's change )or not change, as the case may be) until all of the employees are reviewed, using as many real-time updated iterations as he or she believes are necessary.


 * Planning New Variable Compensation**

Each employee who is eligible for variable compensation is now reviewed, and a suggested amount of compensation is calculated. These amounts are added together, along with any other variable amounts that the employee is eligible for.


 * Planning Stock Compensation Awards**

The manager can now decide on the award of any stock (usually stock options, except at the senior executive level) that is part of the total compensation package. When this step is completed, managers can generate statistics for their own work group and, under certain conditions, determine where they stand in relation to other groups.


 * Approving Compensation Plans**

After a manager submits a compensation plan, it is accessible to the approving manager for review and approval. The manager can both "roll up" for an aggregate view of pay-for-performance and "drill down" to examine any one individual's pay plan.

Individual plans are automatically rolled up, and compensation managers can review program status and summary data at any time. Group-level analytics provide visibility at each level in the management hierarchy before compensation actions are taken. Insightful graphs help managers accelerate the roll-up process while giving them a clear vision of the planning and budgeting of their groups.


 * Compensation Surveys** are a method of obtaining external market pay data to help companies establish wage levels and evaluate their pay practices against those of other companies.

these surveys play a key role in determining the overall appropriateness of salary ranges and annual and long-term incentive targets, and can suggest the need for market adjustments in the cases of certain individuals.


 * Technology & Compensation**

__Three main advantages__
 * 1) Allow access to critical compensation information without the need for high level IT support staff
 * 2) Enable 24/7 availability of compensation information
 * 3) Can Streamline bureaucratic tasks through the use of workflow functionality and real-time processing

__Weaknesses__
 * 1) Currently
 * Tend to have Limited functionality
 * Tend to be secondary to the main HRIS implementation
 * 1) Most systems do not allow for integrated assessment of internal and external equity
 * 2) Only as good as organization’s data
 * Who makes the decisions?


 * Technology and Equity**

Internal Equity

__Remember__ …this is a time consuming & challenging process, so we tend to not do this

You gain access to their expertise
 * The goal here is to put the information you need at your fingertips when you need it
 * Companies are developing web-based job analysis techniques

__External Equity__

Systems exist which provide manager with information on both internal and external pay information Timeliness? What data do you have and is it appropriate for your industry/region? Can we quickly integrate across internal and external systems?
 * How do you know what is appropriate to pay?
 * Internet Provides 24/7 Access
 * Challenges


 * Where Can I Get the Data?

**

Things you need for a good web-delivered compensation program

If the data in your HRIS, such as salary, department, and salary range data, are not up-to-date, the benefits of putting the data on the intranet are negated.
 * __Up-to-date data__

__Who works for whom__ You must have electronic method of assigning employees to their manager.

__Security__ The application must be robust enough to prevent intrusion.

__Hyperlinks__ Hyperlinks should be available to other total rewards and/or HR web pages, including externally administered programs (perhaps including stock options.)

__Explanations__ Definitions of key terms and explanations of eligibility should be available in a knowledge base or context-help format.

__Human Assistance__ Trained service center representatives should be readily available to assist manager.

__Workflow__ Systems should be designed to ensure the proper routing of suggesting increases to senior management, HR, and payroll personnel and to permit collaboration by managers with respect to employees who moved within the company or worked for more than one manager during the year.

Must maintain Equity**

Differences in pay should reflect differences in responsibilities
 * Internal Equity

Pay must be comparable with rates in other companies and industry or it will be hard to attract and retain qualified employees
 * External Equity

Individuals should feel that employee should view pay as equitable given other employees’ pay in the same or similar positions Wage Grades & Ranges
 * Individual Equity

E-BENEFITS

E-Benefits provides a system for organizations to administer and track employee participation in benefits programs. These usually includes, insurance, compensation, profit sharing, retirement etc. This gives a good overview as to who is is involved in the system, and how deep. It easily allows for a company to rate its performance on how much security it is providing for its employees, and just how satisfied they are with the intrinsic benefits of working for your corporation. Despite the fact that benefits can have a monetary value placed upon them, they fall under a separate category from salary, and can add much value to the work, and job experience.
 * Overview**

As with any other topic studied in HRIS, we first must decide if **we need this** electronic tool. If we just copy the corresponding papers into an electronic form, it will be just as boring and useless.

Questions to ask when formulating system. 1. Who will use the system 2. What do they want to know 3. How can you attract users 4. What are you really measuring (what are your criteria for success)

If you are trying to monitor health insurance participation, it is vital that employees know that their information is not public, and that their privacy will be insured. This is an easy way to maximize the usefulness of a health insurance program, and to decide if your packages need to be altered, or more options given.


 * Presentation of Information**- its not about what **you** want to show the user, its about what **they** want to see.


 * What the user **must** know
 * What the user **should** know
 * What would be nice for the user to know
 * What isn't essential for the user to know

In laman's terms: Telling the user everything means telling them nothing. If their is too much minutiae, people cannot access the info that they need and they won't use the system.

The most frustrating thing is to find that after implementing additional technology into the system, you find that it doesn't really do what it is supposed to.
 * MAKE SURE YOU HAVE STRATEGICALLY ALIGNED YOUR GOALS WITH CORPORATE'S**

The system should have a defined flow to it for ease of use and functionality. Ways to organize include: 1. By life events 2. By work events 3. By activities


 * Keep it current.** Outdated employee info is worse than useless. It can seriously impede your goals, and can destroy morale.

Great way to make employees more responsible for their own success and benefits Takes workload off of HR Reduces staffing May be able to eliminate 'paper benefits' altogether Makes personal info much easier to access Allows employees more freedom with their own benefits and personal info
 * Pros**

May be discriminatory (not all groups have equal access) If not universal (ERD, consistent, one source) e-benefits can be a hindrance. -Professor Johnson's example of having to re-enter your info. every time you switch depts. Will most likely be working with an outside vendor
 * Cons**