ch 11: Strategic Pay Plans Flashcards
1
Q
describe employee compensation and the main components
A
- all forms of pay going to employees and arising from their employment
- main components
- direct financial payments (wages, salaries, incentives, commissions, bonuses)
- indirect financial payments (financial benefits)
- pay plans must adhere to legal requirements, union issues, rewards alignment, and equity
2
Q
describe aligning total rewards with strategy
A
- sligned reward strategy is directly related to employee behaviours the firm needs to achieve its competitive strategy
- total rewards include more challenging jobs, career development, and recognition programs
- considerations in setting compensation policy:
- does the firm want to be a leader or follower regarding pay
- business strategy
- The compensation plan should first advance the firm’s strategic aims
- Compensation policies are usually written by the HR or compensation manager in conjunction with senior managemen
3
Q
what are some legal considerations in compensation?
A
- employment/labour standard acts (Canada Labour Code)
- workers’ compensation laws
- human rights acts
- Canada/Quebec Pension Plans
- Pay equity act
4
Q
describe employment/labour standards acts (Canada Labour code)
A
- sets minimums for pay, wages, hours of work, vacations, statutory holidays, termination pay, and record keeping of pay information
- Executive, administrative, and professional employees are generally exempt from the overtime pay requirements.
- varies some of the minimum standards
5
Q
describe workers’ compensation laws
A
- each jurisdiction has own laws to provide reasonable income to victims of work-related accidents/illnesses
- The Employment Insurance Act is aimed at protecting Canadian workers from total economic destitution in the event of employment termination that is beyond their control
6
Q
describe human rights acts
A
- protects workers from discrimination
- most prohibit discrimination in employment (such as in compensation and promotion) on the basis of age, sex, colour, or race; ancestry and place of origin; religion and creed; marital and family status; and physical or mental disability.
7
Q
describe Canada/Quebec Pension Plans
A
- mandatory contributions by employees and employers
- Pension benefits based on the employee’s average earnings are paid during retirement
8
Q
describe pay equity act
A
- equal pay for jobs of equal value to all classes of employees
- regardless of requirement, wage gaps still persist
- Providing equal pay to male dominated job classes and femaledominated job classes of equal value to the employer.
- Ontario and Quebec require pay equity in both the public and the private sectors, whereas the legislation in the other four provinces applies only to the public sector
9
Q
describe union considerations on compensation decisions
A
- unions and labour relations laws influence pay plans
- the Canadian industrial/relations board ensures employees are treated in accordance with their legal rights
10
Q
what is the union attitudes toward compensation?
A
- concerns about managerial malpractice
- workers are the only ones who can judge the relative value of each job
- management’s method in job evaluation can be manipulative in order to restrict or lower pay
11
Q
describe equity theory of motivation and the different types of equity
A
- proposes that people are motivated to maintain a balance between what they perceive as their contributions and their rewards
- if a person perceives an inequity, a tension or drive will develop that motivates him or her to reduce the tension and perceived inequity.
- types:
- external equity
- internal equity
- individual equity
- procedural equity
12
Q
what is external equity?
A
- how does a job’a pay rate in one company compare to a pay rate in other companies
- An employee perception of pay as fair given the pay rates in other organizations.
13
Q
what is internal equity?
A
- compare pay rates with co-workers doing the same or similar jobs
- An employee perception of pay as fair given the pay rates of others in the organization.
14
Q
what is individual equity?
A
- fairness of pay compared to performance
- To the fairness of an individual’s pay as compared with what his or her co-workers are earning for the same or very similar jobs within the company, based on each person’s performance
15
Q
what is procedural equity?
A
- fairness in pay decisions
- Perceived fairness of the processes and procedures used to make decisions regarding the allocation of pay
16
Q
what are some ways managers can addess equity issues?
A
- salary surveys to monitor and maintain external equity
- job analysis and comparisons to maintain external equity
- performance appraisals and incentive pay to maintain individual equity
- communication, grievance mechanisms, and employee participation to maintain procedural equity
- To head off discussions that might prompt feelings of internal inequity, some firms maintain strict secrecy over pay rates, with mixed results
17
Q
what are the stages for establishing pay rates?
A
- preparing for job evaluation
- conduct a wage/salary survey
- combine job evaluation and salary surveys to determine pay for jobs
18
Q
describe stage 1 (preparing for job evaluation) when establishing pay rates
A
- job evaluation: a systemic comparison to determine the relative worth of a job
- establish a benchmark job against which other jobs are compared
19
Q
what is a benchmark job?
A
A job that is critical to the firm’s operations or that is commonly found in other organizations.
31
Q
what are the steps in determining pay for pay grades using a wage curve?
A
- find the average pay for each pay grade, since each of the pay grades consists of several jobs
- plot the pay rates for each pay grade
- fit a line (called a “wage line”) through the points just plotted
35
Q
what is broadbanding?
A
- reduces the number of salary grades and ranges
- allows flexibility in compensation
- Reducing the number of sal-ary grades and ranges into just a few wide levels or “bands,” each of which then contains a relatively wide range of jobs and salary levels.
