Chapter 1 Flashcards
Pay given to employees who are covered by overtime and reporting provisions of the Fair Labor Standards Act. Nonexempts have pay calculated at an hourly rate.
Wages
Employee belief that returns and/or rewards are due regardless or individual or company performance
Entitlement
An individual’s willingness to engage in some behavior. Concerned with what energizes human behavior, what directs such behavior, and how this behavior is maintained.
Motivation
An individual’s capability to engage in a specific behavior.
Ability
The degree to which pay influences individual and aggregate motivation
among employees at any point in time
Incentive Effect
The effect that pay can have on the composition of the workforce. Different
types of pay strategies may cause different types of people to apply to and stay
with an organization.
Sorting Effect
The complete pay package for employees, including all forms of money,
bonuses, benefits, services, and stock
Total Compensation
The nonquantifiable returns employees get from employment, such as social
satisfaction, friendship, feeling of belonging, or accomplishment.
Relational Returns
Pay given to employees who are exempt from regulations of the Fair Labor Standards Act and hence do not receive overtime pay. Exempt pay is calculated at an annual or monthly rate.
Salary
Jobs not subject to provisions of the Fair Labor Standards Act with respect to
minimum wage and overtime. Include most executives,
administrators, professionals, and outside sales representatives
Exempt
The informal rules, rituals, and value systems that influence how people
behave
Culture
Given as increments to base pay and are based on performance
Merit increases
Based on a performance rating but are paid in the form of a lump sum rather than becoming a permanent part of the base salary
Merit bonuses
Payment tied directly to achievement of performance standards. Directly tied to a profit index (sales, production level) and employee costs;
thus, they rise and fall in line with revenues
Commission
Pay tied to productivity or some measure that can vary with the firm’s
profitability
Variable Pay
What are the three building blocks of The Pay Model?
Policies, Techniques, and Objectives
Improving performance, increasing quality, delighting customers and stockholders, and controlling labor costs
Efficiency
Conforming to federal and state compensation laws and regulations.
Compliance
The process used to make pay decisions
Procedural fairness
The pay relationships among organizations; focus attention on the
competitive positions reflected in these relationships.
External competitiveness
The pay relationships among jobs or skill levels within a single
organization; focuses attention on employee and management acceptance
of those relationships. It involves establishing equal pay for jobs of equal
worth and acceptable pay differentials for jobs of unequal worth.
Internal alignment
Base wage plus cash bonus; does not include benefits or stock options.
Total Cash
A single rate, rather than a range of rates, for all individuals performing a
certain job. Ignores seniority and performance differences.
Flat Rate
Comparisons among individuals doing the same job for the same organization.
Employee Contributions
Relative emphasis among compensation components such as base pay, merit,
incentives, and benefits.
Pay Mix
Group incentive restricted to team members with payout usually based on
improvements in productivity, customer satisfaction, financial performance, or
quality of goods and services directly attributable to the team
Team Incentives
Mechanisms or technologies of compensation management, such as job
analysis, job descriptions, market surveys, job evaluation, and the like, that tie
the four basic pay policies to the pay objectives
Pay Techniques
