Compensation Flashcards
147 - 185 Group Commissions
A performance pay plan in which the commissions of a group of sales workers are pooled and then shared out equally among members of the group.
424 - 439 Fixed Benefit System
An employee benefit plan that provides a standard set of benefits to all those covered by the plan.
291 - 321 Pay Range
The minimum and maximum pay rates (in dollars) for jobs in a particular pay grade.
147 - 185 Group Piece Rates
A performance pay plan in which group members get paid based on the number of completed products produced by the group.
3 - 103 Craft Technology
Few exceptions occur in the production process, but there is no standardized way to deal with them when they do occur.
147 - 185 Differential Piece Rate
A lower sum of money per piece is paid if employee production does not meet the production standard, and then is paid once the production standard is met.
391 - 415 Phantom Equity Plan
A plan that helps retain key employees by providing rewards based on the stock performance of a portfolio of promising new high-tech firms.
3 - 103 High-involvement Strategy
Assumes that work can be instrinsically motivating if the organization is structured properly.
3 - 103 Low-cost Business Strategy
A business strategy that depends on providing low-cost products or services to a broad range of customers.
352 - 379 Graphic Rating Scale
An appraisal method in which appraisers use a numerical scale to rate employees on a series of characteristics.
352 - 379 Paired Comparison Method
Determines the rank order of all employees in a unit by comparing each employee with each of the other employees in the unit.
147 - 185 Leverage Selling
Selling new products to existing customers.
424 - 439 Defined Benefit Plans
Pension plans that provide retirement income based on a proportion of the employee’s pay at the time of retirement.
3 - 103 Organizational Commitment
The strength of the individual’s attachment to his or her organization.
256 - 280 Proportional Value Method
Establishes pay equity where no comparator male job class exists by extrapolating a hypothetical male comparator job class based on other male job classes.
3 - 103 Task Identity
The extent to which a worker performs a complete cycle of job activities.
194 - 245 Product/Services Market Constraints
Constraints on compensation strategy caused by the nature of the product or service market in which the firm operates.
107 - 143 Market Pricing
Establishing base pay by determining the average amount of pay other employers are offering for a given job.
3 - 103 Extrinsic Rewards
Factors that satisfy basic human needs for survival and security, as well as social needs and need for recognition.
256 - 280 Job Descriptions
A summary of the duties, responsibilities, and reporting relationships pertaining to a particular job.
424 - 439 Health Care Spending Account
A tax-favoured employee benefit that allows employees to use employer-provided health care spending credits to purchase a wide array of health care services.
107 - 143 Skill Certification
The testing process that determines whether an individual has mastered a given skill block and should be granted the pay raise associated with that skill block.
3 - 103 Routine Technology
Few exceptions occur during the production process, and those exceptions that do occur can be dealt with in a standardized way.
147 - 185 Straight Piece Rate
The same specified sum of money is paid for each piece produced or processed, regardless of how many pieces are produced or processed.
291 - 321 Correlation Coefficient
A statistic that measures the extent to which plots of two variables on a graph fall in a straight line.
291 - 321 Equal Interval Approach
Method to establish pay grade widths, in which the point spreads are equal for all pay grades.
462 - 485 Spiral Career Paths
Career advancement marked by a combination of sideways and vertical progression.
194 - 245 Job Sharing
Two workers who share on full-time permanent job.
3 - 103 Focused Low-cost Business Strategy
A business strategy that depends on providing low-cost products or services to a narrow range of customers.
3 - 103 Optimal Rewards System
The reward system that adds the most value to the organization, after considering all its costs.
3 - 103 Psychological Contract
Expectations about the rewards offered by a given job and the contributions necessary to perform the job.
147 - 185 Straight Commission
Pay that is geared only to the volume of sales or transactions, with no base pay component.
3 - 103 Process Technology
Manufacturing a technology that produces a single product in a continuous flow.
147 - 185 Combination Profit-sharing Plan
A plan that combines the current distribution and deferred profit sharing plans by paying some of the profit-sharing bonus on a current (cash) basis and deferring the remainder.
391 - 415 Family of Measures Plan
A gain-sharing plan that uses a variety of measures to determine the extent to which a bonus payout is justified.
462 - 485 Compensation Cost Ratio
The ratio of total compensation costs to total costs or to revenues.
3 - 103 Skill Variety
The variety of skills required for task completion.
3 - 103 Differentiator Business Strategy
A business strategy that depends on providing unique products or services to a broad range of customers.
3 - 103 Relative Deprivation
Employees experience dissatisfaction under 6 conditions: 1) Discrepency between outcome they want and what they actually receive 2) Their comparison “other” received more than what they do 3) Past experience has led them to expect more than they now receive 4) Expectations for achieving better outcomes are low 5) They feel they are entitled to more 6) The absolve themselves of personal responsibility for the lack of better outcomes.
147 - 185 Current Distribution Profit-sharing Plan
A profit-sharing plan that distributes the profit0sharing bonus to employees in the form of cash or shares, at least annually.
391 - 415 Share Appreciation Rights
A plan through which employees are awarded shares in their employer at no cost to themselves if the price of employer shares rises during a specified period.
194 - 245 Employment Standards Legislation
Legislation that sets minimum standards for pay and other conditions of employment.
256 - 280 Proxy Comparison Method
Established pay equity in public sector organizations where neither the job-to-job method nor the proportional value method can be used.
352 - 379 Forced Distribution Method
A performance appraisal method that stipulates the distribution of employees across the performance categories.
291 - 321 Aging the Data
The process of adjusting compensation data to bring it up to date with the time period in which the new compensation will take effect.
291 - 321 Equal Increase Approach
Method to establish pay grade sizes, in which each pay grade increases in width by a constant number of points from the preceding pay grade.
291 - 321 Base Pay Structure
The structure of pay grades and pay ranges, along with the criteria for movement within pay ranges, that applies to base pay.
3 - 103 Task Behaviour
Occurs when employees perform the tasks that have been assigned to them.
291 - 321 Pay Grade
A grouping of jobs of similar value to the organization, typically grouped by point totals.
107 - 143 Skill-based Pay (SBP)
Pay that is based on the specific skills and capabilities of individual employees, rather than on the specific tasks they are carrying out; usually applied to operational-level employees.
291 - 321 Compa Ratio
A measure of the distribution of employees within their pay range calculated by dividing the mean base pay by the midpoint of the pay range.
194 - 245 Labour Market Constraints
Constraints on compensation strategy flowing from the relative levels of demand and supply for particular occupational groups.
3 - 103 Demographic Characteristics
Age, gender, ethnicity, education, marital status, and similar characteristics.
194 - 245 Lump Sum Approach to Expatriate Pay
Approach to designing expatriate compensation in which various allowance amounts are paid directly in home-country currency.
147 - 185 Pooled Performance Pay
A pay plan in which the performance results of a group are pooled and group member share equally in performance bonus.
194 - 245 Lead Compensation Policy
A compensation-level strategy based on paying above the average compensation level in a given labour market.
3 - 103 Focused Differentiator Business Strategy
A business strategy that depends on providing unique products or services to a narrow range of customers.
391 - 415 Phantom Share Plan
A plan through which employees participate in the appreciation of company shares and any associated dividends, without ever owning any company shares.
291 - 321 Compensable Factors
Characteristics of jobs that are valued by the organization and differentiate jobs from one another.
424 - 439 Flexible Benefit System
An employee benefit plan that allows employees to allocate employer-provided credits to purchase the benefits of most value to them.
3 - 103 Attribution Theory
“Cognitive Evaluation Theory” Theory of motivation arguing that people often act without understanding their motives for their behaviour and afterwar attempt to attribute motives for their actions.
147 - 185 Competitive Bonus Plan
A group pay plan that rewards work groups for outperforming other work groups.
3 - 103 Purpose of a compensation system
To help create a willingness among qualified persons to join the organization and to perform the tasks needed by the organization.
194 - 245 Lag Compensation-level Strategy
A compensation-level strategy based on paying below the average compensation level in a given labour market.
107 - 143 Job Evaluation
Establishing base pay by ranking all jobs in the firm according to their value to that firm.
3 - 103 Analyzer Business Strategy
Focuses on exploiting new opportunities at a relatively early stage while maintaining a base of traditional prducts or services.
3 - 103 Trends in Compensation Systems
The underlying trend has been toward more complicated pay systems. Also, an increase in the use of part-time, temporary, and contract worker (congingent workers). This usually results in poor economic conditions.
147 - 185 Special Purpose Incentive
An incentive designed to motivate a specific type of employee behaviour.
3 - 103 Defender of Business Strategy
Focuses on dominating a narrow product or service market segment.
3 - 103 Incentive
A promise that a specified reward will be provided if a specified employee behaviour is performed.
3 - 103 Human Relations Strategy
Assumes most employees inherently dislike work but can be induced to work in order to satisfy their social needs.
352 - 379 Behavioural Observation
Appraisal method under which appraisers rate the frequency of occurrence of different employee behaviours.
3 - 103 Compensation System
The plan for the mix and total amount of base pay, performance pay, and indirect pay to be paid to various categories of employees.
147 - 185 Employee Profit-sharing Plan
A formal pay program in which a firm provides bonus payments to employees based on the profitability of the firm.
256 - 280 Paired Comparison Method
Every job is compared with every other job, providing a basis for a ranking of jobs.
3 - 103 Required Professional Capabilities (RPCs)
A set of capabilities designated by the Canadian Council of Human Resources Associations as essential for Human Resources practitioners and required for designation as CHRP.
352 - 379 Beauty Effect
The tendency for the physical attractiveness of a ratee to affect their performance appraisals.
147 - 185 Gain-Sharing Plan
Group performance pay plan that shares cost savings or productivity gains generated by a work group with all members of that group.
Pay Policy Line
The intended pay policy for the organization, generated by adjusting the market line for the intended pay level strategy of the organization.
256 - 280 Point Method
Establishes job values by the application of points to each job, based on compensable factors.
147 - 185 Performance Unit Plan
A long-term incentive in which the bonus amounts are expressed in units for which the monetary value will fluctuate, depending on degree of goal accomplishment.
291 - 321 Broadbanding
The practice of reducing the number of pay grades by creating large or “fat” grades, sometimes known as “banks.”
291 - 321 Benchmark Job
A job in the firm’s job evaluation system for which there is a good match in the labour market data.
194 - 245 Trade Union Legislation
Legislation that defines the rights of parties involved in a collective bargaining relationship.
256 - 280 Job Specifications
The employee qualifications deemed necessary to successfully perform the duties for a given job.
256 - 280 Statistical/Policy Capturing Method
Combines use of statistical methods and job questionnaires to derive job values based on prevailing external or internal pay rates.
3 - 103 Base Pay
The foundation pay component for most employees, usually based on some unit of time worked.
194 - 245 Utility Analysis
A method used to analyze whether a lead, lag, or match compensation-level strategy is most efficient for a given organization.
391 - 415 Rucker Plan
A gain-sharing plan similar to Scanlon plan but that expresses labour costs as a percentage of value added.
462 - 485 Average Employee Earnings
Total compensation divided by the number of full-time-equivalent employees.
107 - 143 Pay-for-knowledge-system (PKS)
Establishing base pay according to the total value of the skills and competencies an employee has acquired.
3 - 103 Two-Factor Theory of Motivation
Argues that intrinsic factors influence work motivation, while extrinsic factors influence job satisfaction.
3 - 103 Need Salience
The degree of urgency an individual attaches to the satisfaction of a particular need.
3 - 103 Distributive Justice
The perception that overall reward outcomes are fair.
291 - 321 Equal Percentage Approach
Method to establish pay grade sizes, in which each pay grade increases in width by an equal percentage from the preceding pay grade.
107 - 143 Competency-based Pay
Pay that is based on the characteristics, rather than the performance, of individual employees; usually applied to managerial or professional employees.
3 - 103 Reward
Anything provided by the job or organization that satisfies an employee need.
352 - 379 Behaviourally Anchored Rating Scales (BARS)
Appraisal method that provides specific descriptors for each point on the rating scale.
194 - 245 Localization Approach to Expatriate Pay
Approach to designing expatriate compensation that entails paying expatriate employees the same compensation as local nationals in equivalent positions.
3 - 103 Mediating Technology
Uses standardized transactions to connect parties wishing a mutually beneficial relationship.
291 - 321 Market Line
A regression line that relates job evaluation points to market pay (in dollars) for the benchmark jobs.
147 - 185 Conversion Selling
Selling established products to new customers.
256 - 280 Permissible Difference
Pay difference between female and male job classes that are not considered inequitable because they stem from certain specified allowable circumstances, such as seniority.
3 - 103 Total Rewards
A compensation philosophy that considers the entire spectrum of rewards that an organization may offer to employees
3 - 103 Rewards Strategy
The plan for the mix of rewards that an organization may offer to members, along with the means through which they will be provided.
3 - 103 Engineering Technology
Many exceptions occur in the production or service delivery process, but there are standardized ways of dealing with them.
3 - 103 Membership Behaviour
Occurs when employees decide to join and remain with a firm.
3 - 103 Task Significance
The perceived importance or social value of a given task.
147 - 185 Maintenance Selling
Selling established products to existing customers.
352 - 379 Halo Error
Occurs when appraisers rate an individual either high or low on all characteristics because on characteristic is either high or low.
352 - 379 Recency Effect
The tendency of appraisers to over-weight recent events when appraising employee performance.
424 - 439 Defined Contribution Plans
Pension plans that provide retirement income based on the accrued value of employer and employee contributions to the plan.
424 - 439 Employee Assistance Programs
Employer-provided programs to help employees deal with a variety of personal problems.
291 - 321 Intergrade Differentials
the differences between range midpoints of adjacent pay grades in a pay structure, expressed in dollars.
256 - 280 Job Analysis
The process of collecting information on which job descriptions are based.
3 - 103 Indirect Pay
Noncash items or services that satisfy a variety of specific employee needs, sometimes known as “employee benefits.”
291 - 321 Market Comparator Job
A job in the market data that matches a benchmark job within the firm’s job evaluation system.
3 - 103 Procedural Justice
The perception that the process for reward determination is fair.
291 - 321 Just Noticeable Difference (JND)
The amount of pay increase necessary to be considered significant by employees receiving the increase.
352 - 379 Performance Appraisal
The process of assessing the overall performance levels of individual employees.
194 - 245 Negotiation Approach to Expatriate Pay
Approach to designing expatriate compensation that entails negotiation between employer and employee to create a mutually acceptable compensation package.
3 - 103 Equity Theory
Base perception of fairness. Contributions/reward ratios or perceived equal.
424 - 439 Supplemental Unemployment Benefits
An employer-provided benefit that extends government-provided unemployment benefits.
3 - 103 Job Design
A dimension of orgnization structure that describes the manner in which the total task of an organization is devided into seperate jobs.
256 - 280 Factor Comparison Method
Assigns pay levels to jobs based on the extent to which they embody various job factors.
3 - 103 Compensation Strategy
The economic or monetary part of the reward system.
3 - 103 Agency Theory
Employees will pursue their own self-interests rather than the interests of their principles (employers) unless they are closely monitored or their interests are aligned with the interests of their principles.
291 - 321 Equal Interval Approach
Method to establish pay grade widths, in which the point spreads are equal for all pay grades.
391 - 415 Improshare
A gain-sharing plan that focuses on labour hours per unit of output and that does not usually include worker participation.
424 - 439 Mandatory Benefits
Government-provided employee benefits, such as pensions and employment insurance, to which employers must contribute on behalf of their employees.
147 - 185 Long Term Incentives (LTIs)
A type of performance pay in which the incentives are tied to an organization performance horizon that ranges beyond one year, often three to fives years.
147 - 185 Suggestion System
An incentive plan through which employees receive cash bonuses fo submitting money-saving suggestions.
3 - 103 Long-linked Technology
Divides the total task of producing a product or service into a series of small sequential steps performed by different employees
147 - 185 Deferred Profit-sharing Plan
A profit-sharing plan in which the profit-sharing bonuses are allocated to employee accounts but not actually paid out until a later date, usually on termination or retirement.
424 - 439 Hybrid Pension Plans
Pension plans that combine features of the defined benefit pension plan and the defined contribution pension plan.
3 - 103 Job Enrichment
The process of redesigning jobs to incorporate more of the five core dimensions of intrinsically satisfying work.
3 - 103 Continuance Commitment
Attachment to an organization based on percieved lack of better alternatives.
3 - 103 Intrinsic Rewards
Factors that satisfy higher-order human needs for self-esteem, achievement, growth, and development.
462 - 485 Compensation Administration
The process through which employee earning are calculated and the appropriate remittances are paid to employees, governments, and other agencies.
352 - 379 Contrast Effect
The tendency for a set of performance appraisals to be influenced upward by the presence of a very low performer or downward by the presence of a very high performer.
3 - 103 Job Autonomy
The degree of freedom workers have in deciding how to perform their jobs.
3 - 103 Nonroutine Technology
May exceptions are inherent in the production process, and there is no standardized way to deal with the exceptions.
147 - 185 Performance Share Plan
A long-term incentive in which the bonus amounts are expressed in company shares.
3 - 103 Organizational Identification
A sense of shared goals and belongingness, and the desire to remain a member of the organization.
Causes of Reward Dissatisfaction
1) Violation of the psychological contract 2) Perceived inequity 3) Relative deprivation 4) Lack of organizational justice
352 - 379 Similarity Effect
The tendency of appraisers to inflate the appraisals of appraisees they see as similar to themselves.
194 - 245 Match Compensation Policy
A compensation-level strategy based on paying at average compensation levels in a given labour market.
391 - 415 Scanlon Plan
A gain-sharing plan that creates mechanisms for employee participation in developing productivity improvements and that shares the financial benefits of those improvements with the employee group that generated them.
462 - 485 Technical Premiums
Compensation measures that increase the compensation of technical employees.
424 - 439 Pay for Time Not Worked
An employee benefit that covers a wide array of different types of employee absences from work.
352 - 379 Central Tendency Error
Occurs when appraisers rate all employees as “average” in everything.
256 - 280 Classification/Grading Method
The use of generic grade descriptions for various classes of jobs to assign pay grades to specific jobs.
256 - 280 Job-to-Job Method
Establishes pay equity by comparing a female job class to a male class that is comparable in terms of job evaluation criteria.
3 - 103 Unit/Small Batch Technology
Manufacturing technology that procudes one-of-a-kind items or small batches of unique items.
194 - 245 Technical Ladder
Defined progresion of skills development to keep work interesting and provide opportunities for higher compensation.
147 - 185 Merit Raise
An increase to an employee’s base pay in recognition of good job performance.
147 - 185 Goal-sharing Plan
A group performance pay plan in which a work group receives a bonus when it meets pre-specified performance goals.
3 - 103 Job Feedback
The extent to which the job itself provides feedback on worker performance.
3 - 103 Work Motivation
The attitude one holds towards good job performance.
3 - 103 Affective Commitment
Attachment to an organization based on positive feelings towards the organization.
194 - 245 Hybrid Compensation Policy
A compensation-level strategy that varies across employee groups or compensation components.
3 - 103 Managerial Strategy
One of three main patterns or combinations of structural variables that can be adopted by an organization - namely, classical, human relations, or high involvment.
147 - 185 Piece Rates
A pay system under which individuals receive a specified sum of money for each unit of output they produce or process.
3 - 103 Job Satisfaction
The attitude one holds towards one’s job and workplace.
107 - 143 Skill Block
The basic component of a skill-based pay system, containing a bundle of skills or knowledge necessary to carry out a specific production or service delivery task.
3 - 103 Performance Pay
Relates employee monetary rewards to some measure of individual, or group, or organizational performance.
3 - 103 Prospector Business Strategy
Focuses on identifying and exploiting new opportunities quickly.
194 - 245 Balance Sheet Approach to Expatriate Pay
Approach to designing expatriate compensation that attempts to provide a standard living comparable with the home country.
194 - 245 Contingent Workers
Workers not employed on a permanent full-time basis.
352 - 379 Leniency Effect
The tendency of many appraisers to provide unduly high-performance appraisals.
3 - 103 Contingency Approach to Organization Design
An approach to organizational design based on the premise that the best type of structure for an organization depends on the key contingencies (contextual variables) associated with that organization.
3 - 103 Classical Managerial Strategy
Assumes most employees dislike work but can be induced to work in order to satisfy their economic needs.
107 - 143 High-low Method
Determines entry-level and skill-block pay amounts by pricing comparable entry-level and top-level jobs in the market and allocating the difference to the various skill blocks.
3 - 103 Reward System
The mix of intrinsic and extrinsic rewards that an organization provides to its members.
147 - 185 Merit Bonus
A cash payment, provided to recognize good employee performance, that does not increase base pay.
194 - 245 Human Rights Legislation
Legislation that prohibits discrimination in hiring or employment on the basis of race, ethnic origin, religion, gender, marital status, or age.
3 - 103 Mass/Large Batch Technology
Manufacturing technology that produces large amounts of single items in a standardized way.
3 - 103 Organizational Citizenship Behaviour
Occurs when employees voluntarily undertake special behaviours beneficial to the organization.
256 - 280 Ranking Method
The relative values of different jobs are determined by knowledgable individuals.
3 - 103 Contextual Variables
Factors in the firm’s context that indicate the most appropriate managerial strategy and organizational structure.
147 - 185 Employee Stock Plan
Any type of plan through which employees acquire shares in the firm that employs them.
291 - 321 Intergrade Differential Percentage
Calculated by dividing the intergrade differential (expressed in dollars) of each pay grade by the midpoint (in dollars) of the previous pay grade.
3 - 103 Intensive Technology
Requires that each item or case be dealt with individually, depending on the specific nature of each case.
