Chapter 11: Compensation Flashcards

1
Q

Employee Compensation

A

all forms of pay going to employees and arising from their employment

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2
Q

Direct Financial Payments

A

wages, salaries, commissions and bonuses

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3
Q

Indirect Financial Payments

A

employer-paid insurance, vacations

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4
Q

Four Basic Considerations Influencing the Formulation of a Pay Plan

A
  1. legal requirements
  2. union issues
  3. rewards alignment
  4. equity
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5
Q

Total Rewards

A

approach to determine the best mix of reward that are aligned with a business strategy and that provide employee value all within the cost constraints of the organization

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6
Q

Equity Theory of Motivation

A

a theory that suggests that people are motivated to maintain a balance between their perceived contributions and their rewards

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7
Q

External Equity

A

an employee’s perception of pay as fair given the pay rates of comparable jobs in other organizations

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8
Q

Internal Equity

A

an employee’s perception of pay as fair given the pay rates of others in the organization

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9
Q

Individual Equity

A

an evaluation of the fairness of an individuals pay as compared with what their co-workers are earning for the same or very similar jobs within the company. Based on each person’s performance

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10
Q

Procedural Equity

A

perceived fairness of the procedures used to make decisions regarding the allocation of pay

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11
Q

Pay Equity

A

providing equal pay to jobs of equal value as determined by a gender neutral decisions criteria

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12
Q

Three Stages in Establishing Pay Rates

A
  1. prepare for job evaluation
  2. conduct wage/salary survey
  3. combine job evaluation and salary survey information to determine pay
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13
Q

Job Evaluation

A

systematic comparison to determine the relative worth of jobs within a firm

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14
Q

Benchmark Jobs

A

job that is critical to the firm’s operations or that is commonly found in other organizations

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15
Q

Job Evaluation Methods

A
  • ranking method
  • job classification method
  • point method
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16
Q

Ranking Method

A

simplest job evaluation method that ranks each job relative to all other jobs based on some overall factor

17
Q

Job Classification Method

A

a method for categorizing similar value jobs into groups for pay purposes

18
Q

Job Classes

A

Groups of jobs based on compensable factors for each class. Classes usually contain similar jobs.

19
Q

Job Grades

A

groups of jobs based on a set of rule for each grade, where jobs are similar in difficulty but otherwise different

20
Q

Grade/Group Description

A

a written description of the level of compensable factors required by jobs in each grade, used to combine similar jobs into grades or classes

21
Q

Point Method

A

a job evaluation method in which a number of compensable factors are identified, the degree to which each of these factors is present in the job is determined, and an overall point is calculated

22
Q

Pay Grade

A

Comprises jobs of approximately equal value

23
Q

Wage/Salary survey

A

a survey aimed at determining prevailing wage rates

24
Q

Wage Curve

A

shows the pay rates currently paid for jobs, relative to the points assigned to each job by the job evaluation

25
Q

Pay Ranges

A

a series of steps or levels within each pay grade, usually based on years of service

26
Q

Broadbanding

A

combining salary grades and ranges into just a few levels or “bands”, each of which then contains a relatively wide range of jobs and salary levels

27
Q

Red Circle Pay Rates

A

a rate of pay that is above the pay range maximum

28
Q

Competency Based Pay Plans

A

plans that pay employees for the range, depth, and types of knowledge that they are capable of using rather than for the job that they currently hold

29
Q

Core Competencies

A

knowledge and behaviours that employees throughout the organization must exhibit for the organization to succeed

30
Q

Market Pricing Approach

A

an approach to evaluate professional jobs based on values established for similar benchmark jobs in the market