09 Employee Compensation Flashcards
Refers to all forms of pay or rewards given to employees
compensation
2 main components of compensation
direct and indirect financial payments
Direct financial payments come in the form of (blank)
wages, salaries, incentives, commissions, bonuses
Indirect financial payments come in the form of (blank)
financial benefits such as insurance
What is the minimum wage in NCR in the service sector?
Php 500-537
4 types of financial rewards in the workplace
- membership- and seniority-based
- job status-based
- competency-based
- performance-based
[Financial Rewards]
Given on the basis of being part of the organization and years rendered
membership- and seniority-based
[Financial Rewards]
2 main advantages of membership- and seniority-based rewards
- guaranteed wages are attractive to applicants
2. seniority-based rewards reduce turnover
[Financial Rewards]
3 main disadvantages of membership- and seniority-based rewards
- not motivating
- discourages poor performers from leaving
- golden handcuffs not facilitating affective commitment
Why is early retirement offerred?
expensive to maintain senior employees because they require higher pay
[Financial Rewards]
Given on the basis of status or worth of the jobs they occupy
job status-based
[Financial Rewards]
Job status-based rewards include (blank) and (blank)
job evaluation and status perks
[Financial Rewards]
This is used to systematically rate the worth of jobs
job evaluation
[Financial Rewards]
3 main advantages of job status-based rewards
- maintains internal equity
- minimizes pay discrimination
- motivates employees to compete for promotions
[Financial Rewards]
5 main disadvantages of job status-based rewards
- encourages hierarchy
- increases costs
- reduces responsiveness
- reinforces status differences
- motivates job competition and exaggerated job worth
[Financial Rewards]
Given on the basis of their assessed competencies and whether they actually use those in their current job
competency-based rewards
[Financial Rewards]
Refers to a specific competency-based reward where people receive higher pay based on their mastery of measurable skills
skill-based pay
[Financial Rewards]
2 main advantages of competency-based rewards
- motivates employees to learn new competencies
2. improves quality with multi-skilled employees
[Financial Rewards]
2 main disadvantages of competency-based rewards
- subjective measurement of competencies
2. expensive because employees spend more time learning new skills
[Financial Rewards]
Given on the basis of high levels of performance
performance-based rewards
[Financial Rewards]
Performance-based rewards given based on objective performance measures
pay-for-performance
[Financial Rewards]
Pay-for-performance is also known as (blank)
earning-at-risk
[Financial Rewards]
Performance-based rewards based on subjective measures
merit pay
[Financial Rewards]
3 types of performance-based rewards
- organizational
- team
- individual
[Financial Rewards]
Individual performance-based rewards may come in these 3 forms
- bonuses
- commissions
- piece rates
[Financial Rewards]
Team performance-based rewards may come in these 2 forms
- bonuses
2. gainsharing
[Financial Rewards]
Organizational performance-based rewards may come in these 4 forms
- profit sharing
- share ownership
- stock options
- balanced scorecard
[Financial Rewards]
4 main advantages of performance-based rewards
- motivates performance
- attracts performance-oriented aspects
- organizational rewards create an ownership culture
- profit sharing may avoid layoffs
[Financial Rewards]
5 steps to improving reward system effectiveness
- link rewards to performance
- ensure that rewards are relevant
- use team rewards for interdependent jobs
- ensure that rewards are valued
- watch out for unintended consequences
Refers to creating a total rewards package to elicit employee behaviors the firm needs to support and achieve its competitive strategy
aligned reward strategy
The equity theory of motivation states that employees are strongly motivated to maintain a balance between (blank) and (blank)
their perceived contributions and rewards
4 forms of equity
- external
- internal
- individual
- procedural
[Forms of Equity]
Refers to how a job’s pay rate in one company compares to the equivalent job’s pay rate in other companies
external equity
[Forms of Equity]
Refers to how fair a job’s pay rate is compared to other jobs in the same company
internal equity
[Forms of Equity]
Refers to the fairness of an individual’s pay as compared to his/her coworkers
individual equity
[Forms of Equity]
Refers to the perceived fairness of the processes and procedures used to make in allocating pay
procedural equity
This method monitors and maintains external equity
job surveys
2 methods that maintain internal equity
job analysis and job evaluation
2 methods that maintain individual equity
performance appraisal and incentive pay
3 methods to ensure transparency in the pay process
- communication
- grievance mechanisms
- employees’ participation
2 ways to establish pay rates
salary survey and job evaluation
Used to anchor the employer’s pay scale around other jobs arranged in order of relative worth
benchmarking
4 compensable elements of a job
skills, effort, responsibilities, and working conditions
4 steps in job evaluation using the Point Method
- determines compensable factors
- evaluate the degree of each compensable factor to each job
- sum the points of each job for each factor
- plot actual salaries for each job against the total points
Refers to the requirement to pay men and women equal wages for jobs that are of comparable value to the employer
comparable worth
Comparable worth seeks to address which issue?
women being paid less for being given jobs that are valued less compared to those given to men
