Chapter 11 - Total Rewards and Compensation Flashcards
Define “Total Rewards”.
-Monetary and non-monetary rewards provided by companies to attract, motivate, and retain employees.
Page 374
Define “Tangible Rewards”.
-Elements of compensation that can be quantitatively measured and compared between different organizations.
Page 375
Define “Intangible”.
-Elements of compensation that cannot be easily measured or quantified.
Page 375
Define “Base Pay”.
-Basic compensation that an employee receives, often as an hourly wage or salary.
Page 376
Define “Wages”.
-Payments calculated directly on the basis of time worked by employees.
Page 376
Define “Salary”.
-Consistent payments made each period regardless of the number of hours worked.
Page 376
Define “Variable Pay”.
-Compensation linked directly to individual, team, or organizational performance.
Page 376
Define “Benefit”.
-Indirect reward given to an employee or group of employees as part of membership in the organization, regardless of performance.
Pages 376, 414
Define “Exempt Employees”.
-Employees who hold positions for which they are not paid overtime.
Page 377
Define “Nonexempt Employees”.
-Employees who must be paid overtime.
Page 377
Define “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 geographic area.
Page 381
Define “Garnishment”.
-A court order that directs an employer to set aside a portion of an employee’s wages to pay a debt owed to a creditor.
Page 381
Define “Entitlement Philosophy”.
-Assumes that individuals who have worked another year with the company are entitled to pay increases with little regard for performance differences.
Page 382
Define “Pay-for-Performance”.
-Assumes that compensation decisions reflect performance differences.
Page 382
Define “Expectancy Theory”.
-States that an employee’s motivation is based on the probability that his/her efforts will lead to an expected level of performance that is linked to a valued reward.
Page 383
Define “Equity Theory”.
-States that individuals judge fairness (equity) in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others.
Page 383
Define “Competency-Based Pay”.
-Rewards individuals for the capabilities they demonstrate and acquire.
Page 388
Define “Job Evaluation”.
-Forma, systematic means to determine the relative worth of jobs within an organization.
Page 389
Define “Compensable Factor”.
-Job dimension commonly present throughout a group of jobs within an organization that can be rated for each job.
Page 389
Define “Market Pricing”.
-Uses market pay data to identify the relative value of jobs based on what other employers pay for similar jobs.
Page 390
Define “Benchmark Jobs”.
-Jobs that are found in many other organizations that can be used for the purpose of comparison.
Page 391
Define “Pay Survey”.
-Collection of data on compensation rates for workers performing similar jobs in other organizations.
Page 391
Define “Pay Grades”.
-Grouping of individual jobs that have approximately the same value to the organization.
Page 392
Define “Market Line”.
-Graph line that shows the relationship between job value as determined by job evaluation points and job value as determined by pay survey rates.
Page 392
Define “Market Banding”.
-Grouping jobs into pay grades based on similar market survey amounts.
Page 392
Define “Broadbanding”.
-Practice of using fewer pay grades with much broader ranges than in traditional compensation systems.
Page 393
Define “Compa-Ratio”.
-Pay level divided by the midpoint of the pay range.
Page 394
Define “Red-Circled Employee”.
-Incumbent who is paid above the range set for a job.
Page 394
Define “Green-Circled Employee”.
-Incumbent who is paid below the range set for a job.
Page 394
Define “Pay Compression”.
-Occurs when the pay differences among individuals with different levels of experience and performance become small.
Page 395
Define “Salary Inversion”.
-Occurs when the pay given to new hires is higher than the compensation provided to more senior employees.
Page 395
Define “Seniority”.
-Time spent in an organization or working in a particular job.
Page 396
Define “Lump-Sum Increase”.
-One-time payment of all or part of a yearly pay increase.
Page 397
Define “Incentives”.
-Tangible rewards that encourage or motivate action.
Page 398
Define “Extrinsic Rewards”.
-Rewards that are external to the individual.
Page 398
Define “Intrinsic Rewards”.
-Rewards that are internal to the individual.
Page 399
Define “Line of Sight”.
-Idea that employees can clearly see how their actions and decisions lead to desired outcomes.
Page 400
Define “Critical Success Factors”.
-Variables that have a strong influence on the results of the organization.
Page 400
Define “Key Performance Indicators (KPIs)”.
-Scorecard measures that tell managers how well the organization is performing relative to critical success factors.
Page 400
Define “Piece-Rate System”.
-Pay system in which wages are determined by multiplying the number of units produced by the piece rate for one unit.
Page 401
Define “Bonus”.
-One-time payment that does not become part of the employee’s base pay.
Page 402
Define “Non-monetary Incentives”.
-Rewards that are not given in cash.
Page 402
Define “Free Rider”.
-A member of the group who contributes little.
Page 403
Define “Gainsharing”.
-System of sharing with employees greater than expected gains in profits and/or productivity.
Page 404
Define “Profit Sharing”.
-System to distribute a portion of an organization’s profits to employees.
Page 404
Define “Stock Option Plan”.
-Gives employees the right to purchase a fixed number of shares of company stock at a specified price for a limited period of time.
Page 404
Define “Employee Stock Ownership Plan (ESOP)”.
-Designed to give employees significant stock ownership in their organizations.
Page 404
Define “Commission”.
-A percentage of the revenue generated by sales that is given to an agent or salesperson.
Page 405
Define “Clawback Provision”.
-Provision which permits the organization to require an employee to return rewards obtained through unethical or negligent actions.
Page 405
