Ch 1 *Vanessa - Done

Question 1

Compensation definition

Answer 1

all forms of financial returns and tangible services and benefits that ee’s receive as part of an ee relationship

Question 2

Compensation perspective

from society:

Answer 2

• Measure of justice - gender age gap

* Consumers see compensation as the cause of price increases

Question 3

Compensation perspective

from stakeholders:

Answer 3

. • Compensation matters
• Some believe - Using stocks to pay ee’s increases ownership and improve performance and increase stockholder wealth
• Stock holders have an interest in executive compensation

Question 4

Compensation perspective From managers:

Answer 4

.Influence success of org.
· Major expense
· Influence ee behaviors

Question 5

Compensation perspective From employees:

Answer 5

Financial security

Entitlement, reward, return on investment/contributions

Question 6

Compensation perspective globally

Answer 6

Contrasting perspectives

Question 7

two Forms of pay

Answer 7

total rewards

relational returns

Question 8

total rewards def.

Answer 8

include cash compensation, benefits, and relational returns

Question 9

relational rewards def.

Answer 9

psychological returns ee's believe they receive in the workplace 
	· Learning opportunities
	· Recognition
	· Status
	· Challenging work

Question 10

total comp. def

Answer 10

pay received directly as cash and indirectly as benefits 
	· Base pay
	· Merit increase
	· Incentives
	· Cost of living adjustments
	· Pensions
	· Healthcare
	· Life insurance program

Question 11

Base pay def

Answer 11

cash compensation ee receives for the work performed

· Reflects value of work or skills ignores differences attributable to ind. Ee’s

Question 12

Merit increase:

Answer 12

increment to base pay in recognition of past work behaviour

Question 13

Cost of living adjustments:

Answer 13

% increment to base pay provided to all ee’s regardless of performance

Question 14

Incentive def

Answer 14

one-time payments for meeting pre-established performance obj. in a future time period

Question 15

Difference between incentive and merit increase

Answer 15

○ Incentives do not increase base pay
○ Incentive payment size is known before hand
○ Merit bay evaluates past performance, incentive pay what is expected is known before hand

Question 16

Incentives are known as variable pay, because…

Answer 16

when performance declines, incentives automatically decline

Question 17

Long term incentives:

Answer 17

focus ee efforts on multi-year results
· Stock ownership/options to buy stock
· Companies believe that having a stake in the company supports a culture of ownership

Question 18

Benefits

Answer 18

insurance and pension

Cost of providing benefits has been rising, they are regarded as an increasingly important form of compensation

Question 19

Benefits work life programs:

Answer 19

better integration of work and life responsibilities

Question 20

Benefits: Allowances

Answer 20

compensation to provide for items that in in short supply

Example, china-apartment, transportation, rice allowance

Question 21

Present Value of a stream of Earnings:

Answer 21

PV perspective shifts the choice from comparing todays initial offers to consideration of future bonuses , merit increases, and promotions

Question 22

Relational Returns of Work:

Answer 22

recognition and status, employment security, challenging work, and learning opportunities
· Apart of total awards

Question 23

The organization as a network of returns is most useful when..

Answer 23

· network of returns is more likely to be useful if bonuses, development opportunities, and promotions all work together.
· Compensation is only one of many factors affecting peoples decision about work

Question 24

Pay Model def

Answer 24

framework for examining a current pay system

Question 25

Pay model contains three basic building blocks..

Answer 25

1. The strategic compensation obj
   
   2. The strategic policies that form the foundation of the compensation system
   3. The techniques of compensation

Question 26

Strategic Compensation Objectives:

Answer 26

Attract, retain, and motivate while maintaining efficiency, fairness and legal compliance

Question 27

Strategic Compensation Objectives ethical dilemmas

Answer 27

○ Manipulating results to ensure larger executive bonuses
○ Misusing statistics to measure competitors pay rates
○ Re-pricing or back dating stock options to increase value
○ Offering just enough pay to get hires in the door

Managers must make ethical decisions

Question 28

Strategic Compensation Objectives purposes…

Answer 28

guide the design of the pay system, standard for judging the success of the pay system

Question 29

Four Policy choices

Answer 29

• Internal alignment
  
  • External competiveness
  • Employee contribution-relative emphasis placed on employee perf.
  • Management- policies related to managing the pay system

Question 30

Socio-cultural environment

Answer 30

Be sensitive to these choices
Individualism/collectivism
Power distance
Uncertainty avoidance

Question 31

Two views of work culture:

Answer 31

Descriptive: how people actually behave
Prescriptive: what behaviour should be