last quiz 1 Flashcards
What are the two main components of employee compensation?
Direct financial payments (e.g., wages, salaries, incentives, commissions, bonuses)
Indirect financial payments (e.g., employer-paid insurance, vacations)
What is the purpose of a compensation policy?
The compensation policy aims to attract, retain, motivate, and engage employees. It includes components like salary increases, promotion policies, overtime pay, probationary pay, and leaves.
What are compensable factors in job evaluation?
Compensable factors are fundamental elements of a job, including skill, effort, responsibility, and working conditions.
What are the stages of establishing pay rates?
Stage 1: Job Evaluation
Stage 2: Conduct a Wage/Salary Survey
Stage 3: Combine Job Evaluation and Salary Survey to determine pay.
What is the classification/grading method in job evaluation?
The classification/grading method categorizes jobs into groups or classes and assigns jobs to these categories based on compensable factors like skills and responsibilities.
What is the point method in job evaluation?
The point method identifies compensable factors, assigns weights to each factor, and determines how much of each factor is present in a job.
What is the purpose of conducting a wage/salary survey?
To determine the prevailing wage rates for comparable jobs, assess market rates for benchmark jobs, and collect data on benefits and recognition programs.
What is a wage curve?
A wage curve is a graphic representation of the relationship between the value of a job and the average wage paid for that job.
What is pay equity, and what are its types?
External equity – How a job’s pay compares to other companies.
Internal equity – How fair the job’s pay is compared to other jobs within the same company.
Procedural equity – Fairness of the processes used to determine pay.
What is Herzberg’s Two-Factor Theory of Motivation?
Herzberg’s theory suggests that job satisfaction and dissatisfaction arise from different factors:
Hygiene factors – Extrinsic factors like salary and working conditions (affect dissatisfaction).
Motivators – Intrinsic factors like recognition and accomplishment (affect satisfaction).
What is Vroom’s Expectancy Theory?
Vroom’s theory posits that motivation is influenced by the belief that effort will lead to performance, which will lead to rewards that are valued. It is based on:
Expectancy – The probability that effort will lead to performance.
Instrumentality – The perceived connection between performance and rewards.
Valence – The perceived value of the reward.
What are merit pay raises?
Merit pay raises are salary increases awarded to employees based on individual performance, typically tied to a performance appraisal system.
What is a piecework plan?
A piecework plan pays employees based on the number of items produced or processed in a unit of time (e.g., items per hour or day).
What is the difference between annual bonuses and merit pay?
Merit pay is a permanent increase in base salary tied to individual performance.
Annual bonuses are one-time, non-cumulative payments based on performance, typically paid yearly.
What are profit-sharing plans?
Profit-sharing plans provide employees with a share of the company’s profits based on achieving financial goals, fostering teamwork and alignment with company success.
What is Lincoln Electric’s incentive system?
Lincoln Electric’s system includes piece-rate pay, a bonus system tied to performance, job security, and a strong trust relationship between employees and management.
What are the advantages and disadvantages of commission plans?
Advantages: Greatest incentive for salespeople, easy to understand, and sales costs align with sales performance.
Disadvantages: Focuses on sales over customer relationships, may create income variability, and could lead to unfairness.
What is the concept of “pay for knowledge”?
Pay for knowledge refers to compensating employees based on the specific skills or knowledge they possess that is valuable to the organization.
