Chapter 11: Strategic Pay Plans

Question 1

Employee Compensation

Answer 1

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

Question 2

Two main Compnents

Answer 2

Direct Financial payments (wages, salaries, incentives, commissions, and bonuses)

indirect financial payments (financial benefits like employer-paid insurance and vacations )

Question 3

5 Components of Total Employment rewards

Answer 3

1. Compensation
2. Benefits
3. Work-life programs
4. Performance and recognition
5. Development and career opportunities

Question 4

Impact of rewards (purpose

Answer 4

purposes of rewards are to attract, retain, motivate, and engage employees

Question 5

Engagment

Answer 5

refers to a positive emotional connection to the employer and a clear understanding of the strategic significance of the job, which results in discretionary effort on the part of the employee

Question 6

basic condsiderations in determining pay rates

Answer 6

1. Legal considerations
2. union influences
3. compensation policies
4. equity and its impact on pay rates

Question 7

legal considerations

Answer 7

• employment/labour standards act (minimum pay, hours, overtime pay, statutory holidays, termination pay, record of pay information. )
• pay equity act
• Human Rights Act
• Canada/Quebec Pension Plan
• other legislation (worker’s comp., EI)

Question 8

Establishing pay rates

Answer 8

1. Job evaluation
2. Conduct wage/salary survey
3. Combine job evaluation and salary survey to determine pay

Question 9

1. Job Evaluation

Answer 9

• a systematic comparison to determine relative worth of jobs within a firm
• • benchmark job
• • compensatable factors

Question 10

benchmark job

Answer 10

critical to operations or commonly found in other organizations

Question 11

2. Conduct a wage /salary survey

Answer 11

• aimed at determining prevailing wage rates
  
  • determine rates for benchmark jobs
  • determine market rates for jobs
  • collect data on benefits, recognition programs, etc.
• avoid upward bias
• informal surveys good for easily recognized jobs
• formal surveys are most comprehensive

Question 12

Combine Jo Evaluation and Salary Survey information

Answer 12

• Wage Curve

- Pay rages

Question 13

Wage curve

Answer 13

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

Question 14

pay ranges

Answer 14

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

Question 15

Broadbanding

Answer 15

reducing the number of salary grades and ranges into just a few wide levels or “bands”, each of which then contains a relatively wider range of jobs and salary levels
-advantage: greater flexibility in employee compensation

Question 16

Pay for knowledge

Answer 16

• competency-based pay (mangers, professionals )
• skill-based pay (manufacturing employees)
• pay for knowledge program should include:
  - competencies/skills directly important to job performance
  - new competencies that replace comptencies that are no longer important
  - on the job training, not “in the classroom”

Question 17

Pay Equity

Answer 17

• wage gap has narrowed by remains at 30%
• gap attributed to systemic discrimination
• aim is to provide equal pay to male and female-dominated job classes of equal value
• must ensure no gender bias in job evaluation
• long-term solution is to eliminate male and female-dominated jobs

Question 18

pay equity

Answer 18

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

Question 19

Equity Theory

Answer 19

a theory suggesting that people are motivated to maintain a balance between what they perceive as their contributions and their rewards.

Question 20

External Equity

Answer 20

An employee ­perception of pay as fair given the pay rates in other organizations.

Question 21

Internal equity

Answer 21

An employee ­perception of pay as fair given the pay rates of others in the organization.

Question 22

Individual Equity

Answer 22

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.

Question 23

Procedural Equity

Answer 23

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

Question 24

compenable factor

Answer 24

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

Question 25

Job Evaluation committee

Answer 25

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

Question 26

classification/grading method

Answer 26

a method for categorizing jobs into groups

Question 27

grades

Answer 27

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, mechanics, and firefighters.

Question 28

classes

Answer 28

Groups of jobs based on a set of rules for each class, such as amount of independent judgment, skill, physical effort, and so forth. Classes usually contain similar jobs—such as all secretaries.

Question 29

grade/group description

Answer 29

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

Question 30

Point method

Answer 30

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.

Question 31

pay grade

Answer 31

comprises jobs of approximately equal value

Question 32

red circle pay rate

Answer 32

A rate of pay that is above the pay range maximum.

Question 33

Market pricing approach

Answer 33

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