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HR Intro > Third Exam > Flashcards

Third Exam Flashcards

1
Q

What are the three components of total compensation?

A
  1. Base pay
  2. Incentive pay
  3. Indirect compensation
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2
Q

What is base pay?

A

Fixed pay that an employee receives on a normal basis.

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3
Q

What is incentive pay?

A

Pay that fluctuates based on some criteria (commission or bonuses, for example).

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4
Q

What is indirect compensation?

A

Pay that is not necessarily in the form of cash; benefits (insurance and 401Ks), for example.

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5
Q

How much of a cost does compensation represent to most firms?

A

Usually around 60%. This can vary greatly from industry to industry.

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6
Q

What is internal equity?

A

Is the pay fair relative other people in the organization?

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7
Q

What is external equity?

A

Is the pay fair relative to people in other organizations, of the same profession?

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8
Q

What happens if employees decide their pay is NOT fair?

A

Turnover and lower quality of work. High absenteeism.

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9
Q

What is fixed pay?

A

Getting paid the same amount all the time.

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10
Q

What is variable pay?

A

Pay that varies based on numerous factors.

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11
Q

Why do US companies primarily use fixed pay?

A
  1. Administratively - It’s easy to give the same amount every week.
  2. Easy for employee, knowing what they are going to get every week.
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12
Q

What is a piece-rate plan?

A

You get paid for a certain number of items you produce. Like getting $10/widget you make; make 40 and you make $400.

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13
Q

What is membership-contingent compensation?

A

You get the same amount as everyone else, based solely upon being part of the team/organization.

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14
Q

What is the skills-based approach?

A

You’re paying people based on what their SKILLS are worth. This can make the employees work harder, but that also costs the company more money.

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15
Q

What is a job-based approach?

A

You pay people based upon what the JOB is worth.

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16
Q

What is an egalitarian pay system?

A

Everyone in the organization is under the same compensation system.

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17
Q

What is an elitist pay system?

A

People in the organization are under different compensation systems, usually based upon hierarchy.

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18
Q

What is below-market compensation?

A

Paying people less than they’re worth. You get crappier workers and high turnover.

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19
Q

What is above-market compensation?

A

Paying people more than they’re worth. Better quality of applicants and lower turnover.

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20
Q

What is secret pay?

A

A system in which no one knows what anyone else makes. This can open you up to lawsuits if someone feels discriminated against.

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21
Q

What is open pay?

A

Public record of pay.

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22
Q

What are the differences between centralized vs decentralized pay decisions?

A

Centralized pay means all the pay decisions are made from a central location (usually the HR department). Decentralized pay means more regional pay decisions.

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23
Q

What is a job evaluation?

A

The process of evaluating the relative value or contribution of different jobs in an organization, for internal equity.

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24
Q

In a job evaluation, what’s the process? 5 steps

A
  1. Conduct a job analysis.
  2. Write a job description.
  3. Rate worth of all jobs using a predetermined system.
  4. Create a job hierarchy.
  5. Classify jobs by grade level.
25
Q

What is the Point Factor method?

A

When you assign points to jobs based on compensable factors, like skill, effort, responsibility, or working conditions.
A nurse would rank higher in all of these factors than an office assistant, and thus make more money.

26
Q

How are pay grades determined?

A

Depending upon how many points they have from the Point Factor method. Higher points means being in a higher pay grade.

27
Q

What is a market survey?

A

A survey that tells you how much that job is paid in the market; used for external equity.

28
Q

What is a benchmark job?

A

You take a particular job, like an accountant, and see how much that job gets paid in your geographic location. You then benchmark your pay based upon that.

29
Q

What is needed to establish a pay policy?

A
  1. You can pay above the market
  2. You can pay below the market
  3. You can pay at market
30
Q

What is the Fair Labor Standards Act (FLSA)?

A
  1. It establishes a minimum wage.
  2. It defines overtime as anything over 40 hours per week.
  3. It establishes exempt vs non-exempt employees.
31
Q

What is an exempt vs non-exempt employee?

A

Jobs that are exempt are typically salaried employees (managers and executives, for example). Non-exempt jobs fall under the FLSA (hourly employees).

32
Q

Why is overtime an attractive option for employers?

A

Paying someone overtime is cheaper than hiring a new employee and gets them to work harder.

33
Q

Incentive pay systems are based on three assumptions. What are they?

A
  1. Individuals and teams differ in terms of performance levels.
  2. Firm performance depends on individual level performance.
  3. To attract, motivate, and retain your top performers.
    If these assumptions hold true, then an incentive system is appropriate.
34
Q

What is expectancy theory?

A

Increased effort, leads to increased performance, which leads to increased outcomes (money).

35
Q

What happens you pay employees for their performance?

A
  1. “Do only what you get paid for” syndrome
  2. Unethical behaviors
  3. Negative effects on the spirit of cooperation
  4. Lack of control
  5. Difficulties in measuring performance
36
Q

What are four ways to make “pay for performance” systems work?

A
  1. Link pay and performance appropriately
  2. Use multiple layers of rewards
  3. Increase employee involvement
  4. Consider how to motivate with no financial incentives
37
Q

What is merit pay?

A

A one-time increase in salary based on merit or performance.

38
Q

What are bonus programs?

A

A lump sum payment for performance.

39
Q

What are two disadvantages of individual level incentive plans?

A
  1. It increases competition among employees and decreases collaboration.
  2. Quality of work suffers.
40
Q

What is a team based incentive pay? Pros and cons?

A

It’s when a team is rewarded for performance. You’re rewarding teamwork, rather than competition among individuals.
Free riding is a problem, when they bum off the others.

41
Q

What are plantwide pay for performance plan?

A

A pay for performance plan like a team plan, just a lot larger.

42
Q

What is gain sharing? (This is part of plantwide pay plans)

A

If a plant employee thinks of a way to make the plant run more efficiently, gain sharing takes the new savings and pays it to the whole plant.

43
Q

What is profit-sharing? (Corporate wide pay plan)

A

Sharing the profit with the whole corporation (probably a fixed percent).

44
Q

What is an employee stock ownership plan (ESOP)?

A

When an employee can buy the company’s stock at a discounted rate.

45
Q

What four things does social security provide?

A
  1. It provides income at retirement.
  2. It provides income if you become permanently disabled.
  3. It provides income for the spouse of a dead person.
  4. It provides Medicare.
46
Q

What is the basic concept of workers’ compensation?

A

Income and medical insurance if you get injured on the job.

47
Q

What is the basic concept of unemployment insurance?

A

If you get laid off, you can get money until you find a new job.

48
Q

Who is not eligible for unemployment insurance?

A

People who get fired; different from people who get laid off at not fault of their own.

49
Q

What are discretionary benefits?

A

Benefits that companies provide that are beyond that legally required.

50
Q

What is paid time off?

A

When they lump sick leave and vacation leave into one time frame (instead of two weeks a piece, you’d get 4 weeks during which you can be sick or on vacation).

51
Q

What are six types of discretionary benefits?

A
  1. Payment for time not worked
  2. Health care (medical, dental, vision)
  3. Life insurance
  4. Disability protection
  5. Retirement plans
  6. Employee services
52
Q

What are the two reasons insurance now costs more than it did 20 years ago?

A
  1. People are getting fatter (poor lifestyle choices)

2. Technology has gotten more expensive

53
Q

What is the Family and Medical Leave Act? (FLMA) Describe it in detail.

A

It protects a persons job (and insurance) if they have to take a leave.
1. Birth or adoption of a child
2. To care for a family member who is sick
3. For your own serious illness
You can take 12 weeks off in a year.

54
Q

Which employers must follow the FMLA?

A

Every single government employer and any employer with at least 50 employees.

55
Q

Who is, and isn’t, eligible for FMLA leave?

A
  1. An employee who has worked with them for one year and 1250 hours/year.
  2. A part time employee who is new is SOL.
56
Q

What is COBRA?

A

It allows you to continue your medical coverage if you are no longer with the organization. It’s much more expensive. This is generally done for up to 18 months.

57
Q

What is HIPAA?

A
  1. It protects medical record privacy.

2. Makes insurance portable, can’t be denied for pre-existing conditions.

58
Q

What are two obstacles to effective benefits communication?

A
  1. The complexity of benefits.

2. Resource availability.

HR Intro (4 decks)

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