Exam 3 Flashcards
the monetary and nonmonetary rewards employees receive in exchange for the work they do for an organization
compensation
the sum of all the aspects of a compensation package (base pay, incentives, benefits, perks, and so forth) that signal to current and future employees that they are receiving more than just base pay in exchange for their work
total rewards
communicates information to employees about what is valued within an organization, enhances the likelihood of consistency in pay across the organizational units, and helps attract, motivate, and retain employees
compensation philosophy
the theory that employees compare their input (work effort) and outcome (wages) levels with those of other people in similar situations to determine if they are being treated the same in terms of pay and other outcomes
equity theory
occurs when each job in a company is valued appropriately relative to every other job in terms of its ability to help the firm achieve its goals
internal alignment
the systematic process of establishing the relative worth of the jobs within the company
job evaluation
a type of job evaluation that involves reviewing job descriptions and listing the jobs in order, from highest to lowest worth to the company
job ranking
a type of job evaluation that involves developing broad descriptions for groups of jobs that are similar in terms of their tasks, duties, responsibilities, and qualifications for the purpose of assigning wages
job classification
a quantitative method of job evaluation that involves assigning point values to jobs based on compensable factors to create a relative worth hierarchy for jobs in the company
point method or point factor method
an aspect of jobs, such as skill, effort, responsibility, and working conditions, that exist across jobs in a company, are needed by employees for the firm to achieve its objectives, and for which the company is willing to pay
compensable factor
a job that is used to represent the range of jobs in a company and that can be used for comparison with jobs in other companies for the purpose of establishing pay rates
benchmark job
a grouping of jobs with comparable points together to reflect the hierarchy of jobs within a company for the purpose of establishing wage rates
job grade
a quantitative type of job evaluation that involves ranking benchmark jobs in relation to each other on each of several factors, such as mental requirements, physical requirements, skill, responsibility, and working conditions, and then assigning a portion of the hourly rate for each job to each factor
factor comparison
ensuring pay rates for jobs in a company are appropriately aligned relative to pay rates for similar jobs in the company’s external labor market
external competitiveness
a systematic process for collecting information about wages in the external labor market
salary survey
the systematic process of assigning monetary rates to jobs so that a firm’s internal wages are aligned with the external wages in the marketplace
job pricing
the market line that represents the relationship between the job evaluation points and the salaries paid for the various jobs in the labor market
wage curve or pay policy line
sets the organization’s policy line at the middle of the market
match policy (follow)
the organization intends to pay somewhat above the market rate in valuing employees as a competitive advantage
lead policy
the organization intentionally pays below the market
lag policy
an approach used to reduce the complexity of a compensation system by consolidating a large number of pay grades into a fewer number of broad grades (or bands)
broadbanding (career banding)
jobs for which the person in the job is being paid above the maximum wage for that pay grade
red circled jobs
jobs for which the person’s salary is below the minimum of the range
green circled jobs
systems that require employees to acquire certain skills in order to receive a pay increase
skill-based pay
systems that require employees to acquire certain knowledge in order to receive a pay increase
knowledge-based pay
a highly structured pay system that identifies the competencies employees need to master to be eligible for pay raises
competency-based pay
a method for determining pay for jobs by collecting salary information from the external labor market first, rather than starting with the development of an internal structure based on the value of the jobs within the company
market pricing
direct payments such as salary wages and bonuses, and indirect payments such as payments to cover benefits and services
monetary compensation
the wage or salary an employee receives, exclusive of any incentive pay or benefits - is predictable and fixed
base pay
payments contingent on the performance of the employee, his/her work group, or overall company performance
variable pay
Forms of social and psychological rewards—recognition and respect from others, enjoyment from doing the job itself, opportunities for self development
non-monetary compensation
pay rates are established for
jobs not people
commonly used to establish pay rates but requires significant adjustment in the long run because it lacks an overarching compensation strategy/philosophy/structure
market pricing
four types of job evaluation
job ranking, job classification, point factor method, factor comparison
exists when employees feel they are being paid fairly relative to what people in similar jobs (or with similar competencies) are paid by other employers
external equity
specifies the pay rates that will be used for the jobs in a particular organization
organization pay policy
employers cannot pay lower wages to employees of one gender than it pays to employees of the other gender, employees within the same establishment for equal work at jobs that require equal skill, effort, and responsibility, and that are performed under similar working conditions
Equal Pay Act (EPA)
most commonly, refers to the median annual pay of all women who work full time and year-round, compared to the pay of a similar cohort of men
gender pay gap
What does the Fair Labor Standards Act (FSLA) do?
establishes a minimum wage, sets what constitutes a work week and overtime requirements for pay, defines exempt vs. non exempt employees, restricts use of child labor
exempt employees
employees that meet the requirements and are exempt from FSLA so that employers do not have to pay overtime
non exempt employees
employers have to pay overtime for these
3 tests for exempt vs. non exempt
salary level test, salary basis test, and duties test
strategic importance of performance based pay
use pay to align individual goals with strategic objectives, can change and direct employee behavior, managing labor costs
four types of performance based pay
merit pay, recognition awards, incentive pay, and earnings-at-risk pay
employees receive a compensation adjustment based on results of their performance evaluation
merit pay programs
one-time payment for performance not rolled into employees’ salaries
lump-sum merit bonuses
reward employees for future performance
piecework incentive plans
receive a certain rate of pay for each unit produced
straight piecework plan
the pay received per unit produced changes at certain levels of output
differential piecework plan
pay rate set based on expected amount of time an employee needs to complete task; if employees exceed minimum, they will receive a premium for higher level of work
standard hour plan
used to encourage employees to work toward specific outcomes; Manager gives awards “on the spot” when they see certain behaviors exhibited by employees; Can be cash or non-cash; Recognition programs like employee-of-the-month can also be used; Peer-to-peer recognition programs
recognition awards
employee have part of their salary tied to sales
sales incentive plans
pays an employee a percentage of the total sales they generate
straight commission plan
employees receive a set compensation, regardless of their level of sales (employees may not be as motivated to sell as much as they can)
straight salary plan
employees receive a lower base salary (50%) and the remaining is commission based
mixed salary/commission plan
all members are rewarded when team reaches or exceeds its target objectives; downside is the potential for “free riders”
team incentive plans
designed to help increase a company’s efficiency by rewarding teams that exceed productivity levels with a share of the gains realized
gain sharing plans
company profits are shared with employees
profit sharing plans
a % of profits distributed quarterly or annually
current distribution plans
funds are distributed at retirement, termination, death, or disability
deferred distribution plans
combination of current & deferred
combined plans
involves stocks
ownership plans
provides employees the right to purchase shares of their company stock at some established price for period of time
stock option plans
plans that apply widely to a firm’s employees
broad-based stock option
company contributes shares of its stock to a trust set up for its employees
employee stock ownership plan (ESOP)
the trust borrows against the company’s future earnings and as debt is repaid, employees receive shares of stock from trust
leveraged ESOP
in-kind (noncash) payments to employees for their membership or participation in the organization
employee benefits
provides all employees with a base benefits package then allows employees to choose additional benefits from a wide array of options
flexible benefits plan
provides different types and levels of benefits depending on an employee’s location and position in the organization
targeted benefits plan
examples of legally mandated benefits
social security insurance, unemployment compensation benefits, workers compensation and disability insurance, family and medical leave, the patient protection and affordable care act employer shared responsibility provisions
examples of voluntary benefits
retirement savings plans and pensions, health care benefits and services, wellness programs, employee assistance programs, paid leave, work-life benefits and services
enacted in 1935 as a forced savings plan intended to provide older Americans with a reliable source of income in retirement
social security
the age at which a person may first become entitled to unreduced retirement benefits – depends on when you were born
full retirement age
what is the full retirement age for those born after 1960
67
Is an insurance program providing unemployment compensation as income for employees who lose their jobs at no fault of their own
unemployment insurance
Covers medical costs and lost income due to work-related injuries/illnesses
workers compensation insurance
parts of the Family and Medical Leave Act (FMLA)
Required to grant up to 12 weeks of unpaid leave annually; Employee keeps preexisting health coverage and must be allowed to return to same or equivalent job
what do voluntary benefits focus on
health, wellness, and welfare
work-life balance management
retirement benefits
percentage of union membership in the us
about 11%
reasons for decline in union membership
globalization resulted in manufacturing (a heavily unionized industry) moving abroad, job growth in service sector, small businesses, and professional services, anti union tactics by employers, workers are more capable of negotiating better workplace conditions for themselves, progressive HR policies, departments, and war on talent substituting the need for unions
what do unions do and advocate
Works and negotiates with management things employees care about: raises, affordable health care, job security, safety
Most important piece of labor relations legislation in the U.S.; passed to Protect rights of both employees and employers, Encourage parties to engage in collective bargaining, Control activities so economy wouldn’t be adversely affected; established the national labor relations board (NLRB)
Wagner Act (National Labor Relations Act of 1935)
employee rights
To form, or attempt to form, a union in the workplace
To join a union, even if it’s not recognized by the employer
To assist in union-organizing efforts
To engage in group activities (collective bargaining) such as attempting to modify wages or working terms and conditions
To refuse to do any or all of above unless clause requiring employees to join union exists
employer rights
Correct inaccurate statements made by union organizers
Inform employees of the effects of unionization on the company
Say that the company is opposed to the union
Give information about the union, its officers, fees, collective bargaining process etc.
employers cannot
Forbid employees to solicit other employees during breaks, off-duty time, in non-working areas
Ban the wearing of union buttons or shirts without a valid business reason.
Spy on employees or ask other employees to spy on others
Forbid union representatives from entering the premises if public is permitted
Prohibit discussion among employees during work time if other discussions are permitted
protects the rights of employees and employers, encourages these parties to engage in collective bargaining, and controls their activities so the economy won’t be adversely affected by their actions; also established the National Labor Relations Board (NLRB)
Wagner Act (National Labor Relations Act (NLRA))
when two or more nonunion employees act together to try to improve working conditions, or when a single employee approaches management after conferring with other employees on their behalf or is acting on behalf of other employees
concerted activity
a violation of the NLRA that denies rights and benefits to employees; can be the result of employer or union activity
unfair labor practice (ULP)
an agency of the US government that was created by Congress to administer the National Labor Relations Act (NLRA)
National Labor Relations Board (NLRB)
protects the rights of employees and makes the NLRB a more impartial referee for industrial relations, rather than having it serve as an advocate for organized labor
Taft-Hartley Act (Labor Management Relations Act)
laws that prevent workers from having to join a union as a condition of employment, be prevented from joining a union as a condition of employment, be forced to pay dues to a labor union, or be fired for not paying such dues
right-to-work laws
requires workers to join a union before they can be hired and requires employers tot go to the union first to hire new employees
closed shop
an arrangement under which all workers except managers in an organizational unit represented by a union have to become members of that union within a certain period of time after being hired, or at least pay the equivalent of union dues
union shop
a labor union arrangement under which employees cannot be required to join a union but can be required to pay to a union an agency fee for purposes such as initiation
agency shop
a strike or lockout that affects an entire industry, or a substantial part of it, and national health and safety are imperiled
national emergency strike
a group of employees designated by the National Labor Relations Board or identified by the union and employer together as eligible to participate in a union election
bargaining unit
also knowns as signature card; document indicating that an employee is interested in being represented by a union
union authorization card
a list of names and addresses the company must supply of employees who are eligible to vote in the representation election fo a union
excelsior list
a process whereby a company recognizes a union has produced evidence that the majority of workers have signed authorization cards indicating that they want the union to represent them
card check
an arrangement in which a company agrees that it will not express its views about unionization during the time when signatures are collected
neutrality agreement
the process that labor unions and employers use to reach agreement about wages, benefits, hours worked, and other terms and conditions of employment
collective bargaining
the process that requires parties to meet at a reasonable time and come to the bargaining table ready to reach a collective bargaining agreement
good faith bargaining
topics that must be negotiated, including compensation and benefits, hours of employment, and other conditions of employment
mandatory bargaining topics
non-mandatory issues, such as employee rights, managerial control, and benefits for retired union members, that are often part of the collective bargaining negotiations and agreement
permissive topics
entering into a collective bargaining situation with no intention of reaching an agreement, or in some other way violating the protocol for appropriate collective bargaining
bad faith bargaining
a negotiation strategy in which each party takes a defensive position during the bargaining session resulting in a winner and a loser
distributive bargaining strategy
a negotiation strategy in which each party cooperates and works to reach a win win outcome
integrative bargaining strategy
an extension of integrative bargaining in which each party looks for common goals in order to meet the interests of the other party
interest-based bargaining
the situation in which both parties have made their final offers and are not willing to make further concessions
impasse
a method of resolving disputes in which a third party acts as an intermediary and actually makes the decision about how the issue should be resolved
arbitration
the arrangement whereby an outside party works with each side in a negotiation to reach an acceptable agreement
mediation
a type of facilitation used when an impasse occurs in a collective bargaining session so that both parties keep working toward an agreement until they can resolve the issues at hand
conciliation
