L3 Flashcards
Goals of a Compensation Plan
First, the compensation package should be positive enough to attract the best
people for the job. An organization that does not pay as well as others within the
same industry will likely not be able to attract the best candidates, resulting in a
poorer overall company performance.
• Once the best employees and talent come to work for your organization, you want
the compensation to be competitive enough to motivate people to stay with your
organization. Although we know that compensation packages are not the only
thing that motivates people, compensation is a key component.
• Compensation can be used to improve morale, motivation, and satisfaction among
employees. If employees are not satisfied, this can result not only in higher
turnover but also in poor quality of work for those employees who do stay. A
proper compensation plan can also increase loyalty in the organization.
• Pay systems can also be used to reward individual or team performance and
encourage employees to work at their own peak performance.
the ___________ should be positive enough to attract the best
people for the job. An organization that does not pay as well as others within the
same industry will likely not be able to attract the best candidates, resulting in a
poorer overall company performance.
compensation package
________ is a key component.
compensation
can be used to improve morale, motivation, and satisfaction among
employees. If employees are not satisfied, this can result not only in higher
turnover but also in poor quality of work for those employees who do stay. A
proper compensation plan can also increase loyalty in the organization.
Compensation
____ can also be used to reward individual or team performance and
encourage employees to work at their own peak performance.
Pay systems
Process of implementing Compensation
Strategy
1) Compensation Internal and External Factors
2) Job Evaluation
3) Type of Pay System
4) Types of Pay
5) Legal and Pay Theories
= Implementation of Compensation Strategy
is defined as the process of determining the relative worth of jobs to determine
pay structure. ______ can help us determine if pay is equitable and fair among our
employees
Job evaluation
One of the simplest methods, used by smaller companies or within individual departments, is
a _____
job ranking system
In this type of evaluation, ______ are listed and ranked in order of
importance to the organization.
job titles
A ________ can also occur, in which individual jobs
are compared with every other job, based on a ranking system, and an overall score is given
for each job, determining the highest-valued job to the lowest-valued job.
paired comparison
Another type of job evaluation system is the _____ which determines the value
of a job by calculating the total points assigned to it.
point-factor system
The points given to a specific job are
called compensable factors. Some of their compensable factors include the following:
a. Knowledge
b. Autonomy
c. Supervision
d. Psychological demands
e. Interpersonal skills
f. Internal and external contacts
The first method to pay grade is to develop a variety of pay grade
levels. Then once the levels are developed, each job is assigned a
pay grade. When employees receive raises, their raises stay
within the range of their individual pay grade, until they receive a
promotion that may result in a higher pay grade. The advantage
of this type of system is fairness. Everyone performing the same
job is within a given range and there is little room for pay
discrimination to occur.
Pay Systems
In addition to the pay level models we just looked at, other considerations might include the
following:
Skill-based pay.
Competency-based pay.
Broadbanding
Variable pay system.
With a skill-based pay system, salary levels are based on an employee’s
skills, as opposed to job title. This method is implemented similarly to the pay grade model,
but rather than job title, a set of skills is assigned a particular pay grade.
Skill-based pay
Rather than looking at specific skills, the competency based
approach looks at the employee’s traits or characteristics as opposed to a specific skills set.
This model focuses more on what the employee can become as opposed to the skills he or she
already has.
Competency-based pay.
is similar to a pay grade system, except all jobs in a particular
category are assigned a specific pay category. For example, everyone working in customer
service, or all administrative assistants (regardless of department), are paid within the same
general band. McDonald’s uses this compensation philosophy in their corporate offices,
stating that it allows for flexibility in terms of pay, movement, and growth of employees.
Broadbanding
This type of system provides employees with a pay basis but then links
the attainment of certain goals or achievements directly to their pay. For example, a
salesperson may receive a certain base pay but earn more if he or she meets the sales quota.
Variable pay system
Pay
Theories
The _____ is concerned with the relational satisfaction
employees get from pay and inputs they provide to the
organization.
equity theory
Pay
Theories
The ____ says that employees will put in as much
work as they expect to receive.
expectancy theory
Pay
Theories
The reinforcement theory, developed by _______, 13
says that if high performance is followed by some reward, that
desired behavior will likely occur in the future. Likewise, if high
performance isn’t followed by a reward, it is less likely the high
performance will occur in the future.
Edward L. Thorndike
Types of Pay
Pay
Salary
Hourly Wage
Piecework System
Types of Incentive Plans
Commission Plans
Bonus Plans
Profit Sharing Plans
Stock Options
Fringe Benefits
Health Benefits
401(k) Plans
Other Types of
Compensation
Mandated
Social Security and Medicare
Unemployment
Insurance and
Worker’s
Compensation
Voluntary
Incentive pay
Systems
Medical
Insurance
Employee
pension plans
Paid time off
Key to a successful career as a human resource
manager (HRM) or as a manager.
• The first thing we need to do is learn how we can
communicate with our employees. Then we will want
to look at our own communication style and compare
that with other styles.
• Body language is also a key contributor to
communication; in fact, as was suggested in the late
1960s by researcher Albert Mehrabian, body language
makes up 93 percent of our communication.
Communication
