Chapter 9 Flashcards
What is Direct Compensation?
Wages and salaries, incentives, bonuses and commissions
What is Indirect compensation?
Benefits, retirement plans, insurance, supplied by employers
What is non-financial compensation?
Employee recognition programs, rewarding job, flexible hours, work environment
What are total rewards?
Capture all three components, including career advancement. work-life balance, job security
What is Strategic Compensation?
It links compensation to company mission, goals, values and culture.
What are goals of Strategic compensation?
a. To reward employee’s past performance
b. Remain competitive
c. Maintain Salary equity
d. mesh employee future performance with organizational goals
e. to control the compensation budget
f. attract new skilled employees
g. to reduce unnecessary turnover
What is Pay Equity?
Employee’s perception that pay is equal to the work performed
Describe Equity Theory.
Achieved when their input/output ratio equals input/output of referenced others. (Feelings of underpaid, overpaid or paid fairly)
One theory of motivation is based on the proposition that employees exert greater effort if they have reason to anticipate it will result in valued award. What is this theory?
Expectancy theory.
Questions asked of expectancy theory:
- Is task worth doing?
- Will I receive the rewards?
- Will I be able to accomplish the task?
What are the Internal Factors affecting the pay mix?
- Compensation Strategy
- Value of Job
- Employee relative worth
- Employer’s ability to pay
What are the External Factors affecting the pay mix?
- Conditions of labour market
- Area wage rates
- Cost of living
- Collective bargaining
- Legal Requirements
What is Collective Bargaining?
- Any changes to pay and hours of work must be negotiated with union
- Impact of CB agreement extends beyond the segment of labour force that is unionized
What does the Cost of Living include?
Real wages, Consumer Price Index and Escalator Clauses
Wages increase larger than CPI, strengthening purchasing power
Real wages