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SHRM-CP 2021 > People - Total Rewards > Flashcards

People - Total Rewards Flashcards

1
Q

Total Rewards

A

Financial inducements & rewards as well as nonfinancial inducements and rewards, such as the value of good job content and good working environment.

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2
Q

Total Rewards Strategy

A

A plan or method implemented by an orgz that provides monetary, benefits-in-kind, and developmental rewards to employees who achieve specific business goals

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3
Q

Terminology Associated with Total Rewards

A

Benefits: tangible payments or services provided to broad groups of employees to cover issues such as retirement, health care, sick pay, life ins, PTO, and those required by law

Compensation: all other financial returns (beyond any tangible benefit payments), including salary and allowances

Perquisites: compensation provided on an individual basis in the form of goods or services AKA perks

Incentives: payments in return for the achievement of specific, time limited, targeted objectives. Often calculated as a % of base salary

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4
Q

Compensation Philosophy

A

a short (but broad) statement documenting the orgz guiding principles and core values about employee compensation

should be: fair, equitable, compliant, competitive, aligned to philosophy, easy to communicate

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5
Q

Developing a Total Rewards Strategy (Steps)

A

ADIE:

Assessment
Design
Implementation
Evaluation

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6
Q

Assessment

A

evaluate the current compensation and benefits systems and the effectiveness of those systems in helping the orgz reach its goals

?:

who should be eligible
what behaviors are rewarded
what type of rewards will work best
how will the orgz fund the new system

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7
Q

Design

A

where HR and department representatives identify and analyze various reward strategies to determine what would apply best in their workpalce

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8
Q

Implementation

A

HR implements the new rewards system and circulates materials that communicate the new strategy to EEs

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9
Q

Evaluation

A

to determine how well the system achieves its goals–cost, effectiveness, affordability, compliance, compatibility with strategy, match with culture

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10
Q

Strategic Alignment

A

Compensation and benefits systems must support orgz missions and strategies, that is why you must first review the orgz mission and strategy b4 creating

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11
Q

Cultural Alignment

A

no matter the size of an orgz or where it is in the lifecycle, the comp system must fit the orgz culture

Entitlement-oriented: these orgz feel that EEs are entitled to benefits as a condition of employment.

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12
Q

Internal v. External Equity

A

Internal: when employees feel that performance or job differences result in corresponding differences in rewards are fair.

External: comparing an orgz compensation levels and benefits to those of other orgz that are in the same labor markets and that compete for the same EEs.

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13
Q

Pay Strategies in the Market

A

Lag market: pay rates below those of other orgz
Match market: wage rates and benefits similar to that of the competition

Lead: higher wages and/or benefits in an attempt to attract and keep the best talent

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14
Q

Issues and Challenges in Global Compensation and Benefits

A
  1. Standardization v. Localization: consider local market
  2. Culture: cultural differences ‘what do others value?’
  3. Competitve Labor Market: will vary accross markets
  4. Collective Bargaining: unions that protect EEs
  5. Economic Factors: politics, economy, unemployment
  6. Taxation: tax regulations
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15
Q

4 Important Reasons for Communication of Total Strategy

A
  1. educating EEs about the orgz total rewards practices
  2. achieving EEs buy-in and make them aware of the overall value
  3. supporting the orgz strategic objectives
  4. supporting the orgz goals for performance mgmt

*Its important to be transparent about pay strategy

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16
Q

Challenges to Pay Transparency

A

Complete openness can lead to:

  • jealousy
  • performance problems
  • questioning the fairness
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17
Q

Total Rewards Communication Tools

A
  1. Required Communication: mandated
  2. Voluntary Communication: more is better
  3. Communication Plans: complex system require more
  4. Direct Communication: written comms plan
  5. Individualized Comp Statement: indivudal statement
  6. Self Service: quick and easy access
  7. Consistent message: multiple locations, 1 message
18
Q

Potential Orgz Points for Legal Concerns

A
  1. Laws pertaining to the industry legislated by the country

2. Laws and regulations legislated by a cooperative region pertaining to the industry

19
Q

Job Analysis

A

A systematic study of jobs to determine what activities and tasks they include, the personal qualifications necessary for performance of the jobs, and the conditions under which the work is performed.

20
Q

KSAs

A

K: body of information necessary for task performance
S: level of proficiency needed for task performance
A: capabilities necessary to perform a job

21
Q

Job Analysis Gathers Information About the Following

A

Job Context: the purpose of the job, its work environment, its place in the orgz structure

Job Content: the duties and responsibilities of people who hold the job

Job Specifications: KSAs required for a perso to have a reasonable chance of successfully performing the job

Performance Criteria: desired behaviors that will constitute performance in the job

22
Q

Job Analysis Methods

A
  1. Observation: direct observation
  2. Interview: interview to obtain info about KSA (from EEs, peers, supervisors, team)
  3. Open Ended ?s: ?s to incumbent/manager about KSA
  4. Structured Questionnaire: structured for specific responses to determine the frequency of tasks
  5. Work diary/log: review records maintained
23
Q

Job Documentation

A

A job analysis usually results in three deliverables:

  1. Job description: written description of a job
  2. Job specifications: minimum qualifications
  3. Job competencies: KSAs that give rise to the behaviors needed to perform a job effectively.
24
Q

Job Evaluation

A

Determines the value and price of a job in order to place and compare it within an orgz as well as attract and retain EEs in a competitive environment

25
Q

Job-Content-Based Job Evaluation

A

The relative worth and the pay structure of different jobs are based on an assessment of their content and their relationship to other jobs within the orgz

*Most internal evaluations can be grouped into two categories: quantitative and non-quantitative

26
Q

Nonquantitative v. Quantitative

A

Nonquantitative methods strive to establish a relative order of jobs (evaluate an entire job)

Quantitative methods try to establish how much more one job is worth than another job by using a scaling system

27
Q

Nonquantitative Method ‘Job Ranking’

A

involves establishing a hierarchy of jobs from lowest to highest based on each jobs overall value to the orgz. ranking evaluates the whole job, rather than parts of it, and compares one job to another

28
Q

Nonquantitative Method ‘Paired-Comparison’

A

may be used in which each job is compared with every other job being evaluated

29
Q

Nonquantitative Method ‘Job Classification’

A

writes descriptions for each class of jobs, then those are put into the grade that best matches their class description

30
Q

Quantitative Method ‘Point-Factor System’

A

the most commonly used method of job evaluation. the compensable factors chosen for the evaluation are:

  • skills
  • responsibility
  • efforts and physical demand
  • working conditions
  • supervision of others
31
Q

Market Based Job Evaluation

A

The relative worth and the pay structure of different jobs are based on their market value or the going rate in the marketplace. AKA ‘market pricing’

32
Q

Remuneration Surveys

A

Collect information on prevailing market compensation and benefits practices, including starting wage rates, base pay, pay ranges, other statutory andmarket cash payments, variable comp, and time off

33
Q

Internal v. External Survey

A

Internal: orgz can develop their own internal survey to allow for more control over the survey technique and data analysis

External: org have options available if they choose an external pay survey

34
Q

Survey Data Analysis

A

Survey data must first be verified and may need to be aged, leveled, and/or factored for geography location

When salary data is aged, movement in market rates is used to adjust outdated data.

If a job in a survey is similar but not identical, the data must be leveled for a better match

Wage rates will vary by location, an orgz should factor for geography

35
Q

Benchmarking

A

range from informal networking and knowledge sharing to evaluate orgz pay strategies to formal engagements with private firms that provide current survey data.

36
Q

Pay Grades

A

Used to group jobs that have approx the same relative worth in an org. All jobs within a particular grade are paid the same rate or within the same pay range.

37
Q

Pay Range

A

Sets the upper and lower limits of compensation for EEs whose jobs fit within that particular grade

38
Q

Compa Ratios

A

Are an indicator as to how actual wages match, lead, or lag the target market.

Compa ratio=pay rate/midpoint

39
Q

Broadbanding

A

Combines two or more salary grades to create larger ranges and give ppl wide latitude to move within their job without outgrowing tha pay scale

Different bands for different types:
Management band
Service expert band
Technical band

40
Q

Advantages v. Disadvantages of Broadbanding

A

A: provides wider ranges, reduces the # of grades, provides more autonomy to line managers

D: reduces the value of ranges, affords less control, creates overly broad salary ranges, makes it hard to justify salary differences, reduces the opportunity for promotion

SHRM-CP 2021 (26 decks)

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