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Human Resource Management > Chapter 10 > Flashcards

Chapter 10 Flashcards

1
Q

Explain the strategic importance of an organization’s approach to total compensation

A

Total compensation is strategically important because it can be used to attract, retain, and motivate talent. It can also be used to implement the business strategy and improve productivity

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2
Q

total compensation

A

refers to the monetary and non monetary rewards offered to employees

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3
Q

clawback provisions

A

require executives to repay any incentive compensation that was improperly awarded based on financial restatements

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4
Q

pay mix

A

the way an organization distributes pay among all monetary and non monetary elements of total compensation

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5
Q

Base pay

A

refers to the wage or salary an employee receives, exclusive of any incentive pay or benefits

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6
Q

monetary compensation

A

includes direct payments, such as salary, wages, and bonuses, and indirect payments, such as payments to cover benefits and services.

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7
Q

Non monetary compensation

A

includes many forms of social and psychological rewards, such as recognition and respect for others, enjoyment from the doing the job itself, opportunities for self-development, etc

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8
Q

How does total compensation fit within the integrated HRM system

A

Total compensation should be designed to fit the organization’s external and internal environments. Labor market conditions, the legal environment, and unions all influence an organization’s approach to total compensation. The organization’s size, company culture, and business strategy share the specific approach. Other HR practices that should be aligned with compensation include job analysis and competency modeling, recruitment, performance management, and training and development

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9
Q

Fair Labor Standards Act (FLSA)

A

Sets minimum wages, maximum hours, child labor standards, and overtime pay provisions for employees

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10
Q

Nonexempt employees

A

Employees who are protected by the FLSA

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11
Q

Exempt employees

A

Employees who are not covered by the minimum wage or overtime provisions of the FLSA

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12
Q

Equal Pay Act

A

Prohibits an employer from discriminating between employees on the basis of sex by paying wages to employees of one gender at a rate less than that paid to employees of the opposite sex for work that requires equal skill, effort, and responsibility and is performed under similar working conditions

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13
Q

Comparable worth

A

Based on the principle that even pay for dissimilar jobs should be equal if the jobs have a similar overall value to the organization

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14
Q

What are the roles and responsibilities of the HR Triad related to total compensation?

A

HR professionals, line managers, and employees all have substantial responsibilities with respect to total compensation. The HR Triad is responsible for aligning the needs and characteristics of the organization with the motivation and behaviors of employees while ensuring that employees are paid fairly

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15
Q

How do organizations establish the internal value of jobs?

A

Most organizations use a job-based pay structure that specifies the minimum and maximum pay for all jobs in the organization. The pay structure should ensure both internal and external equity

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16
Q

Pay structure

A

Combines job evaluation information and information about market pay rates to establish a policy that specifies the base pay of employees in each job

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17
Q

Job evaluation

A

A procedure for establishing the relative internal worth of jobs

18
Q

Internal equity

A

The perception by employees that they are compensated fairly compared to others in the same organization given the contributions that they and others make

19
Q

Job-based pay structure

A

The pay that people receive is determined primarily by the job they hold

20
Q

Job ranking method

A

Involves placing jobs into a rank order according to their perceived overall value or importance

21
Q

Job classification method

A

Groups jobs into smaller sets of job classes, and then the job classes (not the individual job) are ranked according to their value to the organization

22
Q

Point factor ranking method

A

Uses a sophisticated system for assigning values to jobs based on numeric ratings of compensable factors

23
Q

Compensable factors

A

The specific dimensions of work that an organization chooses to use when establishing the relative value of jobs

24
Q

Competency-based job evaluation

A

Keeps the focus on the job but emphasizes the competencies needed to perform that job rather than job tasks and duties

25
Q

Broadbanding

A

Refers to the use of pay structures with very few (e.g., three to five) pay grades

26
Q

Skill-based pay

A

Compensates employees for the types and depth of skills they’re capable of using, regardless of whether the job they currently hold requires the use of those skills

27
Q

Describe how organizations set pay levels using external market values

A

Organizations establish market-based pay levels by determining external market rates, establishing the market pay policy, and setting the organization pay policy. Employers can choose a policy that leads, matches, or lags the pay offered by competitors.

28
Q

External equity

A

Exists when employees feel they are being compensated fairly relative to how people in similar jobs (or with similar competencies) are compensated by other employers

29
Q

Compensation survey

A

Used by employers to obtain data about pay rates in the external labor market

30
Q

Benchmark jobs

A

Those jobs that are commonly found across a range of organizations and that involve essentially the same work and responsibilities regardless of the company

31
Q

Market pay policy

A

Established by plotting pay rates against evaluation points that the company has assigned to the benchmark jobs

32
Q

Organization pay policy

A

Specifies the organization’s pay level, which is how its pay compares to that of other organizations

33
Q

Explain the design of an internal pay structure

A

Most organizations use a job-based pay structure that specifies the minimum and maximum pay for all jobs in the organization. The pay structure should ensure both internal and external equity

34
Q

What are the adjustments organizations make to the pay system

A

Adjustments to the pay structure and to individual pay may be needed to balance internal and external equity, to adapt to changes over time, and to achieve individual equity

35
Q

Shadow range

A

A temporary readjustment that expands the size of the maximum pay rates associated with a pay grade

36
Q

Salary budget surveys

A

Estimate the amount of salary increases for the coming year

37
Q

Individual equity

A

Established when the individual perceives that he or she is being compensated fairly compared to others in the same organization with the same job

38
Q

Green-circled

A

Indicates that the person needs to be given a pay adjustment to bring his or her pay up to at least the pay grade’s minimum

39
Q

Red-circled

A

Indicates that the person’s pay is frozen and that he or she should not receive any more raises

40
Q

How does globalization affect total compensation

A

MNCs face the challenge of designing total compensation that balances the advantages of global consistency with the need for sensitivity to local conditions. Consistency can be established by centralizing the pay structure, but local conditions, such as laws and cultural norms for pay, should be considered

41
Q

Explain two current issues related to total compensation

A

Total compensation during difficult economic conditions and the government’s role in compensation decisions

Human Resource Management (10 decks)

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