Ch 9: Compensation Flashcards
3 main component of compensation
-Direct compensation
-Indirect compensation
-Nonfinancial compensation
total rewards capture all three components, plus other aspects of organizational rewards, including career advancement/developmental opportunities, recognition, work–life balance and job security.
What is direct compensation
Encompasses employee wages and salaries, incentives, bonuses, and commissions.
What is indirect compensation
Comprises the many benefits supplied by employers.
What is nonfinancial compensation
Includes employee recognition programs, rewarding jobs, organizational support, work environment, and flexible work hours to accommodate personal needs.
What is strategic compensation
The compensation of employees in ways that enhance motivation and growth while at the same time aligning their efforts with the objectives, philosophies, and culture of the organization
Strategic compensation planning serves to mesh the monetary payments made to employees with specific functions of the HR program.
What is the equity theory
Pay constitutes a quantitative measure of an employee’s relative worth. For most employees, pay has a direct bearing not only on their standard of living but also on the status and recognition they may be able to achieve both on and off the
job
What is the expectancy theory
Predicts that one’s level of motivation depends
on the attractiveness of the rewards sought and the probability of obtaining those rewards
What is piecework compensation
Employees are paid according to the # of units they produce
Internal factors of the wage mix
Compensation
strategy of organization
Worth of job
Employee’s relative worth
Employer’s ability to pay
External factors of the wage mix
Conditions of the labour market
Area wage rates
Cost of living
Collective bargaining
Legal requirements
What is job evaluation
Systematic process of determining the relative worth of jobs to establish which jobs should be paid more than others within the organization
What is job classification
Jobs are classified and grouped according to a
series of predetermined grades.
What is the point system
Quantitative job evaluation procedure that determines a job’s relative value by calculating the total points assigned to it.
What is work evaluation
A job evaluation system that seeks
to measure a job’s worth through its
value to the organization
What is hay profile method
A job evaluation technique using 3
factors to evaluate executive and managerial positions:
-Knowledge
-Mental activity
-Accountability
