1. introduction to compensation and benefits Flashcards
what is compensation?
all forms of financial returns and tangible services and benefit employees receive as part of an employment relationship
how should a company compensate?
must be compliant with the law and must be fair
what is internal alignment?
it refers to comparisons among jobs or skill levels inside a single organization
what does internal alignment pertain to?
the pay rates both for employees doing equal work and for those doing dissimilar work
how will pay relationships affect compensation?
it affects the compensation objectives of efficiency, fairness and compliance
how will pay relationships affect employees
it will affect decision making
what will external competitiveness make the pay to be
market driven
what are the objectives of external competitiveness?
- ensure that the pay is sufficient to attract and retain employees
- control labour costs to ensure competitive pricing of products and services
what is external competitiveness?
pay comparisons with competitors
what is employee contribution for?
understanding the basis for judging performance, helps perceive pay as fair
how can companies recognize employee contributions?
motivate and develop incentive programs - monetary or non-monetary
what are the components under seniority-based?
loyalty, experience and inflexible
what is performance-based?
sales target, individual/team contribution and using performance appraisal to link to salary adjustment
what is under the pay model?
implementation, pay for performance, external competitiveness, internal alignment and objectives
what is in cash compensation?
the base salary
what is considered merit or cost of living?
allowances like attendance, hardship, noise, uniform, etc
what is considered short term?
anything that is paid or enjoyed within 0-18 months after the announcement of incentive
what are the components in short term?
the commission, annual wage supplement, corporate bonus, etc
what is considered long term?
anything that is paid or enjoyed later than 0-18 months after the announcement of incentive
what are the components in long term?
deferred bonus, stock purchase, stock grant plan, etc
what are the components of benefits?
income protection, work/life balance, allowance
what are the components that are considered as leave?
annual, child/elder care, marriage, medical, etc
what is under health?
outpatient, specialist, hospital, etc
what is in insurance?
gtl, gpa, travel
what type of loans are there?
study & housing
what are the facilities available?
childcare, gym, canteen, pantry
what acts are under statutory/mandatory?
employment, part-time employment, child co-saving, trade union and work injury compensation act
what is considered as discretionary?
any benefits give outside the law
what is relational returns?
non-financial returns that substantially impact employee behaviours
what is the components of rational returns?
recognition, status, employment security, challenging work and learning opportunitities
what compensation strategies can companies have?
different business units, product lines, locations and staff population
why should pay system align with the business strategy?
better the alignment = more effective organization
changes in business strategies should result in changes in pay system
what are the types of business strategy?
innovator, cost cutter and customer focused
what is innovator?
increase product complexity and shorten product life cycle + unique and innovative product or service at a premium price
what is cost cutter?
focus on efficiency and firms that cut cost
what is customer focused?
increase customer expectations and stresses delighting customers and bases employee pay on how well they do this
what is competitive advantages?
organization compete for limited talents/employees and a strategic perspective focuses on those competitive choices that help organization gain and sustain competitive advantages
