People: Total Rewards Flashcards
Extent to which employees perceive that monetary and other rewards are distributed equitably, based on effort, skill and/or relevant outcomes.
Internal equity
Unmarried couples, of the same or opposite sex, who live together and seek economic and noneconomic benefits comparable to those granted to their married counterparts.
Domestic partners
Short but broad statement documenting an organization’s guiding principles and core values about employee compensation.
Compensation philosophy
All financial returns (beyond any tangible benefits payments or services), including salary and allowances.
Compensation
Mandatory or voluntary payments or services provided to employees, typically covering retirement, health care, sick pay/disability, life insurance, and paid time off.
Benefits
Plan or method implemented by an organization that provides monetary, benefits-in-kin, and developmental rewards to employees who achieve specific business goals.
Total rewards strategy
Direct and indirect remuneration approaches that employers use to attract, recognize, and retain workers.
Total rewards
Instruments that collect information on prevailing market compensation and benefits practices (including starting wage rates, base pay, pay ranges, statutory and market cash payment, variable compensation, and paid time off).
Remuneration surveys
Situations in which an employee’s pay is below the minimum of the range.
Green-circle rates
Situations in which employees’ pay is above the range maximum.
Red-circle rates
Pay rate divided by the midpoint of the pay range.
Compa-ratio
Combining several salary grades or job classifications with narrow pay ranges into one band with a wider salary spread.
Broadbanding
Used to group jobs that have approximately the same relative internal or external worth and are paid at the same rate or within the same pay range.
Pay grades
Set the upper and lower bounds of possible compensation for individuals whose jobs fall within a pay grade.
Pay ranges
Situation in which an organization’s compensation levels and benefits are similar to those of other organizations that are in the same labor market and compete for the same employees.
External equity
Compensation provided on an individual basis in the form of goods or services.
Perquisites
Payments in return for the achievement of specific, time-limited, targeted objectives.
Premiums
Occurs when there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority; also known as salary compression.
Pay compression
Pay adjustment given to eligible employees regardless of performance or organizational profitability; usually linked to inflation.
Cost of living adjustment (COLA)
System in which pay is based on longevity in the job and pay increases occur on a pre-determined schedule.
Time-based step-rate pay
Pay based on the quantity of work and outputs that can be accurately measured.
Productivity-based pay
Form of direct compensation where employers pay for performance beyond normal expectations to motivate higher performance.
Incentive pay
Pay increase given to employees based on local competitive market requirements; awarded regardless of employee performance.
General pay increase
Pay systems in which employee characteristics, rather than the job, determine pay.
Person-based pay
Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases; also called merit pay or performance-based pay.
Pay for performance
Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as single-rate pay.
Flat-rate pay
Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as flat-rate pay.
Single-rate pay
Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases; also called merit pay or pay for performance.
Performance-based pay
Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases; also called performance-based pay or pay for performance.
Merit pay
One-time payment made to an employee; also called a lump-sum increase (LSI).
Performance bonus
One-time payment made to an employee; also called performance bonus.
Lump-sum increase (LSI)
Process of determining a job’s value and price for the purpose of attracting and retaining employees by comparing the job against other jobs within the organization or against similar jobs in competing organizations.
Job evaluation
Job evaluation method that involves establishing a hierarchy of jobs from lowest to highest based on each job’s overall value to the organization.
Job ranking
Job evaluation method that looks at compensable factors (such as skills and working conditions) that reflect how much a job adds value to the organization; points are assigned to each factor and then added to come up with an overall point value for the job.
Point-factor system
Job evaluation method in which descriptions are written for each class of jobs; individual jobs are then put into the grade that best matches their class description.
Job classification
Job evaluation method in which the relative worth and pay structure of different jobs are based on their market value or the going rate in the marketplace.
Market-based job evaluation
Job evaluation method in which each job is compared with every other job being evaluated; the job with the largest number of “greater than” rankings is the highest-ranked job, etc.
Paired-comparison method
