There are certain applicable Federal and State laws that do have some type of affect on compensation within an organization, as well as taxes paid on income. The way an organization determines the benefit plan and salaries of its staff are directly related to the guidelines produced from certain Federal and State laws. A law that is well known and is a top priority for organization to adhere to is the fair labor standard act. The owner of the business organization needs to be familiar with it. This law is related to dealing with five major laws of the compensation. These are the minimum wage level, overtime pay, record keeping responsibility and the child labor. In recent years, there have been adjustments to these laws. Another law that is closely related to the fair labor standard act is the equal pay act of 1963. The fair labor standard act restricts the differenced in the salaries given to male and female employees in the same position.
This act does not restrict the system of seniority, the system of merit and the system that reward for the performance. This act also does not pay attention to the exempt and the non-exempt status of the employees. There are laws in place to protect the employee’s as well, such as the consumer credit protection act of 1968. This act is concerned with the wage garnishment. Another act is the employee retirement income security act of 1974. This act manages and organizes the pension benefits, retirement plan, disability and the health insurance programs. All these form the foundation of the most of the program and the implementation of the insurance for unemployed, equality in employment, sense of job security and Medicare. The traditional methods of compensation include the setting of the pay levels with regular increment. The increase in the pay can be advanced for a number of reasons and is generally extended for the promotions etc.
Benefits are significant part of the employee compensation programand are included in the monetary compensation to motivate, attract and retain the employees. Fringe Benefits extended to employees are not monetary rewards but they do have some value for the employees. Benefits are not made mandatory by law but they are still included in the compensation packages. Benefits can take the form of health insurance, retirement plan, entertainment or leisure package and leaves. The company can also extend benefits to the employees in the form of day care. There are also few kinds of advantages that are made mandatory by the state and the federal law. The state law governs and controls the compensation of the workers. The federal law states the employer to also contribute into the social security.
The employer is also required to pay the unemployment insurance under the OASDHI. Abbott Labs . The compensation philosophy of Abbott is based on the idea of to pay for the performance. The compensation philosophy of Abbott is determined to compare and contrast with the pay programs of other leading heath care companies. It also compares and contrasts with the companies of similar sizes and the financial performance outside the industry in the global markets where the companies tend to compete for the employees.
The total rewards of Abbott include the elements of base and variable pay. It also includes a wide range of the benefits and the opportunities for the growth and the development. The total compensation of the Abbott is based on targeting the other leading companies in the world. The total compensation is based on the principle that the individual average pay varies based on the ability of the employee and the expertise and the effort of the employees. This pay for the performance philosophy of the Abbott is linked with the internal and the external analysis and reviews and helps Abbott in driving the total compensation strategy of the Abbott. The compensation program of the Abbott is designed to keep in align with the strategy of the business. It also helps to align the interest and the values of the management with the shareholders.
Following are the principles of the Abbott compensation program: Set competitive salaries with in our industry
Design incentive plans to meet short term financial and strategic objectives Pay for Performance: based on incentive compensation binded to the individual performance The total compensation of Abbott is designed in a way that encourages the employees. It is also consistent with the ethical values set in Abbott. Aastrom Biosciences The total compensation program of the Aastrom biosciences is designed to achieve three objectives. To attract, reward and retain the employees
Encourage the employees to achieve short and long term goals that increase the shareholder Support and guide values and the culture of the Aastrom by promoting the internal equity and the external competitiveness. To achieve these objectives Aasrom has followed the following guidelines of compensation: Pay compensation that is competitive with other companies in the biotech industry Pay for performance by setting challenging goals to the employees. Provide short term incentive through a compensation plan on the achievement of the goal. Provide the long term incentives in the form of stock options. The key elements of the Aastrom compensation are its: Base Salary
Annual opportunities including the bonuses
Stock option awards including annual stick option awards
Retirement benefit plan
Executive benefits provided to the employer Aastrom pays close attention to each of these elements because each element is useful and is important to meet the objectivies of the compensation policy. The management of Aastrom believes that when these elements are combined effectively they will continue to be effective in meeting the objectives of the compensation.
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