People Flashcards
The starting point for developing a total rewards strategy. A short (but broad) statement documenting the organization’s guiding principles and core values about employee compensation. A philosophy articulates the “why” behind employee pay.
compensation philosophy
Compensation philosophies are typically developed by whom?
HR in collaboration with the executive team
a plan or method implemented by an organization that provides monetary, benefits-in-kind, and developmental rewards to employees who achieve specific business goals
total rewards strategy
The critical for success of a total rewards strategy.
Senior management buy-in
What skills are key HR competencies to help ensure that the strategy is embraced by all stakeholders?
Interpersonal and communication
In which process step in developing Total Reward Strategy that one or more HR professionals evaluate the current compensation and benefits systems and the effectiveness of those systems in helping the organization reach its goals. Employees are typically surveyed on their opinions and beliefs regarding their pay, benefits, and opportunities for growth and development. Current policies and practices are examined.
Assessment
In which process step in developing Total Reward Strategy a senior management team made up of HR and department representatives identifies and analyzes various reward strategies to determine what would apply best in their workplace.
Design phase
What can help department managers to effectively measure the achievement and employees understand what they need to accomplish to receive the rewards? I
Training
How do you know if the organization’s total rewards strategy is effective?
cost-effectiveness, affordability, compliance with laws and statutory regulations, compatibility with mission and strategy, match with the organizational culture, appropriateness for the workforce, and equity.
first consideration in developing a compensation and benefits system
review the organization’s mission and strategy
In general, as benefits increase, there is less emphasis on individual employee contributions and responsibility and more emphasis on the success of the organization as a whole.
Entitlement-oriented
The compensation programs of other organizations are more performance-driven, putting emphasis on the performance and contributions of individual employees. These compensation systems emphasize performance-based pay, incentives, and shared responsibility for benefits.
Contribution-oriented
One way to keep in touch with the employees’ preferences in Total Reward Strategy.
conducting surveys
What helps to ensure legal compliance with fair pay regulations and prevent employee lawsuits for alleged pay discrimination
Internal equity
Most common approach in Pay Strategy. Often referred to as being externally competitive.
Match market competition
What issue may caused by organizations using more than one pay strategies?
morale issues and lead valuable employees to seek jobs in other organizations
What is the first tenet in mitigating external inequity?
start with competitive base pay
Which survey is critical in assessing external equity?
remuneration surveys
What are HR Implications towards Cultural differences in Total Reward Strategy?
Avoid headquarters biases and Involve local contacts to understand customary compensation and benefits practices.
What are HR Implications towards Standardization versus Localization in Total Reward Strategy?
Have a long-term plan to support the organizational compensation philosophy, but consider local restrictions, tax regimes, and culture.
What are HR Implications towards Competitive Labor Market in Total Reward Strategy?
Employ people with similar skills when industry-specific expertise is in short supply or competition is high; retrain or coach the hires on the job; develop and mentor talent.
What are HR Implications towards Collective Bargaining, Employee Representation, and Government Mandates in Total Reward Strategy?
Comply with requirements of third-party representation; Adhere to related government regulations and mandates and industry-wide collective agreements.
What improves organizational effectiveness and performance, employee satisfaction with pay, employee engagement and motivation, and employee retention. In both good and bad economic times, these are powerful attributes.
A better understanding of the intent and strategy of the reward program
What is the key to the success of innovative self-service technologies and applications?
Implementation
What to start with when designing a compensation system?
Review job’s skills, knowledge, and abilities
Steps in designing a compensation system
Job Analysis, Job Documentation, Job Evaluation and Pay Structure
Establishing a hierarchy of jobs from lowest to highest based on each job’s overall value to the organization.
Job Ranking
The method used in which each job is compared with every other job being evaluated if there are many jobs to evaluate.
paired-comparison method
Resource that provides snapshots of salaries across countries and regions of operations or areas of expertise (e.g., banking, oil and gas, facilities management) and includes a thorough market overview, charting of salary policies, recruitment trends, diversity, employer branding, economic outlook, and more
Hays Salary Guide
Group jobs that have approximately the same relative worth in an organization. All jobs within a particular grade are paid the same rate or within the same pay range.
Pay Grades
An indicator as to how actual wages match, lead, or lag the target market when pay ranges are based on the target market rate.
compa-ratios
Most employees receive some type of base pay, in one of two forms.
An hourly wage (for each hour worked)
A salary (the same amount no matter how many hours are worked)
In what pay systems, each incumbent of a job has the same rate of pay, regardless of performance or seniority.
single-rate pay or flat-rate pay systems
In what pay system, the employee’s pay rate is based on longevity in the job. Pay increases occur on a pre-determined schedule.
time-based step-rate pay system
In what pay system, the individual employee’s performance on the job is the basis for the amount and timing of pay increases.
performance-based pay or merit pay system. A performance-based pay system is commonly called merit pay or pay for performance (P4P or PfP).
In what pay system, pay is determined by the employee’s output.
productivity-based pay system
In what pay system, employee characteristics, rather than how the job is performed, determine pay. In such systems, two employees may perform similar tasks, but the person with superior knowledge or skill mastery receives more pay.
person-based pay
What is the most basic (but critical) role an HR professional plays regarding the benefits, costs, and array of options in launching or improving an executive compensation program?
communication
least used compensation package for direct salespeople
Straight Salary
most widely used approach to compensating sales personnel
Salary plus Commission
employee pay rates above the range maximum
Red-circle rates
an employee’s pay is below the minimum of the range
Green-circle rates
situations where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority
Pay compression
Which activity allows the organization to identify benefits that employees value.
Surveying employees regularly and understanding the make-up of the workforce
What HR professional should performs to identify the set of benefits that best matches the needs of the organization and its employees.
a gap analysis
two most common types of Retirement plans
defined benefit plans and defined contribution plans
Before making any changes in a retirement plan or building a new one, what HR professional must do regarding the organization’s long-term liability. This is particularly important in the case of mergers or acquisitions, where not all retirement-related liabilities may be recognized on the books.
Consult with colleagues and experts with strong, country-specific expertise
special incidental payments, benefits, or privileges given to individual employees, over and above their regular rewards
Perquisites
Tangible payments or services provided to broad groups of employees to cover issues such as retirement, private health coverage, sick pay/disability schemes, life insurance, and paid time off
Beneifts
The difference between incentive pay and a performance bonus
Incentive pay is predetermined. Bonus is after the fact awards
most important factor an HR leader should use when planning pay increases
Financial implication
What approach can be used to support de-layering efforts, which reduce the number of reporting levels within an organization
broadbanding
Compensation plans allow organizations to provide additional benefits to a select group of key executives, which motivates them to stay with the organization
Nonqualified deferred compensation plans
