EXAM 3 COMPENSATION

Question 1

indirect compensation

Answer 1

non-monetary (benefits, services, perks)

Question 2

direct compensation

Answer 2

monetary

Question 3

Base

Answer 3

salary, hourly wage

Question 4

merit

Answer 4

permanent reward for past performance
don’t know ahead of time

Question 5

incentives

Answer 5

motivate future performance
one time thing
told ahead of time

Question 6

skill/knowledge

Answer 6

more valuable
ex. degree, CPA, skills

Question 7

seniority

Answer 7

loyalty/stay with company a long time
more experience = better employee

Question 8

add-ons

Answer 8

ot
shift differentials
holidays
weekends

Question 9

COLA

Answer 9

cost of living adjustment
higher inflation = higher $

Question 10

compensation philosophies?

Answer 10

entitlement
performance

Question 11

compensation philosophy (entitlement)

Answer 11

seniority based
across the board raises (every year)
“santa claus” bonuses (once a year, good or bad)

Question 12

compensation philosophy (performance)

Answer 12

performance based (earn it)
no raises for poor performers
not necessarily every year

MORE COMMON

Question 13

equity theory

Answer 13

compare pay to others to determine fairness (outside company or coworkers)

Question 14

equity (fair)

Answer 14

my outcomes/inputs = other’s outcomes/inputs

Question 15

inequity (under-reward)

Answer 15

my outcomes/inputs < other’s outcomes/inputs

quit? less effort, bad attitude

Question 16

inequity (over-reward)

Answer 16

my outcomes/inputs > other’s outcomes/inputs

rationalize, move on

Question 17

pay secrecy

Answer 17

guess higher pay than actual

Question 18

internal equity

Answer 18

pay differences for ALL jobs are fair

Question 19

external equity

Answer 19

what I am paying vs. what others are paying

Question 20

individual equity

Answer 20

same job, same company

Question 21

determining internal equity: job evaluation

Answer 21

job ranking
job classification
point-factor method

Question 22

job ranking

Answer 22

cons- diff. standard, criteria?, diff. between jobs, relies heavily on job description

pros– fairly easy and quick if few jobs

Question 23

point-factor method

Answer 23

compensable factors (characteristics w/ value)
–> levels w/ points –> job description (not person)

VALUE OF JOB, NOT PERSON

cons- need training, time consuming

pros- most common, east to defend, criteria

Question 24

job classification

Answer 24

take job descriptions and rank from highest to lowest

Question 25

determine external equity: market review

Answer 25

conduct salary surveys determine pay level policy w/ other companies

Question 26

conduct salary surveys

Answer 26

size location industry

Question 27

determine pay level policy

Answer 27

match (=) lead (+) lag (-)

Question 28

match

Answer 28

most companies no leverage

Question 29

lead

Answer 29

more applicants more labor costs

Question 30

lag

Answer 30

harder to attract higher turnover lower labor costs only get bad performers offer benefits to offset it

Question 31

establishing pay: combining internal & external equity

Answer 31

1. plot each job 2. market line 3. pay grades lead = move line up lag = move line down

Question 32

red circle employee

Answer 32

employee whose pay is ABOVE their position's maximum rate

Question 33

green circle employee

Answer 33

employee whose pay is BELOW their position's maximum rate

Question 34

recognizing individual equity

Answer 34

experience seniority performance (merit pay, incentives, knowledge/skill pay)

Question 35

title VII of the civil rights act of 1964

Answer 35

protects from employment discrimination based on race, color, religion, sex and national origin

Question 36

lilly ledbetter fair play act of 2009

Answer 36

every time you get a paycheck based on discrimination, the 180 days resets

Question 37

fair labor standards act of 1938

Answer 37

min. wage overtime child labor (14-15 yrs: limited jobs and hours 16-17 yrs: limited jobs 18+ yrs: unlimited)

Question 38

min. wage provision

Answer 38

provide an income floor flow worker's lowest paid jobs can pay less if tipped state laws diff. (can't pay worse than federal min. wage)

Question 39

overtime provision

Answer 39

time and a half for > 40 hours nonexempt = OT exempt = no OT

Question 40

exempt from OT?

Answer 40

salary test (earn more than this amount) job duties test (executive, admin, professional, outside sales, computer related, highly compensated)

Question 41

equal pay act of 1963

Answer 41

pay men + women in same job w/ same company the same amount exceptions: - seniority - merit pay - quantity or quality of production - factors other than sex