Chapter 2: compensation Flashcards
What is compensation
total of all rewards provided to employees
in return for their services
What are the components of compensation?
financial
non-financial
What are the different types of direct financial incentive?
individual
group or team
company-wide
What are examples of the individual-based incentive plan?
merit pay
piecework plan
commission
What are examples of company-wide incentive programme?
profit sharing
gain sharing
What are the profit-sharing plans?
current plan
deffered plan
combination plan
What are the gainsharing plans?
scanlon
improshare
What are the types of indirect financial compensation?
legally required/mandatory/compulsory
voluntary/discretionary
flexible/cafeteria benefits scheme
What are examples of legally required indirect financial compensation?
CPF (Central Provident Fund)
WICA (Work injury compensation act)
Employment Act
WSJA (Workplace safety and health act)
What are examples of voluntary discretionary benefits?
payment for time not worked healthcare life insurance employee services premium pay
What are the purposes of all kinds of compensation
attract
retain
motivate employees
What does direct financial compensation consist of
wages salaries commissions bonuses incentives
Where does non-financial compensation come from?
satisfaction from job
psychological environment
physical environment
What are the two ways companies can choose to base their compensation on?
seniority
performance
For a compensation to motivate an employee, what must incentive be based on
performance
What is performance-related compensation that increase productivity known as
incentive compensation
When a company knows how to motivate employees to be more productive, what does it gain
competitive advantage
the composition of the workforce changes with pay for performance because
high performers paid for, more motivated
below-average discouraged
buck up or leave
What is merit pay?
absolute sum of money
added to base salary
Who receives merit pay
deserving employees with good performance
What is the problem with merit pay
treated as cost of living allowance
expect regular and frequent
When do company’s hold back on merit pay
bad year
What is set and established in a piecework plan?
minimal hourly wage rate
meeting a pre-established output
What is the rate called when employee exceeds the standard
differential piece rate
What is the advantage of using a piecework plan
simple and easily understood
What is the problem with piecework plan
change in payscale, new piece rate
work does not come in neat piecemeal manner
cannot attribute output to an individual
What kind of personnel work on a commission basis?
sales
What is a sales commission?
% of sales price
added to base wage
Overall, what do individual incentives create that motivates employees
clear performance objectives
If individual incentives fail, what will happen
dysfunctional competition
encourage inflate perspectives
reduced interaction and communication
compromise on safety and quality
How are employees paid in a group incentive plan
for theircombined performance
When should group incentive plan be implemented?
tasks are interdependent
requires cooperation and teamwork
What is the disadvantage of team incentive plan
a single ‘freeloader’ can jeopardise the group
peer pressure- conform or leave
What good things does team incentive plan bring about
teamwork
encourage peers to become counsellers watches
helping hand
What does profit-sharing distribute?
predetermined percentage of company’s profits
What do employees get in the current plan
cash
stock
When can employees get their incentives in the deffered profit sharing plan
retirement
termination
death
Where does the fund go to in defferred profit sharing plan
invested in securities
How do employees get their share of profit in deffered profit sharing
irrevocable trust of company
credited to employee accounts
What does the combination plan do for employees?
receive part of profits on current basis
defer the rest
What are the positive effects of profit-sharing
efficiency
lower cost
What is the negative effect of profit-sharing
do not know how they helped generate profit dilution effect (entitlement, expect and depend. less ownership)
What does gain sharing aim to do with employees
bind them with company productivity
What is the incentive based on gainsharing?
improved company performance
How is gainsharing different from profit sharing?
% vs payment
What does the scanlon plan reward employees for?
savings in labour costs
In the scanlon plan, savings in labour costs arise from
suggestions and ideas
What are the platforms used for generating ideas to improve productivity?
QCC
WIT
suggestion scheme
What does improshare use to determine staff bonuses?
mathematical formula
What are the goals of indirect financial compensation?
attract keep employees
Employee benefits are membership-based and there not related to productivity and does not serve as a direct
motivation
What are the purposes of employee benefits?
increase recruitment success rate
improved morale
enhance quality of work life
improve overall productivity
minimise union-management conflict
gain favourable competitive position in industry
Where do contributions for CPF come from?
employee
employer
What kind of benefit scheme is CPF under?
retirement
What does WICA provide payment for?
death or accident at work
workplace diseases
Who receives the compensation from WICA
injured workman
or dependents
When is WICA void?
injury or death out of employement
injury caused when drunk or drugged
What is the purpose of the employement act
basic rights of employees
duties of employers
What are some things spelled out in the employment act?
annual leave entitlement overtime pay rate hours of work rest days maternity leave
What is the aim of WSHA
cultivate good safety habits
strong safety culture
How does WSHA decrease the risks
make stakeholders accountable
What are the examples of payment for time not worked
paid vacations paid sick leave sabbaticals compassionate marriage rest periods
What do paid vacations help with employees
rejuvenated
rest
What does paid sick leave do for employees?
too sick to report for work
receive their pay
What are sabbaticals
temporary leave of absence from organisation
at reduced pay
Healthcare benefits are the most expensive form of indirect financial compensation because
ageing population
growing demand for medical care
expensive technology
inefficient administrative processes
Who receives the benefit of life insurance
employee’s family
in death
Who pays for life insurance
employee pay part of premium
What benefits does employee services encompass
company subsidised food loans for housing renovation car club membership sports and wellness
What kind of employees get premium pay
work long hours
dangerous conditions
What are examples of premium pay
shift allowances
risk allowance/ hazard pay
What does a flexible/cafeteria benefits scheme allow employees to do?
choose from a range of available benefits
What is the purpose of flexible benefits scheme
employees see the cost and value of each benefit/ total benefit programme
improvement in QWL
productivity enhanced (loyalty and motivation)
What are the limitations of benefits package?
control cost of benefits against the expectation of employees
limited motivation to increase motivation
What does non-financial compensation use to motivate people?
intrinsic value
What are examples of non-financial compensation
job content
job environment
work flexibility
What are components of the job environment
sound policies competent supervision good working colleagues status symbols comfortable working conditions
What does work flexibility give employees
greater control over their jobs
What are examples of work flexibility
compressed workweek
flexitime
job sharing
telecommuting
