Chapter 9 - Direct Financial Compensation (Monetary Compensation) Flashcards
Total Compensation
Both the intrinsic and extrinsic rewards employees receive for performing their jobs
Job Structure
Management techniques used to determine a job’s worth through job analysis, job descriptions, and job evaluations.
Labor Market
Potential employees located within a geographical area from which employees are recruited
Cost-of-Living Differences
Cost -of-living differences between geographic locations may account for variation in compensation for similar jobs
Spillover Effect
Non-union companies’ offer of similar compensation unionized companies with the goal of reducing the likelihood that nonunion workforces will seek union representation
Interindustry wage differentials
Variations in wages paid to workers in the same occupation, location, and time, but employed in different industries
Nonexempt Employees
Employees that required to be paid overtime.
Exempt Employees
Employees that are not required to be paid overtime. Usually categorized as executive, administrative, professional, or outside salesperson.
Cost-of-Living Adjustment
Escalator clause in a labor agreement that automatically increases wages as the US Bureau of Labor Statistics’ cost-of-living index rises
Real Hourly Compensation
Measure purchasing power of a dollar
Nominal Hourly Compensation
The face value of a dollar
Incentive Pay
Pay based on quotas and such. Think of Lethal Company
Point Method
Job evaluation method in which the raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job’s relative worth
Factor Comparison Method
Job evaluation method that
assumes there are five universal
factors consisting of mental
requirements, skills, physical
requirements, responsibilities, and
working conditions; the evaluator
makes decisions on these factors
independently.
Point Method
Job evaluation method in which the raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job’s relative worth.
Pay Level Compensation Policies
Determine whether the company will be a pay leader (market lead), a pay follower (market lag), or assume an average position (market match) in the labor market
Broadbanding
Compensation technique that collapses many pay grades (salary grades) into a few wide bands to improve organizational effectiveness.
Two-Tier Wage System
A wage structure where newly hired workers are paid less than current employees for performing the same or similar jobs.
Claw-back Policy
Allows the company to recover compensation if subsequent review indicates that payments were not calculated accurately or performance goals were not met
Gainsharing
A plant-wide program that distributes compensation based on improvements in a company’s profitability. Employee are involved in identifying way to cut costs/increase sales and get a share of “gains”
Profit Sharing Plans
Organization-Wide Programs that distribute compensation based on some established formula centered around a company’s profitability
