Module 8

Question 1

Total Compensation

Answer 1

Includes all financial returns, benefits and tangible services an employee receives from the employment relationship.

Question 2

Total Rewards

Answer 2

Comprised of total compensation as well as relational returns.

Question 3

Relational Returns

Answer 3

Non-monetary employment gains, such as recognition and status, employment security, challenging work, learning opportunities.

Question 4

A Successful Total Rewards System

Answer 4

Attracts suitable talent, retains current talent, controls labour costs, rewards desired behaviour, reduces union pressures, and is legally compliant.

Question 5

Internal Alignment (IA)

Answer 5

Determines how jobs within an organization relate to each other.

Question 6

Fundamental Structures

Answer 6

Job-based & Person-based

Question 7

Job-based

Answer 7

Refers to the content of the work.

Question 8

Person-based

Answer 8

Refers to the skills, knowledge and abilities of the employee.

Question 9

What is Internal Pay Structure Determined By?

Answer 9

The number of levels or roles, the pay differential between those levels, the criteria that determine and define those levels and the differentials.

Question 10

Job Evaluation (JE)

Answer 10

The process of determining the value of a job and its relative worth to the organization.

Question 11

Ranking

Answer 11

Ranks job descriptions from high to low based on perceived value to the organization.

Question 12

Classification

Answer 12

Requires the definition of job class descriptions, then compares job descriptions with standard description of the class to which it best fits.

Question 13

Point-Based Systems

Answer 13

Evaluates a compensable factor for each job, determines the degree of each factor and finally allocates points to each degree.

This process involves conducting job analysis, determining compensable factors, scale the factors, and weighing the factors and assign points.

Question 14

Person-Based Structures

Answer 14

Skill-based and competency-based plans are conceptually the same, they pay employees for the skills or competencies they possess regardless of whether they use them (all) in their daily work.

Question 15

Skill-Based Pay Structure

Answer 15

• Skills are specific and validated by means of certification
• Usually applied to blue collar workers
• Can be focused on either depth or breadth of skill set
• Allows flexible deployment of employees based on workflow needs.

Question 16

Competency-Based Pay Structure

Answer 16

• Competencies are broader and more difficult to objectively validate
• Usually applied to white collar workers
• Focus on a set of competencies assumed to be critical for successful job performance

Question 17

Purposes of Participating in a Survey

Answer 17

• Adjust pay levels and determine by how much
• Understand trends in the labour market

Question 18

Market Pay Line

Answer 18

Connects a company’s benchmark jobs with the market rates paid by competitors for such benchmark jobs.

Question 19

Pay Policy Line

Answer 19

Reflects company’s position in the market.

Question 20

Pay Grade

Answer 20

Includes various jobs consided substantially equal pay purposes and offer flexibility but are difficult to design.

Question 21

Pay Range

Answer 21

The range between the upper and lower limit of a pay grade, and provides flexibility when two or more rates are paid to employees doing the same job.

Question 22

Pay for Performance Plans

Answer 22

Also called variable pay plans, known for having a positive perfomance impact if designed well.

Question 23

Long-Term Plans

Answer 23

Mixed evidence on the effectiveness of stock ownership in leading to better corporate results:
- Stock Options
- Broad-based options plans (BBOPs)
- Employee stock ownership plan (ESOPs)

Question 24

Lump Sum Bonus

Answer 24

Not built into base pay and thus no long-term impact on labour costs.

Question 25

Individual Spot Awards

Answer 25

Usually awarded for exceptional performance on a given project.

Question 26

Individual Incentive Plans

Answer 26

Promise pay for some objective pre-established performance level, and are less common today.

Question 27

Sales Plans

Answer 27

Require low supervision and high initiative, standard compensation package or commission only may not work; combine base pay with commissions.

Question 28

Contingent Workers

Answer 28

Include independent contractors and employees employed by temp agencies.

Question 29

Group Incentive Plans

Answer 29

Incentive plans where payout depends on team performance compared to a given standard.

Question 30

3 Types of Group Incentives

Answer 30

• Gain-Sharing Plans
• Earnings-at-Risk Plans
• Profit-Sharing Plans

Question 31

Gain-Sharing Plans

Answer 31

Typically use operational performance measure.

Question 32

Earnings-at-Risk Plans

Answer 32

Reduces base pay if company does poorly.

Question 33

Profit-Sharing Plans

Answer 33

Typically use financial performance measure.

Question 34

International Pay

Answer 34

• The Localizer
• The Exporter
• The Globalizer

Question 35

The Localizer

Answer 35

Designs pay systems consistent with local conditions.

Question 36

The Exporter

Answer 36

HQ-designed pay system exported to the world and only adjusted for mandatory legal local conditions.

Question 37

The Globalizer

Answer 37

Adjusts to local conditions beyond what is legally required only if it deems to support business strategy/cost control.