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MGMT 411: Human Resource Management > Chapter 11: Strategic Pay Plans > Flashcards

Chapter 11: Strategic Pay Plans Flashcards

1
Q

Employee compensation

A

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

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2
Q

Employee compensation has two main components, what are they?

A

1) direct financial payments

2) indirect financial payments

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3
Q

Direct financial payments

A

Pay in the form of wages, salaries, incentives, commissions, and bonuses

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4
Q

Indirect financial payments

A

Pay in the form of financial benefits, such as employer-paid insurance and vacations

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5
Q

For more senior positions or more dynamic jobs, such as managers or web designers, pay tends to be ______ and paid weekly, monthly, or yearly

A

salaried

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6
Q

Four basic considerations influence the formulation of any pay plan:

A

1) legal requirements,
2) union issues,
3) rewards alignment,
4) and equity

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7
Q

aligned reward strategy

A

This means creating a compensation package (including wages, incentives, and benefits) that produces the employee behaviours the firm needs to achieve its competitive strategy

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8
Q

Nonmonetary rewards

A
  • Personal growth rewards

- Interpersonal rewards

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9
Q

Cash payments

A
  • Base pay
  • Merit plans
  • Incentive plans
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10
Q

Benefits

A
  • Vacations
  • Insurance
  • Pensions
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11
Q

Total rewards

A

encompass the traditional pay, incentives, and benefits, but also things such as more challenging jobs (job design), career development, and recognition programs.

Total rewards include direct and indirect financial benefits

Not health and safety programs

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12
Q

Do Our Compensation Policies Support Our Strategic Aims?

A

Q1: What are our strategic aims?

Q2: What employee behaviours and skills do we need to achieve our strategic aims?

Q3: What compensation policies and practices—salary, incentive plans, and benefits—will help to produce the employee behaviours we need to achieve our strategic aims?

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13
Q

All of the __ jurisdictions regulating employment in Canada (ten provinces, three territories, and the federal jurisdiction)

A

14

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14
Q

Employment/Labour Standards Acts (Canada Labour Code)

A

set minimum standards regarding pay, including minimum wage, maximum hours of work, overtime pay, paid vacation, paid statutory holidays, termination pay, record keeping of pay information, and more

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15
Q

Executive, administrative, and professional employees are generally exempt from the _______ pay requirements

A

overtime

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16
Q

Workers’ Compensation Laws

A

each jurisdiction has its own workers’ compensation laws

The objective of these laws is to provide a prompt, sure, and reasonable income to victims of work-related accidents and illnesses

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17
Q

Human Rights Acts

A

All jurisdictions have enacted human rights laws

prohibit discrimination in employment (such as in compensation and promotion) on the basis of age, sex, colour, or race; ancestry and place of origin; religion and creed; marital and family status; and physical or mental disability

Any human factor we cannot change (we are born with)

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18
Q

Canada/Quebec Pension Plan (CPP)

A

All employees and their employers must contribute

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19
Q

Pay Equity Act

A

redress systemic gender discrimination in compensation for work performed by employees in female-dominated job classes

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20
Q

Pay Equity BLUE

A

Providing equal pay to male dominated job classes and female dominated job classes of equal value to the employer

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21
Q

Which of the following would not be included in total rewards?

Vacations
Benefits
Monetary compensation
Health and safety programs

A

Health and safety programs

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22
Q

Equity Theory

A

Theory suggesting that people are motivated to maintain a balance between what they perceive as their contributors and their rewards

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23
Q

In compensation, what are the four types of equity

A

1) External equity
2) Internal equity
3) Individual equity
4) Procedural equity

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24
Q

1) External equity

A

refers to how a job’s pay rate in one company compares to the job’s pay rate in other companies.

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25
Q

2) Internal equity

A

refers to how fair the job’s pay rate is when compared to other jobs within the same company

for instance, is the sales manager’s pay fair when compared to what the production manager earns?

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26
Q

3) Individual equity

A

refers to the fairness of an individual’s pay as compared with what his or her co-workers are earning for the same or very similar jobs within the company, based on each person’s performance.

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27
Q

4) Procedural equity

A

refers to the “perceived fairness of the processes and procedures used to make decisions regarding the allocation of pay.”

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28
Q

Steps required to establish pay rates

A

Stage 1: Preparing for Job Evaluation

Stage 2: Conduct a Wage/Salary Survey

Stage 3: Combine the Job Evaluation and Salary Survey Information to Determine Pay for Jobs

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29
Q

Job evaluation

A

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

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30
Q

benchmark jobs

A

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

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31
Q

Compensable factors

A

A fundamental, compensable element of a job, such as skill, effort, responsibility, and working conditions

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32
Q

For example, most of the pay equity acts in Canada focus on four compensable factors:

A

1) skill,
2) effort,
3) responsibility,
4) working conditions

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33
Q

A job evaluation committee

A

A diverse group (including employees), HR staff, managers, and union reps established to ensure that fair and comprehensive representation of the nature and requirements of the jobs in question

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34
Q

Job Evaluation Methods

A

Classification Method

35
Q

Classification/grading method

A

Method for categorizing jobs into groups

The groups are called classes

36
Q

Classes

A

Groups of jobs based on a set of rules for each class, such as amount of independent judgement, skill, physical effort, and so forth

Class usually contain similar jobs such as secretaries

37
Q

Grades

A

Groups of jobs based on a set of rules for each grade, where jobs are similar in difficulty but otherwise different.

Grades often contain dissimilar jobs, such as secretaries, firefighters, and mechanics

38
Q

grade/group description

A

Written document of the level of compensable factors required by jobs in each grade; used to combine similar jobs into grades or classes

39
Q

Point Method

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 value is calculated

Needed: necessary to have current job descriptions and job specifications based on a thorough job analysis

40
Q

Pay grade

A

comprises jobs of approximate equal value or importance, as determined by job evaluation

41
Q

wage/salary surveys

A

A survey aimed at determining prevailing wage rates

42
Q

An employer may use wage/salary surveys in three way

A

First, survey data are used to determine pay rates for benchmark jobs that serve as reference points or anchors for the employer’s pay scale, meaning that other jobs are then paid based on their relative worth compared to the benchmark jobs.

Second, an increasing number of positions are paid solely based on the marketplace (rather than relative to the firm’s benchmark jobs)

Finally, surveys also collect data on employee benefits, work–life programs, pay-for-performance plans, recognition plans, and so on to provide a basis on which to make decisions regarding other types of rewards.

43
Q

wage curve

.

A

A graphic description of the relationship between the value of the job and the average wage paid for this job

44
Q

Broadbanding

A

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

45
Q

What is the main purpose of doing a job evaluation with respect to total rewards?

Preamature Quiz Question

A

To determine the value of a job for internal equity

46
Q

There are a number of advantages to using a broadbanding pay system, such as greater flexibility in employee compensation and:

Preamature Quiz Question

A

facilitating less specialized, boundaryless jobs and organizations.

47
Q

Correcting Out-of-Line Rates

A

his means that the average pay for that job is currently too high or too low relative to other jobs in the firm

If a point falls well below the line, a pay raise for the job may be required. If the plot falls well above the wage line, pay cuts or a pay freeze may be required.

48
Q

Red circle pay rates

KNOW ME FOR MIDTERM

A

A rate of pay that is above the pay range maximum

One is to freeze the rate paid to employees in this grade until general salary increases bring the other jobs into line with it

A second alternative is to transfer or promote some or all of the employees involved to jobs for which they can legitimately be paid their current pay rates

49
Q

Pay-for-knowledge systems are known as

A

competency-based pay

skill-based pay

50
Q

Core competencies

A

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

such as “customer service orientation” for all hotel employees

51
Q

Functional competencies

A

are associated with a particular organizational function, such as “negotiation skills” for salespeople, or “safety orientation” for pilots

52
Q

Behavioural competencies

A

expected behaviours, such as “always walking a customer to the product they are looking for rather than pointing.”

53
Q

Developing a compensation plan to pay executive, managerial, and professional employees is similar in many respects to developing a plan for other ______

A

employees

54
Q

There are five elements in an executive/managerial compensation package:

A

salary, benefits, short-term incentives, long-term incentives, and perquisites.

55
Q

market-pricing approach

A

An approach usually limited to determining compensation for professional jobs based on values established for similar benchmark jobs in the market

56
Q

According to the textbook, blue-collar and clerical workers typically receive which of the following types of pay?

QUIZ QUESTION

A

Hourly or daily wages

57
Q

According to the textbook, which of the following do unions believe will be the best able to judge the relative value of a job?

QUIZ QUESTION

A

The workers themselves

58
Q

The argument that the way in which most compensation surveys are constructed, interpreted, and used leads almost invariably to a situation in which firms set higher wages than they otherwise might is reflective of which of the following terms?

QUIZ QUESTION

A

Upward bias

59
Q

What are “pay-for-knowledge” systems also known as when they are used for management and professional employees?

QUIZ QUESTION

A

Competency-based pay

60
Q

Which of the following components of equity theory specifically refers to the fairness of an employee’s pay compared with what his or her coworkers are earning for the same or very similar jobs within the company, based on each employee’s performance?

QUIZ QUESTION

A

Individual equity

61
Q

Julien and Bernard, friends in the same commerce program, find similar summer jobs at different banks at the end of their winter school terms. Julien learns that Bernard’s compensation is 11% more than what he is being paid. Julien feels that his employer provides unfair compensation and begins looking for a new job; what is this an example of?

QUIZ QUESTION

A

External equity

62
Q

When using a job evaluation method, such as the ranking method, which of the following is the eventual result of that approach?

QUIZ QUESTION

A

Next Best Guess Compensable factors

Do not select Job hierarchy

63
Q

The job evaluation committee typically includes several employees and has the important task of evaluating the worth of each job using which of the following?

QUIZ QUESTION

A

Compensable factors

64
Q

Fareena runs a small manufacturing company. A worker hurt his hand on a vertical grinding machine. Fareena filed the proper legal documents quickly so that the worker could receive benefits while recovering from his injury. Which type of legislation did Fareena adhere to?

QUIZ QUESTION

A

Workers compensation

65
Q

Pay-for-knowledge systems meet pay equity requirements in Canada.

QUIZ QUESTION

A

False

66
Q

According to the textbook, which of the following conducts five compensation surveys annually covering executive; management; professional, supervisory, and sales; information technology; and administrative and support positions?

QUIZ QUESTION

A

The Toronto Board of Trade

67
Q

The term “total rewards” refers only to the monetary components of compensation.

QUIZ QUESTION

A

FALSE

68
Q

According to the recent study conducted by Towers Watson referenced in the textbook, what is the most important factor in attracting employees to an organization?

QUIZ QUESTION

A

Competitive base pay

69
Q

An advantage of using pay ranges for each pay grade is that it allows for which of the following?

QUIZ QUESTION

A

Performance differences between employees within the same grade

70
Q

Which of the following refers to the creation of a compensation package that produces the employee behaviours that a company requires in order to achieve their competitive strategy?

QUIZ QUESTION

A

Aligned reward strategy

71
Q

Which of the following is mentioned in the textbook as a disadvantage associated with using the job classification/grading method in job evaluation?

QUIZ QUESTION

A

Considerable judgment is required in applying the class or grade descriptions.

72
Q

A pay grade comprises jobs of varying value and importance to the company.

QUIZ QUESTION

A

FALSE

73
Q

Victoria has been a contract worker for a construction company and has just been offered a full-time, non-contract position. She will now receive additional benefits, such as employer-paid insurance and vacation; what are these components of employee compensation called?

QUIZ QUESTION

A

Indirect financial payments

74
Q

According to the textbook, which of the following are the most popular job evaluation methods that can be applied to compensation decisions?

QUIZ QUESTION

A

The classification and point methods

75
Q

Which of the following is the term used to describe the graphical depiction of the relationship between the value of the job and the average wage paid for that job?

QUIZ QUESTION

A

Wage curve

76
Q

Wages, salaries, incentives, commissions, and bonuses are known as which of the following?

QUIZ QUESTION

A

Direct financial payments

77
Q

Which job evaluation method identifies compensable factors in a job as well as the degree to which each of these factors is present in the job and then calculates a value for each job?

QUIZ QUESTION

A

Point method

78
Q

An advantage of using pay ranges for each pay grade is that it allows for which of the following?

QUIZ QUESTION

A

Performance differences between employees within the same grade

79
Q

What is the term used to describe a diverse group established to ensure the fair and comprehensive representation of the nature and requirements of a job in question for the purposes of determining compensation?

QUIZ QUESTION

A

Job evaluation committee

80
Q

Justin used to assemble 18 desks per hour during his shift for the furniture company he works for; then he found out that other workers who only assemble 13 to 15 desks per hour were receiving the same compensation as he was. Justin now assembles 14 desks per hour. Which of the following would help to explain Justin’s behaviour?

QUIZ QUESTION

A

Equity theory

81
Q

The purpose of pay equity legislation is to eliminate discrimination based on age and culture.

QUIZ QUESTION

A

FALSE

82
Q

Underpaid employees should have their wages raised to which of the following?

QUIZ QUESTION

A

The minimum of the rate range for their pay grade

83
Q

Which of the following is another way of categorizing jobs when undertaking the job classification/grading method, other than using class descriptions and placing jobs into classes based on their correspondence to these descriptions?

QUIZ QUESTION

A

Draw up a set of classifying rules for each class and then categorize the jobs according to these rules.

MGMT 411: Human Resource Management (17 decks)

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