MAN 4330–01
INFLUENCES ON
COMPENSATION PRACTICE
Instructor: Darren Brooks, Ph.D.
Overview
Discuss the reasons for wage differentials.
Explain the factors that contribute to pay differentials
and for the occurrence of geographic pay
differentials.
Discuss the influence of labor unions on
compensation.
Identify and discuss key employment laws pertinent
to compensation practice.
Factors that Affect Pay Differentials
Discussion Activity:
Get into pairs and discuss the following questions?
1. What industry/sector factors affect differences in pay
and benefits?
2. What occupational factors affect differences in pay
and benefits?
3. What geographical factors affect differences in pay and
benefits?
Debrief as a class.
Industry/Sector Wage Differentials
The pattern of pay and benefits is associated with characteristics of
industries
Factors leading to wage differentials across industries and sectors:
◦Industry’s product market: Where there is limited competition (e.g.,
mining, utilities), there is greater flexibility for providing higher wages
◦Capital intensity: The extent to which companies’ operations are based on
the use of large-scale equipment, and capital intensity is associated with
higher wages
◦Industry profitability: Presumably, employee higher levels of knowledge,
skills and abilities contribute to company profitability, which, in turn, is
associated with higher wages
◦Unionization of the workforce: More highly unionized industries pay more
highly, in part, because the collective bargaining process gives labor greater
leverage for negotiating higher wages and benefits
Occupational Wage Differentials
An occupation is a group of jobs, found at more
than one company or organization, characterized
by a:
◦Common set of tasks, and related in terms of
◦Similar objectives
◦Methodologies
◦Materials used
◦Products/services
◦Worker actions
◦Worker characteristics
Occupational Wage Differentials
Job content based on knowledge, skills, and
abilities (KSAs)
Labor supply relative to employer demand for
labor
Occupational Wage Differentials:
Job Content
Between occupational differences
◦Differences in the complexity of KSAs such as
◦The building and grounds cleaning and maintenance
