Chapter 28 Flashcards
What is pay
Pay is a statement an employee’s worth by an employer
What is employee compensation
Employee compensation refers to all forms of pay or rewards going to employees and arising from their employment.
What are 2 parts of employee compensation
- Direct financial payment (cash)
2. Indirect financial payment (car, house)
What is piecework
Pay is tied directly to what the worker produces
What is wages
Wages generally refer to hourly compensation paid to operating employees; the basis for wages is time.
What is salary
Salary is income that is paid on individual not on the basis of time, but on the basis of performance.
What is total compensation structure
It is based on 2 parts.
- Extrinsic rewards
- Intrinsic rewards
What are Extrinsic rewards
1- Monetary rewards (salary, bonus, commission, hourly wages, pay incentives)
2. Benefits (Insurance, retirements, paid vacations, food services, credit union and recreation)
What are intrinsic rewards
- Recognition
- Promotion opportunities
- Working conditions
- Interesting work
What are consequences of pay dissatisfaction
- Performance
- Strikes
- Grievances
- Search of other jobs
- Absenteeism
- Turn over
- Job dissatisfaction
- Lower attractiveness of job
- Psychological withdrawal
- Dispensary visits
- Poor mental health
What is turn over
How many people leaving the organization
What is compensation system
A total reward system includes both monetary and non monetary compensation.
What are 3 phases of compensation management
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.
What are big there objectives for effective compensation system
- Attract qualified employment applicants
- Retain qualified employees
- Motivate employee behavior toward organization objectives.
What are other objectives for effective compensation system
- 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
What are the factors that tell how much company should pay
- Prevailing wages in market
- Ability to pay
- Cost of living
- Productivity
- Bargaining power
- Job requirement
- Government laws
- Equity factors
What is equity theory in terms of pay
Pay should be based upon contributions made by the employees. Higher efforts should be rewarded with higher pay.
What are 3 options in equity in terms of pay
- Under-reward
- Equity
- Over-reward
What are conditions necessary for perception of pay fairness
- Internal consistency
- External competitiveness
- Employees contribution
What is the role of line manager in compensation decision
- Evaluate the worth of job
- Negotiate starting salary
- Recommend pay raises and promotions
- Notify HRM department of job changes
What is the role of HR department in compensation decision
- 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
