Total Rewards Flashcards
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
Set the upper and lower bounds of possible compensation for individuals whose jobs fall within a pay grade.
Pay ranges
Pay systems in which employee characteristics, rather than the job, determine pay.
Name the 3 systems
Person-based pay/system
Skill-based, knowledge-based, competency-based
Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority.
Single-rate pay // flat rate pay
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
Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases.
Performance-based, Performance 4 Pay, Merit-based pay
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
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
Factor that motivates performance of a desired behavior or discourages performance of an undesired behavior.
Incentive
Pay adjustment given to eligible employees regardless of performance or organizational profitability; usually linked to inflation.
Cost of living adjustment (COLA)
Plan or method implemented by an organization that provides monetary, benefits-in-kind, and developmental rewards to employees who achieve specific business goals.
Total rewards strategy
Form of direct compensation where employers pay for performance beyond normal expectations to motivate higher performance.
Incentive pay
- or premiums. Payments in return for the achievement of specific, time-limited, targeted objectives.*
- Often they are calculated as a percentage of base salary. Payment may be made in a lump sum or as ongoing payments over a specified period of time.*
- Examples: profit-sharing, commission, non-cash rewards (trips, gifts), gainsharing plans, flat monetary cash*
- Can be at any level: individual, group, or org-wide*
- Based on theory that rewards drive behavior*
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
(it is the most systematic and analytical method and it includes documentation of the process)
Pay rate divided by the midpoint of the pay range.
Compa-ratio
Process of systematically studying a job in order to identify the activities/tasks and responsibilities it includes, the personal qualifications necessary to perform it, and the conditions under which it is performed.
Job analysis
Job evaluation method in which the relative worth and pay structure of different jobs are based on an assessment of their content and their relationship to other jobs within the organization.
Job-content-based job evaluation
Situations in which an employee’s pay is below the minimum of the range.
Green-circle rates (tool used to monitor comp system)
Pay based on the quantity of work and outputs that can be accurately measured.
Productivity-based pay
Pay increase given to employees based on local competitive market requirements; awarded regardless of employee performance.
General pay increase
Short but broad statement documenting an organization’s guiding principles and core values about employee compensation.
Compensation philosophy
(creates a framework for consistency and transparency, Compensation philosophies are typically created in collaboration with leadership. Compensation philosophies take local conditions into consideration as part of the review for competitiveness.)
Combining several salary grades or job classifications with narrow pay ranges into one band with a wider salary spread.
Broadbanding
Instruments that collect information on prevailing market compensation and benefits practices (including starting wage rates, base pay, pay ranges, statutory and market cash payments, variable compensation, and paid time off).
Remuneration surveys
Mandatory or voluntary payments or services provided to employees, typically covering retirement, health care, sick pay/disability, life insurance, and paid time off.
Benefits
Situations in which employees’ pay is above the range maximum.
Red-circle rates (tool used to monitor comp system)
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
Direct and indirect remuneration approaches that employers use to attract, recognize, and retain workers.
Total rewards
Compensation provided on an individual basis in the form of goods or services.
Perquisites
Perquisites are special incidental payments, benefits, or privileges given to individuals over and above their regular rewards. Often awarded to senior-level positions, “perks” may extend to furnished housing, luxury transportation, and membership in exclusive clubs, phones
Payments in return for the achievement of specific, time-limited, targeted objectives.
Premiums/Performance bonus
Examples of direct benefits
Salaries, commissions, and bonuses
Examples of indirect benefits
Life insurance, company car, disability insurance, and noncash rewards
Situations where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority.
Pay compression
