Quiz 4 Flashcards
internal vs. external equity
will pay be fair within the company or fair compared to other employers
fixed vs. variable pay
will pay be paid through base salaries or fluctuate depending on various criteria
job vs. individual pay
will pay be based on particular job or overall skill & knowledge employee brings
egalitarianism vs. elitism
egalitarianism - place most employees under same compensation system
elitism - establish different plans by organization level or group
below-market vs. above-market
will pay be at, above or below market levels
monetary vs. nonmonetary awards
will compensation plan use monetary or nonmonetary rewards to motivate employees
open vs. secret pay
will employees have access to information about other worker’s compensations or will this info be withheld
centralization vs. decentralization of pay decisions
will compensation be decided in controlled central location or delegated to managers
job based compensation plans
achieving internal, external, and individual equity
achieving internal equity
job evaluation - provides importance of each job to the firm
achieving external equity
identify benchmark jobs & check salaries
establish pay policy (lead, lag, or market rate)
achieving individual equity
individual assigned pay within a range
within-pay-range positioning criteria
previous experience
seniority
performance appraisal ratings
skill based compensation plans
skill mastery increases pay, based on 3 types of skills; workforce is more flexible but training costs are higher
3 types of skills
depth - specialized area
breadth - jobs/tasks in firm
vertical - self-management
fair labor standards act
exempt/non-exempt employees, minimum wage and overtime
equal pay act
male and female employees must be paid the same for jobs of comparable worth, with some exemptions (seniority, job performance, etc)
what should a compensation system design do?
enable the firm to achieve strategic objectives and be molded to unique characteristics of firm
what is pay-for-performance?
incentive system that rewards individuals and groups based on their contributions
p-f-p challenges
"do only what you get paid for" syndrome unethical behavior competition measuring performance is difficult high stress
advantages of individual-based p-f-p plans
performance rewarded is likely to be repeated
helps shape goals
individual equity
individualistic culture in U.S.
disadvantages of individual-based p-f-p plans
can promote single-mindedness
goals not given priority
inflexibility
advantages of team-based p-f-p plans
foster group cohesiveness
easier to asses team performance
disadvantages of team-based p-f-p plans
free-riders
social pressures to limit performance
intergroup competition
why would an employer want to reward excellent customer service?
to retain customers and encourage employees to provide better service
employee benefits
group membership rewards that protect employees and their families from risks that could jeopardize health & financial security
co-pay
small payment employees pay for each visit to a physician, health plan covers the rest
deductible
annual out-of-pocket expenditure that employee must make before insurance makes any reimbursements
what are the legally required benefits?
health insurance social security worker's compensation unemployment insurance family & medical leave
benefits of social security
disability insurance
retirement income
medicare
survivor benefits
unemployment insurance
has to be actively seeking work and have left job involuntarily for former employer to provide supplemental unemployment benefits
worker’s compensation
if an employee is injured on the job and unable to work they are compensated for their time lost at work
FMLA
up to 12 weeks unpaid leave for birth, adoption, to care for a sick relative, or if employee becomes seriously ill
voluntary types of benefits
retirement
insurance
paid time off
employee services
COBRA of 1985
allows employees to continue health insurance after their employment has terminated
HIPAA
employee may transfer between health insurance plans without a gap in coverage if they have a preexisting condition
types of health insurance
traditional, health maintenance organizations (HMO), preferred provider organizations (PPO)
3 parts of compensation
benefits, salary, incentives
