Intro & The Pay Model Ch.1 Flashcards
What is the purpose of compensation?
Create willingness among qualified persons to join the org and perform tasks the org needs
Why do employees accept jobs?
The job must satisfy their own needs
-intrinsic & extrinsic rewards (total rewards)
Who deals with compensation in small orgs?
Large orgs?
Very large orgs?
1) owner or CEO
2) HR dept; head of HR (with top mgmt)
3) comp specialists
What are the 3 building blocks of a pay model?
CPT
1) Comp objectives (what you want to achieve through the system)
2) Policies (guide pay decisions/actions)
3) Techniques (make up comp system)
What are the 3 compensation objectives?
EFC
1) Efficiency - improve performance and quality while controlling labour costs
2) Fairness - ensure employees are treated fairly
3) Compliance - conform to laws & regulations (ex.avoid pay discrimination)
What two main purposes do objectives serve?
- guide design of the pay system (e.g., pay for performance policy if you pay employees based on their relative contributions)
- standard for judging success of the pay system
What are the 4 policies of pay systems
ACCM (AIR CANADA CENTRE)
1) Internal alignment
2) External competitiveness
3) Employee contributions
4) Management
* *All need to ensure efficiency, fairness & compliance
What is internal alignment?
- comparisons btwn jobs or skill levels in a single org
- ensures efficiency, fairness & compliance
What is employee contributions policy?
- employee performance
- efficiency - motivation to perform well with low costs
What is the management policy?
- policies related to managing the pay system
- actively manage the system effectively
What techniques implement internal alignment?
- job analysis
- descriptions & evaluations/certificates
What techniques implement external competitiveness?
- mkt definitions
- surveys
- pay policy lines
What techniques implement employee contributions?
- seniority based
- performance based
- merit guidelines
What techniques implement management?
- planning
- budgeting, comm’n
What is a pay model?
strategic policies (4) --> techniques --> strategic objectives (EFC) -provides structure for understanding comp systems
Why is compensation important?
- facilitates organizational performance
- influences employee work behaviours
- fosters pay satisfaction
- motivates employees
What is compensation?
Anything provided by an org that satisfies employee needs are considered rewards
What are Extrinsic rewards?
- -satisfy basic needs for survival & security
- social needs
- need for recognition
What are intrinsic rewards?
-satisfy higher level needs for self esteem, achievement, growth, development
what are total rewards?
1) total compensation
- cash compensation: base pay, merit/cost of living, short term & long term incentives
- benefits: allowances, work.life programs, life, health, disability insurance, pension
2) relational returns
- recognition & status
- employment security
- challenging work
- learning opportunities
