EXAM 2 Review Flashcards
1
Q
Assign different pay rates for jobs of unequal worth and provide the framework for recognizing differences in individual employee contributions.
A
pay structure
2
Q
Representative of typical market pay rates relative to a company’s job structure
A
Market Pay Line
3
Q
Groups jobs for pay policy application. HR proffessionals typically group jobs based on similar compensable factors and value
A
Pay Grades
4
Q
Grades are based on a set number of job evaluation points for each grade
A
“Absolute” Job evaluation point spreads
5
Q
how do HR proffesionals develop pay grades?
A
● “Absolute” Job evaluation point spreads ●Percentage based Job evaluation
6
Q
Represents horizontal dimensions of pay structures (job evaluation points)
A
Pay grades
7
Q
Represent the vertical dimension (pay rates) represent the span of possible pay rates for each pay grade. Inude: midpoint,minimum and maximum pay rates
A
Pay ranges
8
Q
The halfway mark between the range minimum and max rates. represent the competetive market rate determined by the analysis of compensation survey data
A
Midpoint Pay Value
9
Q
distinguishes a company from the competition, but by compensating employees less than most competitors. Market pay levels below the market pay line
A
market lag
10
Q
most closely follows the typical market pay rates because companies pay according to the market pay line. Pay rates fall along the market pay line.
A
Market match
11
Q
distinguishes a company from the competition by compensating employees more highly than most competitors. Market pay levels above the market pay line
A
Market lead
12
Q
difference between the maximum and the min pay rates of a given pay grade
A
Range Spread
13
Q
Occurs whenever a company’s pay spread between newly hired or less qualified employees and more qualified job incubents is small
A
Pay Compression
14
Q
Pay rates that are higher than the designated pay range maximums
A
Red Circle rates
15
Q
represent pay rates for jobs that fall below the designated pay minimums
A
Green circle rates
16
Q
midpoint, index the relative competetiveness of internal pay rates based on pay range midpoints
A
Compa-ratios
17
Q
Compa-Ratio formula
A
Employees pay rate/ Pay range midpoint
18
Q
Minimum amount employees will see as making a meaningful change in their compensation
A
Just meaningful pay increase
19
Q
suggest that an employee must regard his or her own ratio of merit increase pay to performance or similar to the ratio for other comparably performing people in the company
A
Equity theory
20
Q
blueprints that desrcibe the allocation of moneyary resources to fund pay structures
A
compensation budgets
21
Q
Is the designated date/period when all employees recieve performance appraisals
A
Common review date/period
22
Q
Fixed base commission, which does not vary with the level of units sold, increase in market share or any other indicator of sales performance
A
Salary-only plans
23
Q
Form of incentive compensation based on a percentage of the product or service selling price and the number of units sold
A
commission
24
Q
Fixed base compensation with a bonus
A
Salary plus bonus plans
25
fixed base compensation and commision
salary plus comission plans
26
awards sales proffessiinals commisions and draws, draws are pay components that cover living expenses. companies usually charge draws against commisiins, they are like advances which are charged against commission sale proffessionals are expected to earn. they need to pay back these advances
commision plus draw plans
27
Act as company loans to employees that are carried forward indefintely until employees sell enough (earn a sufficient amount in commissions) to repay their draws
Recoverable Draws
28
Act as a salary because sale's employees are not obligated to repay the loans if they do not sell enough.
Nonrecoverable Draws
29
Some salespeople derive their entire income through commissions
Commission only plans
30
Increase percentage pay rates for progressively higher sales volume in a given period
Graduated Commissions
31
Increase percentage pay rates for progressively higher sales volume in a given period only if sales exceed a predetermined level.
Multiple tiered commissions
32
Pay structure form that leads to the consolidation of existing pay grades and pay ranges into fewer wider pay grades.
Broadbanding
33
Reward newly hired employees less than established employees on either a temporary or permanent basis
Two tier pay structures
34
Replaces income for employees who become unable to work because of sickness or accidents
Disability Insurance
35
Provides income benefits for limited periods of time, usually less than 6 months
Short term disability insurance
36
Illness or accidents that prevent an employee from performing his or her "own" occupation over a designated period. The term own occupation applies to employees based on education, training or experience. After the designated period elapses the definition becomes more inclusive by adding the phrase "inability to perform any occupation or to engage in any paid employement. The second stage definition is consistent with the concept of total disability in workers' compensation programs.
Long term disability
37
Provides benefits for extended periods of time anywhere between 6 months and life.
Long term disability Insurance
38
Policies that compensate employees when they are not performing their primary work duties. Companies offer most paid time off as a matter of costum particularly paid holiday vacations and sick leave
Paid time off banks
39
Help employees cope with personal problems that may impair their job performance such as alcohol or drug abuse, domestic violence, the emotional impact of AIDS and other diseases, clinical depression, and eating disorders, senior care, legal assistance. Ie: Call a 1-800 like a crisis hotline
Employee assistance programs (EAPs)
40
Provides benefits for limited time, more than a week but less than 6 months. Can range 3-6 months. More for people that have an inability to perform everyday duties. As an inability to perform the duties of one’s regular job.
STD (Short term disability)
41
~Income replacement typically between 50%-66.6% of gross wages.
~Runs concurrent with FMLA
o Must be employed with the company for 6-12 months
Short term disbaility qualifications
42
mental or physical ability for which medical advice, diagnosis, care, or treatment was received during a designated period preceding the beginning of disability insurance coverage. (Anytime prior to employment and enrollment in a company’s disability insurance plan).
Preexisting condition
43
list the particular health conditions that are ineligible for coverage. Disabilities like: Self inflicted injuries, and often exclude mental illness or disabilities due to chemical dependencies like additions to drugs and alcohol.
Exclusion provisions
44
Spans firm the initial date of hire to the time of eligibility for coverage in a disability insurance program.
Preeligibility
45
Refers to the minimum amount of time an employee must wait after becoming disabled before disability insurance payments begin.
Eliminating condition
46
~Jury Duty
~Military and medical leave
~Sabbatical
~Volunteerism
Types of PTOs
47
PTO for professional activities like a research project or curriculum development. Take time off for research.
Sabbatical
48
“We want you to research and cut you out of your regular activities and in 4 months we want you to come back with a solution etc.” This is an example of ?
Sabbatical
49
Giving one’s time to support a meaningful cause
Volunteerism
50
company sponsored technical and emotional support to employees who are being laid off or terminated.
Outplacement assistance
51
`Layoffs due to economic hardship
- Mergers and acquisitions
- Company reorganizations
- Changes in management
- Plant closings or relocation
- Elimination of specific positions, often the result of changes in technology
Reasons for outplacement assistance
52
Specify the rate at which participants accumulate (or earn) benefits
Accrual rates
53
A common feature of fee-for-service plan. The amount you have to pay before your insurance benefits kicks in.
Deductible
54
Refers to the percentage of covered expenses paid by the insured.
Coinsurance
55
Nominal payments an individual makes as a condition of receiving services.
Copay
56
A series of payments for the life of the participant and beneficiary.
Annuity
57
Pension plans that meet the minimum standard.entile employees and employers to favorable tax treatment by deducting the contributions from taxable income.
Not favorable to highly compensated employees
Qualified retirement plan
58
pension plans that do no meet one at least one minimum standard
Favorable to highly compensated employees
Non-qualified retirement plan
59
Similar to commercial insurance plans with one key difference: Companies typically draw from their own assets to fund claims
Self Funded plans
60
Traditional health insurance plans in which the insurance company agrees to pay a designated percentage of the costs for health insurance procedures and the insured (recipient of the insurance benefit) agrees to pay a designated percentage.
Indemnity plans
61
guarantee retirement benefits specified in the plan document. This benefit is usually expressed in terms of a monthly sum equal to a percentage of a participant’s pre retirement pay multiplied by the number of years he or she has worked for the employer.
Defined benefit
62
employers and employees make annual contributions to separate accounts established for each participating employee, based on formula contained in plan document.
Defined contribution
63
Type of defined benefit and also a qualified plan
Pensions
64
•
Company contributes $ to account regardless of employee participation
• Looks favorable with discrimination testing
• Common with lower-wage employers
Almost always a qualified plan
Can do pre-tax or post-tax (Roth) contributions • $18,000 annual contribution limit • $6,000 additional contributions allowed as catch-up for employees 50 and older
401k
65
retirement plans named after the section of the IRC that created them. (almost always a qualified plan)
401k
66
(similar to 401k but non profit),
403b
67
(NOT QUALIFIED PLAN), profit sharing, stock bonus, employee stock ownership plan (You know how much you put into it, but you don’t know how much you’re gonna get)
Common vehicle for highly compensated employees
Dollars that the company has access to—a company asset
457b
68
A potential basis for a 401k plan. Plans invest in company securities making them similar to profit sharing plans and stock bonus plans presumably when the value of the stock has increased
ESOP plan (Employee stock ownership plan)
69
Money distributed to employees, seperate from base pay, cost of living adjustment or permanent merit pay increases.
Profit sharing
70
A select group of healthcare providers agrees to furnish health care services to a given population at a higher level of reimbursement than under commercial plans
PPO (Preferred provider organization)
71
Combine the features of fee-for-service systems and health maintenance organizations. Employees pay a nominal copayment for each visit to a designated network of physicians, alternatively they may receive treatment from providers outside the network but they pay more for this choice
POS (Point of service plan)
72
Provide "prepaid medical services" because fixed periodic enrollment fees cover members for all medically necessary services as long as the services are delivered or approved by them. Represent an alternative to commercial and self funded insurance plans
HMO (Health Maintenance Organizations
73
promoted the use of health maintenance organizations.
HMO (Health Maintenance Organization Act)
74
Provide protection for 3 types of medical expenses: Hospital and surgical expenses and physician's charges in the form of cash benefit paid to the insured or directly to the health care provider after the employee has received health care services.
Fee-for-service plan
75
cover the cost of drugs. Plans apply to exclusively to drugs that state or federal law require to be dispensed by licensed pharmacists
Prescription drug plans
76
emphasize cost control by limiting an employee’s choice of doctors and hospitals. 3 kinds: HMOs, PPOs, and POS plans
Managed care programs
77
dispenses expensive medication used to treat chronic health conditions such as human immunodeficiency virus (HIV) infection or disorders like Parkinson’s disease. Health insurers specify if the participants must receive prescription through __________
programs or locally approved pharmacies
Mail order prescription program
78
Employer-provided medical- permit employees to pay for specified health care costs that are no covered on an employer's insurance plan.
~Employee funded
~Employees forfeit what is unused at the end of the year
~To be used on ancillary expenses
FSA (Flexible spending accounts)
79
~Is employer dollars (employer funded), insurance company is finding a way to make it hard for you to use your benefits
~Appealing for low wage employees
~Employer funded
~Allow for carry-over between plan years
~To be used on deductibles and cover eligible health care costs
HRA (Health reimbursement accounts) - Employer-provided medical
80
involve the collection and subsequent analysis of competitors’ compensation data. Focused on competitors pay and salary practices
Compensation Surveys
81
Provide reference points against which the values of jobs within the company are judged
Benchmark Jobs
82
~Central tendency
| ~Variation
Measures of dispersion
83
represents the fact that a set of data clusters or centers around a central point. Is a number that represents the typical numerical value in a data set.
Central tendency
84
Average annual salary in data set then dividing it by total number of annual salaries in data set. Compensation professionals use this to see whether the employees’ compensation is below and above the market
Mean
85
Middle value in an ordered sequence of numerical data.
Median
86
represents the amount of spread or dispersion in a set of data.
Variation-
87
Refers to the mean distance of each salary figure from the mean.
Standard deviation
88
allow compensation professionals to describe the distribution of data
Quartiles
89
25% of salary figures are less than or equal to that
1st quartile ($34,500)
90
50% of salary figures are less than or equal to that
2nd quartile ($36,000)
91
75% of salary figures are less than or equal to that
3rd quartile ($43,500)
92
100% of salary figures are less than or equal to that
4th quartile ($55,000)
93
If $33,000 represents the 10th percentile for accountants,
Percentiles:10 percent earn $33,000 or less. But 90% earn more than that.
94
1st- 100th
Percentiles
95
If you’re getting paid at the 25th percentile,
75 percent people are getting paid more than you
96
~contain immense amount of information
~Statistical analysis needed to integrate internal job structures with external market
~Outdated
Weaknesses of Comp surveys
97
~Effective compensation systems based on base pay level, incentive award structures, and both the mix and levels of discretionary benefits
~Sustain a competitive advantage
~Make Sound Judgement about how much to pay employees
Strengths (Or what companies gain from compensation surveys):
98
Compulsory hospitalization insurance covers both inpatient and outpatient hospital care and services. Social Security beneficiaries, retirees, voluntary enrollees, and disabled individuals are all entitled. Both employers and employees finance benefits through payroll taxes of 1.45 percent on all earnings.
Examples : Hospital care with general nursing, home health services
Medicare Part A
99
12 weeks of unpaid leave for: Birth, adoption, or foster care, Serious family medical or psychological problems or 26 weeks for family member of the military for qualifying exigencies (also unpaid), Must keep employee whole
FMLA (Family Medical Leave Act)
100
Minimal income workers who are seeking employment defined as a specific number of applications per week
Paid weekly through a welfare and WIC payment
Unemployment and frequency of payments
101
Established 3 main types of legally required benefits: unemployment insurance, retirement income, benefits for dependents and medical insurance
Social Security Act 1935
102
Provides income for the married spouse of a deceased participant • Goal is to keep the household somewhat whole
Survivors’ Insurance
103
• Participant must have contributed for 40 quarters • Eligibility depends on age, job, and nature of the disability • Benefits are very difficult to obtain are frequently require expensive legal representation • Disability must last for at least a year or be terminal
Average Monthly Benefit in 2015 = $1,166.33
Disability Benefits
104
Participating citizens get annual statements discussing their benefits at retirement using current rules • Retiring at age 62 provides partial benefits • Retiring between age 65 & 67 (depending on the year) provides full benefits
Retirement
105
Value grows tax-free and no taxes at distribution (with few exceptions)
Post tax ROH
106
Most common type offered by companies, provides protection to employees’ beneficiaries only during a limited period based on a specified number of years (i.e. 5 years) subject to a maximum age (65 years old) After that it expires.
Most common form of life insurance
Like all life insurance, it pays a benefit upon the death of the insured
Written only for a specific term (i.e. 10 years)
Term life insurance
107
Pays an amount to the designated beneficiaries of the deceased employee, but unlike term policies, whole life plans do not terminate until payment is made to beneficiaries.
~Follows the insured throughout their life; there’s no term
~Premiums are significantly higher, and adjust as the insured’s age & health changes
~Will become higher as you get older, as you pass away etc. Can be very expensive.
Whole life insurance
108
If the employee has been there for 3 years. The employee gets all the money. Happens all at once within 3 years.
Cliff vesting
109
at year 2, you get 20%, and additional year you get another 20%. Then 100% vesting after 6 years. Happens overtime
Graduated vesting
110
Decreased cost of healthcare = successful program
-Employees who meet requirements such as being healthy, improving health, getting a yearly physical, etc, usually get a discounted rate of medical insurance
Wellness programs: how do companies gauge success
111
* Participation requirements
* Coverage requirements
* Vesting rules
* Accrual rules
* Evidence of nondiscrimination
* Key employee and top-heavy provisions • Minimum funding standards
* Social Security integration
* Contribution and benefit limits
13 Characteristics of Qualified Plans
112
13 Characteristics of Qualified Plans
* Participation requirements
* Coverage requirements
* Vesting rules
* Accrual rules
* Evidence of nondiscrimination
* Key employee and top-heavy provisions
* Minimum funding standards
* Social Security integration
* Contribution and benefit limits
113
operates similarly to managed care programs because it offers prepaid benefits with nominal copayments.
Prescription card program
