Slide 8

Question 1

What are the two approaches that employers use in setting pay rates?

Answer 1

1. market-based approaches- smaller firm
2. evaluation methods- involves assigning values to each of the company’s jobs

Question 2

What are some employer objectives for reward strategies?

Answer 2

1. Attracting staff
2. Retaining staff
3. Motivating staff
4. Driving change
5. Corporate reputation
6. Affordability

Question 3

What are some employee objectives for reward strategies?

Answer 3

1. purchasing power
2. fairness
3. rights
4. recognition
5. composition

Question 4

What are the two main components in employee compensation?

Answer 4

1. direct financial payments: wages, salaries, incentives
2. indirect financial payments: employer-paid insurance and vacations

Question 5

What factors determine the design of any pay plan?

Answer 5

1. legal
   2.union
2. company strategy/policy
3. equity

Question 6

What are the components of equity?

Answer 6

1. external equity
2. internal equity
3. individual equity
4. procedural equity

Question 7

What is external equity?

Answer 7

it refers to how a job’s pay rate in one company compares to the job’s pay rate in other companies

Question 8

What is internal equity?

Answer 8

it refers to how fair the job’s pay rate is when compared to other jobs within the same company

Question 9

What is individual equity?

Answer 9

it refers to the fairness of an individual’s pay as compared with what his or her coworkers are earning for the same or very similar jobs within the company, based on each person’s performance.

Question 10

what is procedural equity?

Answer 10

“Perceived fairness of the processes and procedures used to make decisions regarding the allocation of pay.”.

Question 11

What is the traditional approach for salary structures?

Answer 11

1. job families
2. ladders and steps

Question 12

What are some contemporary trends for salary structures?

Answer 12

1. single pay spines
2. performance-based progression
3. broad banding
4. total reward

Question 13

What are the objectives of the single spine pay structure?

Answer 13

1. Firstly place all public sector employees on one pay structure
2. Second, ensure that jobs within the same job value range are paid within the same pay range
3. Thirdly, allow Government the ability to manage the wage bill more efficiently
4. Again, ensure compliance and ease of monitoring pay structures of independent institutions
5. Also, minimise industrial relations tensions related to pay distortions across the public sector

Question 14

What are the advantages of the Single spine pay structure?

Answer 14

1. One single ladder and set of grades covers the whole organisation
2. Helps flexibility and harmonization

Question 15

What are the disadvantages of the single spine structure?

Answer 15

1. A common set of assumptions may be inappropriate for certain groups
2. Can hinder pay flexibility for certain groups

Question 16

Talk a bit about performance-based progression salary structure

Answer 16

Progression depends on performance rather than seniority
Leads to more effective wage cost control
However, can be perceived by employees as being over reliant on managers’ opinions

Question 17

What is broadbanding?

Answer 17

Broadbanding means collapsing salary grades into just a few wide levels or bands, each of which contains a relatively wide range of jobs and pay levels.
Involves retaining some form of grading system while reducing the numbers of grades or salary bands
Broadbanding injects greater flexibility into employee assignments, and it allows an employee to move up or down along the pay scale without changing pay ranges.

Question 18

What are benefits?

Answer 18

indirect financial and nonfinancial payments employees receive for continuing their employment with the company. They include things like health and life insurance, pensions, time off with pay, and child-care assistance

Question 19

What are some types of benefits?

Answer 19

Pensions
Company cars
Sick pay
Meals
Live-in accommodation
Parking facilities
Private health insurance
Crèche facilities

Question 20

What is statutory sick pay?

Answer 20

A state benefit
Provides basic income to employees who are incapable of work due to illness
Administered by employers and paid through payroll
Since 1994 employers have full financial responsibility for SSP for first 4 weeks of absence
After 4 weeks, the employers can claim back a portion of costs from the state

Question 21

What is occupational sick pay?

Answer 21

No obligation on employers to pay employees for absence due to sickness beyond requirements of SSP
If employers choose to – via occupational sick pay (OSP) schemes
A sum in excess of the statutory minimum is paid
Tend to be most generous in unionised environments
Schemes can vary on length of service of staff

Question 22

What are pensions?

Answer 22

Pension funds can be described as contribution made by employees towards their retirement

Question 23

What are pensions?

Answer 23

Pension funds can be described as contribution made by employees towards their retirement

Question 24

What are some types of occupational pension schemes?

Answer 24

1. Defined benefit scheme
2. Defined contribution scheme
3. Hybrid schemes

Question 25

What is a defined benefit scheme

Answer 25

Contributions made into a single organisation fund which is invested for its members Retired employees draw pension from fund calculated according to defined formula You’ll get a pension based on a percentage of your earnings. Broadly speaking, the greater your salary and length of service the bigger your pension should be. These pensions offer a more predictable pension.

Question 26

What is a defined contribution scheme?

Answer 26

Also known as money purchase schemes Employees and employers contribute a fixed percentage of salary Pension benefits received dependent on money contributed and way it has been invested Investments perform well – a good level of pension can be gained Single lump sum given to employees on retirement to buy an annuity from life insurance company Your pension depends on the amount of money put into the scheme, how well the funds have been invested, the level of charges applied to your fund

Question 27

What is the main difference between a defined benefit plan and a defined contribution plan?

Answer 27

With a defined benefit plan, the employee can compute what his or her retirement benefits will be upon retirement. With a defined contribution plan, the actual pension will depend on the amounts contributed to the fund and on the success of the fund's investment earnings

Question 28

What is the hybrid pension scheme?

Answer 28

It seeks to combine the best elements of the two main schemes

Question 29

How does a personal pension scheme work?

Answer 29

Personal pensions are arranged through an insurance company Individuals pay amounts into their own personal pension, which is then invested in a similar way as a company pension

Question 30

How does a group personal pension scheme work?

Answer 30

Set up by an employer instead of an occupational pension scheme From a legal and taxation viewpoint, no different from any individual personal pension Charges are lower as employer can arrange a bulk discount Scheme administered by an insurance company Company and employees make contributions

Question 31

How does a stakeholder pension work?

Answer 31

Established in 2001 Aimed primarily at middle income earners who do not have access to occupational schemes Aim is to reduce the number of people reliant solely on state pensions Can be operated by employers, financial services companies or a trade union Charges are kept low as providers follow government standards Employers not obliged to make contributions, but must provide access to a pension through the payroll