Chapter 9 Flashcards
Pay-For-Performance Standard
A standard by which managers tie compensation to employee effort and performance.
Pay Equity
An employee’s perception that compensation received is equal to the value of the work performed.
Hourly Work
Work paid on an hourly basis.
Piecework
Work paid according to the number of units produced.
Nonexempt Employees
Employees covered by the overtime provisions of the Fair Labor Standards Act.
Exempt Employees
Employees not covered by the overtime provisions of the Fair Labor Standards Act.
Consumer Price Index (CPI)
A measure of the average change in prices over time in a fixed “market basket” of goods and services.
Escalator Clauses
Clauses in labor agreements that provide for quarterly cost-of-living adjustments in wages, basing the adjustments on changes in the consumer price index.
Real Wages
Wage increases larger than rises in the consumer price index, that is, the real earning power of wages.
Job Evaluation
A systematic process of determining the relative worth of jobs to establish which jobs should be paid more than others within an organization.
Job Ranking System
The simplest and oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth.
Job Classification System
A system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades.
Point System
A quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it.
Work Valuation
A job evaluation system that seeks to measure a job’s worth through its value to the organization.
Hay Profile Method
A job evaluation technique using three factors – knowledge, mental activity, and accountability – to evaluate executive and managerial positions.
Wage And Salary Survey
A survey of the wages paid to employees of other employees in the surveying organization’s relevant labor market.
Wage Curve
A curve in a scattergram representing the relationship between relative worth of jobs and pay rates.
Pay Grades
Groups of jobs within a particular class that are paid the same rate.
Red Circle Rates
Payment rates above the maximum of the pay range.
Competence-Based Pay
Pay based on an employee’s skill level, variety of skills possessed, or increased job knowledge.
Broadbanding
Collapses many traditional salary grades into a few wide salary bands.
Pay Rate Compensation
Compensation of pay between new and experienced employees caused by the higher starting salaries of new employees, also the differential between hourly workers and their managers.
Compensation Scorecard
Displays the results for all the measures that a company uses to monitor and compare compensation among internal departments or units.
Compensation Components
Indirect: Benefits
Direct: Wages/Salary, Incentives, Bonuses, Commissions
Nonfinancial: Recognition programs, Rewarding work, Organizational support, Work environment, Flexibility
