Chapter 8 Flashcards
Total rewards
approach to compensating and rewarding employees
-Creates a value proposition for current and prospective employees
-align rewards with the business strategy
Total compensation
-direct: financial rewards employees receive as part of their employment
-indirect: benefits and services employees receive
Decisions about pay base
-legal requirements (equal pay for equal work, minimum wage, overtime pay)
-market forces (product markets and labor markets)
-organization’s goal (high quality workforce, equity and fairness)
Pay level decision
-pay rates
-pay grades
- pay ranges
-pay differentials
pay structure
helps the organization meet goals related to employee motivation, cost control, and ability to attract and retain
-Job structure—the relative pay for different jobs within the organization
-Pay level—average amount the organization pays for a particular jo
legal requirements
-human rights legislation
-employment/labor standards
-pay equity
-pay transparency
human rights legislation
differences in pay must link to job responsibilities or performance
employment/labor standards
laws provide minimum requirements
pay equity
attempts to address the wage gap between female and male dominated jobs
pay transparency
-employers have several requirements
pay level
-range in which organisations make decisions
-gathering information about market pay (benchmarking: compare practices to competitors)
-pay fairness (based on equity theory)
job structure: relative value of jobs
-Job evaluation: measuring the relative internal worth of the organization’s jobs
-compensable factors: experience, education, complexity, working conditions, responsibility
pay structure
-hourly wage
-piecework rate
-salary
pay rate
Rates of key jobs can be based on market research.
-Reflects the pay structure in the market, which does not always match rates in the organization.
pay grade
Sets of jobs having similar worth or content grouped together to establish rates of pay.
pay range
Set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job or a job within a particular pay grade.
alternatives to job-based pay
- broadbanding: Pay structure that consolidates pay grades into a few “broad bands”. Reduces promotion opportunities but provides flexibility for lateral career moves
-Competency-based pay system (skill-based pay system): Sets pay according to employees’ level of skill or knowledge.
compa-ratio
ratio of average pay to the midpoint of pay range
incentive pay
Forms of pay designed to energize, direct, or control employees’ behavior.
types of incentive pay
-linked to individual performance
-linked to team performance
-linked to organisational performance
pay for individual performance
-piecework rates
-standard hour plans
-merit pay
-performance bonuses
-commissions
pay for team performance
-gainsharing
-team bonuses and awards
pay for organisational performance
-profit sharing
-stock options
-employee stock ownership plans
employee benefits
-Compensation in forms other than cash (indirect compensation)
-Contribute to attracting, retaining & motivating
what benefits are provided
-legally required (CPP, employment insurance, workers compensation)
-options (paid leave, benefits, retirement plans)
retirement plans
-phased retirement (gradual transition into full retirement9
-defined benefit plans
-defined contribution plans
communicating total rewards
-Comprehensive communication strategy is needed so employees can understand the total value of their rewards
-Managers play a significant role in communication
