Chapter 28

Question 1

What is pay

Answer 1

Pay is a statement an employee’s worth by an employer

Question 2

What is employee compensation

Answer 2

Employee compensation refers to all forms of pay or rewards going to employees and arising from their employment.

Question 3

What are 2 parts of employee compensation

Answer 3

1. Direct financial payment (cash)

2. Indirect financial payment (car, house)

Question 4

What is piecework

Answer 4

Pay is tied directly to what the worker produces

Question 5

What is wages

Answer 5

Wages generally refer to hourly compensation paid to operating employees; the basis for wages is time.

Question 6

What is salary

Answer 6

Salary is income that is paid on individual not on the basis of time, but on the basis of performance.

Question 7

What is total compensation structure

Answer 7

It is based on 2 parts.

1. Extrinsic rewards
2. Intrinsic rewards

Question 8

What are Extrinsic rewards

Answer 8

1- Monetary rewards (salary, bonus, commission, hourly wages, pay incentives)
2. Benefits (Insurance, retirements, paid vacations, food services, credit union and recreation)

Question 9

What are intrinsic rewards

Answer 9

• Recognition
• Promotion opportunities
• Working conditions
• Interesting work

Question 10

What are consequences of pay dissatisfaction

Answer 10

• Performance
• Strikes
• Grievances
• Search of other jobs
• Absenteeism
• Turn over
• Job dissatisfaction
• Lower attractiveness of job
• Psychological withdrawal
• Dispensary visits
• Poor mental health

Question 11

What is turn over

Answer 11

How many people leaving the organization

Question 12

What is compensation system

Answer 12

A total reward system includes both monetary and non monetary compensation.

Question 13

What are 3 phases of compensation management

Answer 13

Phase 1: Evaluate every job to ensure internal equity on each job’s relative worth.
Phase 2: Conduct wage and salary surveys to find the rates paid in labor market.
Phase 3: Price each job to determine the rate of pay based.

Question 14

What are big there objectives for effective compensation system

Answer 14

1. Attract qualified employment applicants
2. Retain qualified employees
3. Motivate employee behavior toward organization objectives.

Question 15

What are other objectives for effective compensation system

Answer 15

• Ensure equity
• Reward desired behavior
• Control costs
• Comply with legal regulations
• Facilitate understanding
• Achieve external competitiveness
• Support organization priorities
• Strategy and goals
• Culture and values
• Easy to administer

Question 16

What are the factors that tell how much company should pay

Answer 16

• Prevailing wages in market
• Ability to pay
• Cost of living
• Productivity
• Bargaining power
• Job requirement
• Government laws
• Equity factors

Question 17

What is equity theory in terms of pay

Answer 17

Pay should be based upon contributions made by the employees. Higher efforts should be rewarded with higher pay.

Question 18

What are 3 options in equity in terms of pay

Answer 18

1. Under-reward
2. Equity
3. Over-reward

Question 19

What are conditions necessary for perception of pay fairness

Answer 19

• Internal consistency
• External competitiveness
• Employees contribution

Question 20

What is the role of line manager in compensation decision

Answer 20

• Evaluate the worth of job
• Negotiate starting salary
• Recommend pay raises and promotions
• Notify HRM department of job changes

Question 21

What is the role of HR department in compensation decision

Answer 21

• Establish rates of pay
• Oversee job evaluation process
• Conduct salary survey
• Establish procedures for administering pay plans
• Ensure compliance with anti discrimination laws
• Communicate benefits information