7. COMPENSATION Flashcards

1
Q

What are the basic factors that determine the pay plan or compensation

A

(Direct financial payments and indirect financial payments such as insurance)

The factors:

  • legal
  • union
  • collective labor agreements
  • company strategy/ policy
  • equity
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2
Q

The reward system should be aligned with strategy, this means…

A

Rewards should provide a clear match between each reward and the specific business goal

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3
Q

What is external equity?

A

How a job’s pay rate in one company compares to job’s pay rate in other companies

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4
Q

Internal equity

A

How fair the job’s pay rate is, when compared with jobs of same company

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5
Q

Individual equity

A

Fairness of an individuals’ pay compared with coworkers’ pay

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6
Q

Procedural equity

A

Perceived fairness of procedures to make decisions regarding allocation of pay

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7
Q

Types of equity

A
  • external
  • internal
  • individual
  • procedural
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8
Q

What 2 basic approaches do managers use to setting pay rates?

A
  • market-based approaches

- job evaluation methods

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9
Q

What is job evaluation

A

Comparison of the worth of a job to another. It involves assigning values to each job = results on salary structure

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10
Q

What are the job evaluation methods to determine value of job? (COMPENSABLE FACTORS)and ways of rating it?

A
  • greater qualifications
  • more responsibilities
  • more complex job duties
  • ranking (by departments)(factor: job difficulty. Explain factors to evaluators) (several ratings, rating committee does average
  • job classification (grading and grouping into classes )
  • point method (evaluating several compensable factors)=results in quantitative view
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11
Q

What is the system to find the adequate salary structure ?

A
  • job description
  • job evaluation
  • performance appraisal

-market-competitive pay (employers pay rates are competitive with those on labor market)

Pay

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