Topic 1 - Introduction to Total Rewards Flashcards
Total Rewards
refers to all forms of pay and compensation, tangible benefits, and other intangible rewards that an organization provides.
Intangible Rewards
These include such things as meaningful work, purpose, and rewarding relationships
How do employers define total rewards?
A. All forms of pay and compensation, tangible benefits, and
other intangible rewards that an organization provides
B. Base Salary
C. All forms of benefits such as insurance and paid time off, NOT
including base salary
D. The ability to provide a fair, competitive salary in the job
market
(A) All forms of pay and compensation, tangible benefits, and other intangible rewards that an organization provides.
Cash compensation is the only element of a total rewards package.
A. True
B. False
(B) False - Total Rewards refers to all forms of pay and compensation, tangible benefits, and other intangible rewards that an organization provides.
Which of the following is not considered an intangible reward?
A. Cash bonuses
B. Meaningful work
C. Playing a key role in a company
D. Rewarding relationships
(A) Cash bonuses
Cash compensation influences:
A. Employee perception
B. Government perception
C. Management perception
D. Market perception
(A) Employee perception
strategy
The process by which an organization decides on which products or services to market and sell, which industries to enter, and how the organization is going to reach its desired goals in the marketplace. How an organization is going to compete.
In this course, you will learn that as a compensation manager, you will?
A. Explain to senior management why employees are unhappy
with their salary
B. Improve compensation systems and better enable your
organization to meet its goals
C. Develop strategies in which you will be able to create
opportunities for career advancement
D. Help employees understand how to negotiate a higher salary
(B) Improve compensation systems and better enable your organization to meet its goals
In your capacity as a generalist, your ability to impact compensation will happen in the following way:
A. Staffing
B. Training
C. Recruiting
D. All of the above
(D) All of the above
Compensation affects which groups of people in a company?
A. HR managers
B. Employees
C. Potential employees
D. All of the above
(D) All of the above
As a compensation manager, you will not:
A. Require the organization to implement a market-standardized compensation plan
B. Manage company goals
C. Explain the compensation plan to others
D. Understand the compensation plan
(A) Require the organization to implement a market-standardized compensation plan
What department of the company is not affected by the compensation plan?
A. Marketing
B. All departments are affected
C. Research and development
D. Accounting
(B) All departments are affected
Cash Compensation
Monetary pay that employees receive in exchange for their work
Base Pay
Includes salary or hourly wages.
Variable Pay
Performance-based rewards such as bonuses and commissions, as well as longer-term equity rewards such as stock options.
Employee Benefits
Additional benefits and services offered other than cash compensation. These portions of the compensation package are known as “fringe benefits” or perks. Some of these benefits have become mandated by federal, state, and local governments. Employee benefits include company health benefits and retirement plans.
Intangible Rewards
Decades of research have also revealed that there are many other non-monetary rewards that shape employee choices. These intangible rewards such as meaningful work, positive working relationships, or working location
What is another term for “fringe benefits”?
A. Company parties
B. Salary
C. Perks
D. Paid time off
(C) Perks
One set of awards may fit one firm but may not fit another firm.
A. True
B. False
(A) True
To have an effective rewards system, you will not need to understand:
A. Market conditions
B. Profitability
C. Employees’ previous salary
D. Customer needs
(C) Employee’s previous salary
An effective rewards system will require you to have a clear understanding of how your business competes in the market, meets customer needs, and remains profitable.
What is variable pay?
A. Being paid variably through the month
B. Performance-based rewards and long-term equity
C. Being paid in a variety of ways (i.e. base salary, fringe benefits, etc.)
D. Ability to negotiate salary
(B) Performance-based rewards and long-term equity
Variable Pay can include performance-based rewards such as bonuses and commissions, as well as longer-term equity rewards such as stock options.
What is base pay?
A. The salary or hourly wage including benefits
B. The salary or hourly wage in exchange for the employee’s contribution to the organization
C. The salary based on the market rate
D. An hourly employee’s wage for training hours
(B) The salary or hourly wage in exchange for the employee’s contribution to the organization
outcomes
Goals or the criteria by which a rewards system can be judged.
What are the main outcomes organizations seek from Total Rewards Systems?
- Performance
- Attraction & Retention
- Satisfaction & Fairness
- Cost & Efficiency
- Legal Compliance
How can Total Rewards Systems provide a competitive advantage?
By efficiently and strategically addressing short- and long-term goals at individual, team, and organizational levels.
What are the three levels of performance impacted by Total Rewards?
Employee performance, team/unit performance, and organizational performance.
What are Organizational Citizenship Behaviors (OCBs)?
Value-creating activities beyond job responsibilities, such as helping colleagues.
Why is sustaining performance over time important?
Short-term gains that harm long-term outcomes (e.g., customer retention) undermine overall success.
What role do rewards play in attraction?
They influence the number and quality of applicants, enabling organizations to hire highly qualified employees.
How do rewards aid retention?
By competing in the labor market and increasing the costs of switching to another employer.
Why is employee pay satisfaction important?
It reduces turnover, promotes OCBs, and supports intangible rewards.
What are the three types of fairness in rewards systems?
Distributive, Procedural, and Interactional fairness.
Why must reward costs be balanced?
To control expenses while maintaining investments in human capital and performance.
What happens if cost reductions ignore performance impacts?
It can harm current and future organizational performance.
What laws ensure non-discrimination in Total Rewards?
Civil Rights Act, Equal Pay Act, and Age Discrimination in Employment Act.
What is the general rule when laws conflict?
Follow the regulation most advantageous to the employee.
How do inconsistent state laws impact multi-state organizations?
They may choose to comply with the most stringent law for simplicity and fairness but at higher costs.
Which is NOT a performance type affected by Total Rewards?
A. Employee performance
B. Customer loyalty
C. Team/unit performance
D. Organizational performance
B. Customer Loyalty
What is a primary goal of Attraction and Retention?
A. Encourage OCBs
B. Reduce training costs
C. Hire and retain highly qualified employees
D. Simplify administrative tasks
C. Hire and retain highly qualified employees
Total Rewards Systems should discourage OCBs to focus employees on their core tasks.
A. True
B. False
B. False
Legal compliance in rewards ensures equity across gender, ethnicity, and age.
A. True
B. False
A. True
What are the three types of fairness perceptions in a Total Rewards System?
Distributive, Procedural, and Interactional fairness.
Why might an organization comply with the most stringent state regulations in multi-state operations?
To simplify administration and better meet fairness objectives.
Organizational Performance
Can include effectiveness at meeting customer needs, new product creation, and gains in market share, profits, and other measures of financial return on the firm’s assets.
- Employee Performance represents:
a. The quantity of the work that individual employees produce in the organization
b. The quality of the work that individual employees produce in the organization
c. The quality and quantity of the work that individual employees produce in the organization
d. the quality and quantity of the work that an organization has in the market
(C) The quality and quantity of the work that individual employees produce in the organization.
- An organizational citizenship behavior is:
a. A value-creating activity that engages employees, which is part of the job
b. A value-creating activity that is asked from senior management to mid-level management to complete
c. A value-creating activity that employees do as part of the job description
d. A value-creating activity engaged in by employees, but not as part of the job
(D) A value-creating activity engaged in by employees not part of the job
Which of the following does organizational performance not include?
a. Developing employees
b. New product creation
c. Gains in market share
d. Effectiveness at meeting customer needs
(A) Developing employees is not included in organizational performance.
Which of the following laws relates to total rewards?
a. Civil rights laws
b. Arbitrage law
c. Litigation
d. None of the Above
(A) Civil Rights Laws
Of the following, which is not considered a guide to fairness in total rewards:
a. Distributive
b. Procedural
c. Interactional
d. Extreme
(D) Extreme
There are three different types of fairness perceptions that should be considered in developing a Total Rewards system: Distributive, Procedural, and Interactional.
Team or Unit Performance
Team Performance comprises the joint or collective actions of groups of employees
Attraction & Retention
The second category of outcomes by which Total Rewards Systems are evaluated is Attraction & Retention. Attractive rewards draw highly qualified candidates, allowing organizations to be selective and improve outcomes at all levels. Retention is enhanced by offering competitive rewards and increasing switching costs, helping firms retain valuable knowledge and prevent talent loss to competitors.
Satisfaction and Fairness
The third category of results deals with the employees’ reactions to the Total Rewards System, namely perceptions of Fairness and Satisfaction. Employee perceptions of fairness and satisfaction with reward systems impact retention. Fair treatment reduces turnover, while perceived unfairness increases costs and knowledge loss.
Employee Pay Satisfaction
Reflects employee happiness with rewards and pay decisions. Progressive companies measure satisfaction annually through survey to prevent turnover and support organizational citizenship behaviors (OCBs).
Rewards System Fairness
Fairness influences satisfaction, turnover, and performance. Includes distributive, procedural, and interactional fairness, which are critical to minimizing absenteeism and turnover.
Cost and Efficiency
An additional area of critical outcomes relates to the cost of the rewards system and its cost relative to the results that it produces, or efficiency.
Reward system costs significantly impact the organization’s bottom line and must be controlled.
Rewards are an investment in human capital and performance.
Cost reductions should not compromise current or future performance.
Legal Compliance
One final metric for assessing the effectiveness of a rewards system is the extent to which the system complies with legal regulations, or Compliance.
Rewards must comply with laws like the Civil Rights Act and Equal Pay Act, ensuring non-discrimination based on gender, ethnicity, age, or other factors.
When laws conflict, follow the regulation most advantageous to employees (e.g., higher state minimum wage).
For multi-state organizations, compliance may lead to varied compensation levels. Adjusting to the most stringent regulations simplifies administration but increases costs.
Paid Vacations
- Employees receive wages during vacation periods.
- Vacation days increase with length of service (e.g., 10 days for 1 year, 19 days for 20 years).
- Carryover or cash-in provisions may apply, with unused days beyond limits forfeited.
Paid Holidays
- Common holidays include New Year’s Day, Memorial Day, and Christmas.
- Average: 8 paid holidays per year.
- Personal or floating holidays may be included.
Paid Personal Leave
1–5 days per year for various personal needs, sometimes unlimited for certain employees
Union Activities
Paid time off for union officers involved in grievance procedures
Bereavement Leave
Time off for family deaths, typically 1–3 days based on relationship to the deceased
Jury Duty Leave
Paid leave for jury service, often supplemented by employers to match regular pay
Sabbatical Leave
Offered in some organizations for professional or societal work, usually up to 1 year
Military Leave
Guaranteed by USERRA, employees return to their job after fulfilling military commitments
Reporting Time
Guarantees minimum pay for employees who report to work but are not needed.
Differential Pay
In addition to their base pay, employees often receive additional compensation for factors that make work more difficult or unpleasant.
The employment relationship is:
a. An agreed-upon basis for organizations and people meeting each other’s needs
b. A disagreed-upon basis for organizations and people meeting each other’s needs
c. An agreed-upon basis for organizations and government meeting each other’s needs
d. None of the above
(A) An agreed-upon basis for organizations and people meeting each other’s needs
Organizations get work done through:
a. Product
b. Customers
c. People
d. Dollars
(C) People
Total rewards includes:
a. Benefits, base salary, paid time off
b. Base salary
c. Benefits
d. Base salary and benefits
(D) Base salary and benefits
Meaningful work would be considered a discretionary employee benefit.
a. True
b. False
(B) False
Understanding the total rewards system will not allow you to create a meaningful total rewards plan.
a. True
b. False
(B) False
Which of the following job families would not be affected by total rewards?
a. Engineers
b. Finance
c. Marketing
d. All job families are affected by total rewards
(D) All job families are affected by total rewards
Pay is not a broad category that refers to the monetary compensation that is provided to an employee in exchange for their work.
a. True
b. False
(B) False
Cash compensation is monetary pay from ____________ to __________________.
a. Employers, employees
b. Employees, employers
c. Government, citizens
d. None of the above
(A) Employers, employees
Fringe benefits have become quite ____________ to compensation plans.
a. Conditional
b. Central
c. Proven
d. Unimportant
(B) Central
When you think about a company’s health benefits or retirement plan, you are thinking about employee benefits.
a. True
b. False
(A) True
________________________ refers to the direct monetary pay given to an employee in exchange for their contributions to the organization.
a. Time off
b. Cash compensation
c. Benefits
d. Total rewards
(B) Cash Compensation
Which of the following would not be included as an intangible reward?
a. Positive working relationships
b. Location
c. Meaningful work
d. Salary
(D) Salary
Cash compensation can have an influence on the employee’s perception of how much they are valued at the firm.
a. True
b. False
(A) True
To create a strategic total rewards plan, you need to understand all of the following except:
a. Market
b. Benefits
c. Customers
d. None of the above
(B) Benefits
Base pay includes:
a. Salary or hourly wages
b. Hourly and benefits
c. Benefits and salary
d. None of the above
(A) Salary or Hourly Wages
Team performance:
a. Comprises the star employees’ level of performance
b. Comprises senior management level of performance
c. Comprises the collective actions of groups of employees
d. Comprises customer feedback regarding employees
(C) Comprises the collective actions of groups of employees
Total Reward Systems do not need to be reviewed to ensure that they are not penalizing such OCBs and instead provide a degree of encouragement for those helpful behaviors.
a. True
b. False
(B) False
Organizational performance includes all but:
a. Profits
b. New market share
c. Employee satisfaction
d. Meeting customer needs
(C) Employee satisfaction
Employee perception of the organization has potential to lead to turnover and performance.
a. True
b. False
(A) True
Managing total rewards is an art and a science.
a. True
b. False
(A) True
