Compensation and Benefits - Definitions Flashcards
1
Q
Extrinsic Rewards
A
Factors that satisfy basic human needs for survival and security, as well as social and recognition needs.
It comes from a job’s content
2
Q
Intrinsic Rewards
A
Factors that satisfy higher-order human needs for self-esteem, achievement, growth and development.
Comes from a job’s context
3
Q
Reward
A
Anything provided by an organization that satisfies an employee need
4
Q
Incentive
A
A promise that the a specified reward will be provided if the employee performs a specified behaviour
5
Q
Reward System
A
combination of intrinsic and extrinsic rewards provided by an organization
6
Q
Compensation System
A
The economic/monetary part of the reward system. This is only a part of the reward system
7
Q
Reward Strategy
A
The plan for the mix of rewards (intrinsic and extrinsic) that will be provided, as well as how, in order to elicit the desired behaviours necessary for the organizations success
8
Q
Compensation Strategy
A
The plan for the mix and total amount of base, performance pay, and indirect pay to be paid to various categories of employees
9
Q
Vertical Fit (in a compensation system)
A
The alignment between an organization’s mission, values and vision, and the supportive strategies that cascade down an organization
10
Q
Horizontal Fit (in a compensation system)
A
The alignment between and among strategies at the same level
11
Q
Classical Managerial Strategy
A
People are inherently lazy, dislike work, and would prefer to get as much from a work relationship as possible, and give as little as possible.
12
Q
Human Relations Strategy
A
People inherently dislike work, but can be motivated by appealing to their social needs.
13
Q
High-Involvement Managerial Strategy
A
An approach to management that assumes work can be intrinsically motivating if the organization is structured properly
14
Q
Membership Behaviour
A
Occurs when employees decide to join and remain with a firm
15
Q
Task Behaviour
A
When employees perform the specific task assigned to them
16
Q
Organizational Citizenship Behaviour
A
When employees voluntarily undertake special behaviours beneficial to the organization that go beyond simple membership (e.g. extra effort)
17
Q
Psychological Contract (of rewards)
A
Expectation about the rewards offered for a job, and the contributions necessary to perform the job
18
Q
Equity Theory
A
Employee’s base perception’s of equity on a comparison of their contributions rewards ratio to the ratio of others perceived as being similar
19
Q
Equity Sensitivity
A
A personality trait that entails a high predisposition toward perceiving personal inequity
People with this are more likely to resort to drastic action to reduce their perceived reward imbalance
20
Q
Organizational Commitment
A
The strength of an individual’s attachment to an organization
21
Q
Affective Commitment
A
The attachment to an organization based on positive feelings towards the organization
22
Q
Continuance Commitment
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Attachment to an organization due to a perceived lack of better alternatives
23
Q
Content Theories of Motivation
A
Theories that involve understanding motivation by identifying the underlying human needs
24
Q
Process Theories of Motivation
A
Theories that involve understanding motivation by determining the processes humans use to make choices about the specific actions they will take
25
Job Enrichment
The process of redesigning jobs to incorporate more of the 5 core dimensions of intrinsically satisfying work (task identity, task significance, skill variety, job autonomy, job feedback)
26
Herzberg's Theory of Motivation
There are hygiene factors (factors caused by job satisfaction) and motivators (Factors that made people feel good about their work)
27
Reinforcement Theory
Behaviour will not be repeated if valued outcomes flow from that behaviour, or if performing the behavior reduces undesirable outcomes
28
Expectancy Theory of Motivation
Individuals are more likely to exert effort to perform a particular behaviour if they believe that behaviour will lead to valued consequences and if they expect they can perform that behaviour
29
Attribution Theory of Motivation
Humans often act without understanding their motives for their behaviour and afterward attempt to attribute motives for their actions
30
Economic Theory of Motivation
People are only motivated by economic rewards, and will seek to maximize their reward while minimizing their contribution to the organization
31
Indirect Pay
Any type of employer-provided reward/benefit that serves an employee need, but isn’t part of their base or performance pay. Is usually about 15% of total compensation
32
Market Pricing
Basing base pay on what other employers are offering for a given job
33
Job Evaluation
Systematically ranking all jobs based on value to the firm
34
Pay-for-knowledge System (PKS)
Establishing base pay according to the total value of the skills and competencies an employee has acquired
35
Skill Blocks
Contains a bundle of skills or knowledge necessary to carry out a specific production or service delivery task. The basic component of a skill-based pay system
36
High-low method (skill blocks)
A method that prices comparable entry- and top-level jobs in the market, and allocates the difference to the various skill blocks
37
Piece Rates
A pay system under which individuals receive a specified sum of money for each unit of output they produce or process
38
Straight Piece Rate
The same sum of money is paid for each piece produced or processed, regardless of how many pieces are produced or processed.
39
Differential Piece Rate
A lower sum of money per piece is paid if employee production does not meet the production standard, and a higher sum per piece is paid once the production standard is met
40
Straight Commission
Pay that is geared only to the volume of sales or transactions, with no base pay component.
41
Merit Raise
An increase to an employee’s base pay in recognition of good job performance
42
Merit Bonus
A cash payment, provided to recognize good employee performance, that does not increase base pay.
43
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.
44
Goal-Sharing Plan
A group performance pay plan in which a work group receives a bonus when it meets pre-specified performance goals
45
Competitive Bonus Plan
A group pay plan that rewards work groups for outperforming other work group
46
Pooled Performance Plan
A pay plan in which the performance results of a group are pooled and group members share equally in the performance bonus.
47
Group Commissions
A performance pay plan in which the commissions of a group of sales workers are pooled and then shared equally among members of the group.
48
Group Piece Rates
A performance pay plan in which group members get paid based on the number of completed products produced by the group.
49
Employee Profit-sharing Plan
A formal pay program in which a firm provides bonus payments to employees based on the profitability of the firm
50
Current Distribution Profit-Sharing Plan
A profit-sharing plan that distributes the profit-sharing bonus to employees in the form of cash or shares, at least annually.
51
Deferred Profit-Sharing Plan (DPSP)
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.
52
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
53
Employee Stock Bonus Plan
A plan through which employees receive shares in their employer firm at no cost to the employee
54
Employee Share Purchase Plan
A plan through which employees may purchase shares in their employer firm
55
Employee Stock Options Plan:
A plan through which employees are provided with options to purchase shares in their employer at a fixed price within a limited time period
56
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
57
Performance Share Plan
A long-term incentive in which the bonus amounts are expressed in company shares
58
Technical Ladders
Defined progression of skills development to keep work interesting and provide opportunities for higher compensation. Technical ladders have been developed to substitute for career advancement opportunities
59
Lead compensation policy
A compensation-level strategy based on paying above the average compensation level in a given labour market.
60
Match compensation policy
A compensation-level strategy based on paying at average compensation levels in a given labour market.
61
Hybrid Compensation policy
A compensation-level strategy that varies across employee groups or compensation components.
62
Utility Analysis
An approach to analyzing whether a lead, lag, or match strategy would be most efficient for a given organization
63
Equalization approach (for Expatriates)
Reasonable costs are calculated for the expense and then the company deducts or adds income to ensure the standard is the same as it would be in Canada
64
Job Description
A summary of the duties, responsibilities, and reporting relationships pertaining to a particular job
65
Job Specifications
The employee qualifications deemed necessary to successfully perform the duties for a given job. Often called KSAO's
66
Functional Job Analysis
An attempt to develop generic descriptions of jobs using a common set of job functions.
The current system uses a series of task statements that contain four elements for each job:
- Who performs what
- To whom or what
- With what tools, equipment, or processes
- To achieve what purpose or outcome
67
Job Evaluation: Ranking Method
The relative values of different jobs are determined by knowledgeable individuals/judges
68
Job Evaluation: Paired Comparison Model
Every job is compared with every other job, providing a basis for a ranking of job
69
Job Evaluation: Job Classification/Grading
This method establishes and defines general classes of jobs (e.g. technical, clerical) and then creates a series of grade descriptions for each class
70
Job Evaluation: Factor Comparison Method
This method identifies several major factors against which all jobs in a job class can be assessed and then rates the extent to which each factor is present in each of a large set of “key jobs” thought to be properly compensated at the present time
71
Job Evaluation: Statistical/Policy Capturing Method
This method combines the use of statistical methods (from internal and market data) and job questionnaires to derive job values based on prevailing external or internal pay rates
72
Job Evaluation: Point Method
This method identifies key job characteristics (known as “compensable factors”) that differentiate the value of various jobs, weights these factors, and then determines how much of each factor is present in a given job by assigning a certain number of points to each job for that factor. This hierarchy of jobs is then transformed into a set of pay grades and pay ranges, based on the market rates of certain key or benchmark jobs.
73
Job Comparison: Job-to-job method
This method establishes pay equity by comparing a female job class to a male class that is comparable in terms of job evaluation criteria
74
Job Comparison: Proportional Value Method
This 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
75
Job Comparison: Proxy Comparison Method
This method establishes pay equity in public sector organizations where neither the job-to-job method nor the proportional value method can be used. The employer selects another public sector employer that has completed pay equity procedures and collect information on the female job classes in that “proxy” organization
76
Permissible Differences Pay
Differences between female and male job classes that are not considered inequitable because they stem from certain specified allowable circumstances, such as seniority
77
Compensable Factors
Characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives. The 4 most common are: Skill, Effort, Responsibility, and Working conditions
78
Benchmark Jobs
A job in the firm’s job evaluation system for which there is a good match in the labour market data
79
Market Comparator Job
A job in the market data that matches a benchmark job within the firm’s job evaluation system
80
Market Line
A regression line that relates job evaluation points to market pay (in dollars) for the benchmark jobs
81
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
82
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
83
Pay Grade
A grouping of jobs of similar value to the organization, typically grouped by point totals
84
Pay Range
The minimum and maximum pay rates (in dollars) for jobs in a particular pay grade
85
Establishing Pay Grades: Equal Internal Approach
A method to establish pay grade widths, in which the point spreads are equal for all pay grades
86
Establishing Pay Grades: Equal Increase Approach
A 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
87
Establishing Pay Grades: Equal Percentage Approach
A method to establish pay grade sizes, in which each pay grade increases in width by an equal percentage from the preceding pay grade
88
Establishing Pay Grades: Broadbanding
The practice of reducing the number of pay grades by creating large or “fat” grades, sometimes known as “bands.”
89
Establishing Pay Ranges: Range Spreads
The difference between the maximum and the minimum pay level, in dollars, for a given pay range.
90
Establishing Pay Ranges: Range Spread Percentages
A percentage calculated by dividing the range spread for a given pay range by the minimum for that pay range
91
Compensating Differentials
A higher compensation level offered by an employer because of undesirable aspects of the employment.
92
Market Comparator Firms
Firms selected as comparators when constructing a sample of market data
93
Compensation Surveys: Key Job matching
Including jobs on a compensation survey that are well understood and numerous in the labour market, and asking respondents to supply compensation information for those jobs
94
Analyzing Survey Data: Interquartile Range
A measure of pay dispersion across employers, calculated by dividing the difference between the 25th and 75th percentile values by the value of the 25th percentile......or Q3-Q1
95
Analyzing Survey Data: Compa-Ratio
It assesses the distribution of employees within their pay range. The compa-ratio is calculated by taking the mean base pay of all employees holding a particular job and then dividing this amount by the midpoint of the pay range for that job.
96
Performance Appraisal Reliability
When a performance appraisal system produces the same scores even when applied by different appraisers.
97
Performance Appraisal Validity
The process of assessing the overall performance levels of individual employees. It occurs when employees who receive the highest scores in a performance appraisal system are in fact the highest performers
98
Central Tendency Error
Occurs when appraisers rate all employees as “average” in everything
99
Halo Error
when appraisers rate an individual either high or low on all characteristics because one characteristic is either high or low
100
Recency Effect
The tendency of appraisers to over-weight recent events when appraising employee performance
101
Contrast Effect (Performance Appraisal)
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
102
Similarity Effect
The tendency of appraisers to inflate the appraisals of appraisees they see as similar to themselves
103
Leniency Effect
The tendency of many appraisers to provide unduly high performance appraisals
104
Harshness Effect
The tendency of some appraisers to provide unduly low performance appraisals
105
Beauty Effect
The tendency for the physical attractiveness of a ratee to affect their performance appraisals
106
Methods for Individual Appraisal: 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.
107
Methods for Individual Appraisal: Forced Distribution Method
A performance appraisal method that stipulates the distribution of employees across the performance categories
108
Methods for Individual Appraisal: Graphic Rating Scale
An appraisal method in which appraisers use a numerical scale to rate employees on a series of characteristics
109
Methods for Individual Appraisal: Behaviourally anchored rating scales (BARS)
BARs provides specific descriptions of behaviours for each point on the rating scale for each job aspect
110
Methods for Individual Appraisal: Behavioural observation scales (BOS)
Appraisal method under which appraisers rate the frequency of occurrence of different employee behaviour
111
Methods for Individual Appraisal: Management by objectives (MBO)
An approach to management that involves setting employee goals and providing feedback on goal accomplishment
112
Methods for Individual Appraisal: Field Review
This method involves a short period of direct observation of the job performance of the individual being rated. Usually by someone outside the organization
113
Sources of Individual Appraisal: 360-degree feedback method
A method that combines peer and subordinate appraisals (and sometimes even customer appraisals) with supervisory appraisals
114
Performance Management
A method for improving employee performance based on goal setting, feedback, encouragement and support, and rewards for success
115
Individual/team merit grid
A method for linking individual merit pay to both individual and team performance
If the team does not meet its performance goals, there is no merit pay for anyone, regardless of individual performance
116
Gain Sharing Plan: 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.
117
Gain Sharing Plan: Rucker Plan
A gain-sharing plan similar to the Scanlon plan but that expresses labour costs as a percentage of value added
118
Gain Sharing Plan: Family Measures Plan
A gain-sharing plan that uses a variety of measures to determine the extent to which a bonus payout is justified
119
Gain Sharing Plan: Improshare
A gain-sharing plan that focuses on labour hours per unit of output and that does not usually include worker participation
120
Goal-Sharing Plans
Work groups or teams receive a bonus when certain pre-specified performance goals are met
121
Employee Stock Bonus Plans: 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
122
Employee Stock Bonus Plans: 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
123
Employee Stock Bonus Plans: 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 firm
124
Mandatory Benefits
Government-provided employee benefits, such as pensions, to which employers must contribute on behalf of their employees
125
Defined Benefit Plans
A plan that provides a specified stream of income from the time of retirement until death
126
Defined Contribution Plans
The employer commits a certain amount of money in an investment on behalf of each employee, then at retirement, the amount of the pension is paid based on whatever amount of money is in the trust.
127
Hybrid Pension Plans
Pension plans that combine features of the defined benefit pension plan and the defined contribution pension plan
128
Health Care Spending Account (HCSA)
A tax-favoured employee benefit that allows employees to use employer-provided health care spending credits to purchase a wide array of healthcare services.
The funds paid to each employee are not taxable
129
Supplemental Unemployment Benefits (SUBs)
An employer-provided benefit that extends (tops up) government-provided unemployment benefits. These plans must be approved and registered with the Employment Insurance Commission
130
Employee Assistance Programs (EAPs)
Employer-provided programs to help employees deal with a variety of personal problems
131
Fixed Benefit System
An employee benefit plan that provides a standard set of benefits to all those covered by the plan
132
Flexible Benefit System
An employee benefit plan that allows employees to allocate employer-provided credits to purchase the benefits of most value to them.
133
Compensation Administration
The process through which employee earnings are calculated and the appropriate remittances are paid to employees, governments, and other agencies
134
Average earnings per employee
Total compensation divided by the number of full-time equivalent employees. It takes the perspective of the individual employee.
135
Technical Premium
Compensation measures that increase the compensation of technical employees
136
Task Identity (Theory of Motivation)
The extent a worker performs a complete cycle of an activity
137
Task Significance (Theory of Motivation)
The perceived importance of the job
138
Skill Variety (Theory of Motivation)
The number of skills required for the task
139
Job Autonomy (Theory of Motivation)
The extent workers can decide for themselves
140
Job Feedback (Theory of Motivation)
The level of feedback on work quantity and quality
141
Split Pay Range
Where the mid-point represents the maximum pay for fully satisfactory performance. To move above the midpoint, performance must be above standard
142
Contributory (Pension) Plan
A pension plan that requires members to make contributions in addition to any employer required contributions
143
Lockstep Compensation Model
A seniority-based system of remuneration where employees are paid according to their rank. No other factors, such as merit, performance background or university, affect remuneration.
