Chapter 11 Flashcards
Total Rewards in HR includes what 5 things?
- compensation
- benefits
- work-life balance
- performance management
- Talent management
compensation provided by an organization can come two ways. what are those ways and how do you get the money.
directly (through base pay and variable pay) and indirectly (through benefits)
Fair Labor Standards Act (FSLA) is what?
- affects pay systems
- requires most organizations to pay a minimum wage and to comply with overtime provisions, including appropriately classifying employees as exempt or nonexempt and as independent contractors or employees
a base pay system is developed how?
using information from valuations of jobs and pay surveys
valuation of jobs can be determined using either what two things?
job evaluation or market pricing
total rewards?
monetary and nonmonetary rewards provided by companies to attract, motivate, and retain employees
total rewards philosophy empahsizes what?
how a company can use both direct and indirect (or relational) rewards for motivation and commitment.
several strategic decision can guide the design of compensation practices what are they?
- compliance with all applicable laws
- cost-effectiveness for the organization
- internal and external equity for employees
- optimal mix of compensation components
- performance enhancement for the organization
- performance recognition and talent management for employees
- enhanced recruitment, involvement, and retention of employees
tangible rewards?
elements of compensation that can be quantatively measured and compared between different organizations
intangible rewards
elements of compensation that cannot be easily measured or quanitified
examples of tangible direct rewards?
base pay (wages, salary) and variable pay (bounses, incentives, and equity awards)
examples of tangible indirect rewards
- health care benefits
- paid time off
- disability benefits
intangible rewards
- suppoertive work environment
- challenging work
- autonomy
- positive reinforcement
base pay?
basic compensation that an employee receives often as hourly wage or salary
direct compensation examples?
base and variable pay
wages?
payments calculated directly on the basis of time worked by employees
salary?
consistent payments made each period regardless of the number of hours worked
variable pay?
compensation linked directly to individual, team, or organization performance
ex. bonuses, incentive programs, equity awards, and comissions
benefits?
indirect reward given to an employee or group of employees as part of membership in the organization, regardless of performance
primary federal law affecting compensation is what and what was it passed?
Fair Labor Standards Act (FLSA) and passed in 1938
provisions of both the original FLSA act and subsequent revisions focus on what 3 major areas?
- minimum wage
- limitations on the use of child labor
- exempt and nonexempt status (overtime provisions)
under the FLSA, employees are classified as exempt or nonexempt. what do those two things mean?
exempt employees hold positions where they do not get paid overtime.`
nonexempt employees must be paid overtime.
- overtime is required for those working hourly jobs but if you have a salary you are nonexempt
what is a fluctuating workweek?
when you only pay one third of the overtime rate because it is assumed that the base part of overtime pay has already been included in the salary that the individual has earned for that week.
for individuals who are nonexempt, employers must consider many issues. what are the 7?
- compensatory time off
- incentives for nonexempt employees
- training time
- security inspection time
- after-hours email time
- travel time
- donning and doffing time
what is compensatory time off?
only in the public sector, comp hours are earned by public sector nonexempt employees in lieu of payment for extra time and worked at the rate of 15 times the number of hours over 40 worked that week
incentives for nonexempt employees
employers must add the amount of direct work-related incentives to an employee’s base pay and then calculate overtime pay as 1.5 times the higher (adjusted) rate of pay
training time
time in training must count as work by nonexempt employees unless they voluntarily do it or it has nothing to do with their job
security inspection time
some companies may have to count the time that employees spend going through security inspections after work as compensable
after hours email time?
some employees can make arguement checking emails after hous counts as overtime. so companies can try to adopt curfew policies so they dont have check after hours
travel time?
travel time counts as work time if it occurs during normal work hours for the benefit of the employer
donning and doffing time
putting on clothes or taking care of equipment counts as work
title VII of the civil rights act of 1964 prohibits what?
discrimination based on race, color, sex, religion, or national origin
equal pay act of 1963?
act prohibits companies from using different wage scales for men and women performing essentially the same jobs
lilly ledbetter fair pay act
signed in 2009 allowed people to file complaints and discrimination in quicker manners bc a law prior severely restricted the time period for filing complaints of employment discrimination concerning compensation.
prevailing wage
an hourly wage determined by a formula that considers the rate paid for a job by a majority of the employers in the appropriate georgraphic area
garnishment
a court order that directs an employer to set aside a portion of an employee’s wages to pay a debt to a creditor
what are the two basic compensation philosophies?
entitlement philosophy and the performance philosophy
entitlement philosophy?
assumes that individuals who have worked for another year with the company are entitled to pay increases with little regard for performance differences
ex. giving automatic increases to their employees every year which are often called COST OF LIVING INCREASES
pay for performance philosophy?
assumes that compensation decisions reflect performance differences
what are “ say on pay” guidelines?
guidelines that provide shareholders an opportunity to review top management pay at least once a year over a three year period
expectancy theory?
theory that says an employee’s motivation is based on the probability that his or her efforts will lead to an expected level of performance that is linked to a valued reward
equity theory?
theory that says individuals judge fairness (equity) in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others
what are referent others?
workers that the individual uses as a reference point to make these comparisons
what are an example of inputs?
skills, abilities, knowledge, efforts
what are examples of outputs?
wages, salary, benefits, bonuses
what is internal equity?
means that employees are compensated fairly within an organization with regards to their KSA’s they use in their jobs as well as their resposnibiltiies, accomplishments, and job performance
what is external equity?
when one companies’s rewards are compared to anothers. if it isnt good they will have higher turnover rate bc people will leave
what are two types of justice that are important in regards to internal equity and what are they?
- procedural justice - perceived fairness of the process and procedures used to make decisions about employees, including their pay
- distributive justice - perceived fairness of how rewards and other outcomes are distributed
what is a quartile strategy and how is it used?
a quartile strategy is used to establish policies about where they (an organization) wish to be positioned in the labor market
def: quartile strategy reflects the overall market position where the organization sets its compensation levels
an employer using a first quartile “lag the market” strategy choose to do what?
“lag the market” by paying below market levels for several reason such as not being able to pay more or there is a lot of workers and they can get some at lower costs to them however it can be bad bc of higher turnover and low employee moral
what is a lead the market strategy (3rd quartile)
this strategy helps companies attract and retain sufficient workers with require capabilities and be more selective when hiring
what is a match the market strategy of 2nd quartile?
when they pay employees what the market will pay them to balance employer cost pressure and need to get and keep employees
what are some considerations in determining what quartile strategy to use. 3 of them?
- financial resources available
- competitiveness pressures
- market availability of employees
competency based pay
rewards individuals for the capabilities they demonstrate and acquire
offshoring?
moving jobs to lower wage countries
home country - based approach
maintains the standard of living the expatriate had in the home county. housing, taxes and discretionary spending expenses are calculated based on those items in the home country
host country - based approach
compensates the expatriate at the same level as workers from the host country
two general approaches for valuing jobs are?
job evaluation and market pricing
job evaluation
formal systematic process to determine the relative worth of jobs within an organization
ranking method?
simple system that places jobs in order from highest to lowest by value in an organization
classification method?
often used in public sector, descriptions of jobs are written and then each job is put into a grade according to the class it best matches
factor comparison method?
complex quantitative method that combines ranking and point factor methods. orgs that use this develop their own key jos and factors
point factor method?
most popular job evaluation approach bc its easy to use and considers components of a job
compensable factor
job dimension commonly present throughout a group of jobs within an organization that can be rated for each job
market pricing
uses market pay data to identify the relative value of jobs based on what other employers pay for similar jobs
primary advantage of market pricing is what?
it closely ties organizational pay levels to what is actually occuring in the market withinout influene of internal job evals
biggest disadvantage of market pricing is what?
that pay survey data may be limited or may not be gathered in methodologically sound ways
pay survey?
pay survey is a collection of data on compensation rates for workers performing similar jobs in other organizations
benchmark jobs
jobs that are found in many other organizations that can be used for the purposes of comparison
pay grades?
groupings of individual jobs that have approximately the same value to the organization
market line?
grah line that show the relationship between job value as determined by job evaluation points and job value as determined pay survey rates
market branding
grouping jobs into pay grades based on similar market survey amounts
broadbanding?
practice of using fewer pay grades with much broader ranges than in traditional compensation systems
red circled employee
incumbent who is paid above the range set for a job
ex. get paid 2o bucks ina a pay range of 15-20 so they red circled and cant get a raise
green circled employees
incumbent who is paid below the range set for a job. opposite of red circled and are encouraged to get rapid pay increase
pay compression
occurs when the pay differences among individuals with different levels of experience and performance become small
salary inversion
ocurs when the pay given to new hires is higher than the compensation provided to more senior employees
compa ratio
pay level divided by the midpoint of the pay range
seniority
time spent in an organization or working in a particular job
cost of living adjustment
pay increase to compensate for inflation and rising prices and are tied to the changes in the consumer price indenc or some other economic measure
accross the board increases
pay increasses across the board the same for everyone
lump sum incfreases
one time payment of all or part of a yearly pay increase. versus getting an increase in hourly wage
