Ch 1 *Vanessa - Done Flashcards
Compensation definition
all forms of financial returns and tangible services and benefits that ee’s receive as part of an ee relationship
Compensation perspective
from society:
- Measure of justice - gender age gap
* Consumers see compensation as the cause of price increases
Compensation perspective
from stakeholders:
. • 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
Compensation perspective From managers:
.Influence success of org.
· Major expense
· Influence ee behaviors
Compensation perspective From employees:
Financial security
Entitlement, reward, return on investment/contributions
Compensation perspective globally
Contrasting perspectives
two Forms of pay
total rewards
relational returns
total rewards def.
include cash compensation, benefits, and relational returns
relational rewards def.
psychological returns ee's believe they receive in the workplace · Learning opportunities · Recognition · Status · Challenging work
total comp. def
pay received directly as cash and indirectly as benefits · Base pay · Merit increase · Incentives · Cost of living adjustments · Pensions · Healthcare · Life insurance program
Base pay def
cash compensation ee receives for the work performed
· Reflects value of work or skills ignores differences attributable to ind. Ee’s
Merit increase:
increment to base pay in recognition of past work behaviour
Cost of living adjustments:
% increment to base pay provided to all ee’s regardless of performance
Incentive def
one-time payments for meeting pre-established performance obj. in a future time period
Difference between incentive and merit increase
○ 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
Incentives are known as variable pay, because…
when performance declines, incentives automatically decline
Long term incentives:
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
Benefits
insurance and pension
Cost of providing benefits has been rising, they are regarded as an increasingly important form of compensation
Benefits work life programs:
better integration of work and life responsibilities
Benefits: Allowances
compensation to provide for items that in in short supply
Example, china-apartment, transportation, rice allowance
Present Value of a stream of Earnings:
PV perspective shifts the choice from comparing todays initial offers to consideration of future bonuses , merit increases, and promotions
Relational Returns of Work:
recognition and status, employment security, challenging work, and learning opportunities
· Apart of total awards
The organization as a network of returns is most useful when..
· 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
Pay Model def
framework for examining a current pay system
