Total rewards Flashcards
Job evaluation
Process of determining a job’s value and price for the purpose of attracting and retaining employees by comparing the job against other jobs within the company or against similar jobs in competing companies
Key in the company’s remuneration program and supports the company’s concern for pay equity
Job Classification
Job evaluation method in which descriptions are written for each class of job;
individual jobs are then put into the grade that best matches their description
Disadvantages: the process is subjective, and jobs can easily go into many grade levels. It relies on job titles and duties and assumes they are the same at other companies
Internal equity
Employees feel that they are being paid fairly for their work. It also helps ensure compliance with fair pay regulations and prevent employee lawsuits
The extent to which employees perceive that monetary and other rewards are distributed equitably, based on effort, skill, and relevant outcomes
Pay equity
the fairness of compensation and benefits paid to employees
Paired comparison method
Job evaluation method in which each job is compared with every other job being evaluated; the job with the largest number of greater than rankings is the highest ranked job.
Perquisites
Compensation is provided on an individual basis in the form of goods or services.
Example: cars& cell phones
Broadbranding
Combines 2+ salary grades to create larger ranges and give people wide latitude to move within their job without outgrowing the pay scale. This is done in large companies that want to flatten their structure and remove levels of management.
Combining several salary grades or job classifications with narrow pay ranges into one band with a wider salary spread
Benefits
Tangible payments or services are provided to broad groups of employees. Mandatory or voluntary payments or services provided to employees typically covering retirement, health care, sick pay/ disability, life insurance, and paid time off
Red-circle rates
Situations in which employee pay is above the range maximum.
Ex: when long term employees reach max rate in pay range. Employee bumped down a little but pay salary didn’t change
Single rate pay
provides each incumbent of a job with the same rate of pay, regardless of performance or seniority Aka flat rate pay. Often set to correspond to target market survey data relating to the job
Remuneration surveys
Collects information on prevailing market compensation and benefit practices; including wage rates, pay ranges, time off
Internal surveys for a salary survey
Advantages:
Allows for more control over survey technique
Ensure that salaries are internally aligned meaning comparable jobs and skills are paid comparable wages
Has the ability to shape the design, administration, data analysis, and reporting as needed by the company.
Disadvantages:
Competitors may not want to share their pay structures
Matching positions may be hard
External salary survey
Advantage:
Draws on extensive databases for industry benchmarks and provides real-time
insights into total compensation levels, trends, and practices
Disadvantage:
Limited company control
Point factor system
Job evaluation method that looks at compensable factors such as skills and working conditions that reflect how much a job adds value to the company;
Points are assigned to each factor and then added to come up with an overall point value for the job
most commonly used quantitative eval
Helps company determine traits that they value across the board.
Job ranking
establishing a hierarchy of jobs from lowest to highest based on each job’s overall value to the company. It evaluates the whole job and compares one job to another
Overall quick and inexpensive and easy to explain to managers.
Not clear why one job may be valued over another not helpful if there are many positions
Productivity based pay
Pay based on the quantity of work and outputs that can be accurately measured
Works if the job is standardized and if unit outputs can be measured
Premiums
Payments in return for the achievement of specific, time-limited, targeted objectives
Pay grade
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
The purpose is to create a pay structure for the entire company.
Pay range
sets the upper and lower bounds of possible compensation for individuals whose jobs fall within a pay grade. The mid point of range is usually the market pay
Compa ratio
Metric used to determine how actual wages match, lag, or lead the target market.
Compa ratio = pay rate/ midpoint
Performance-based pay
Sistuation when a individual’s performance on the job is the basis for the amount and timing of pay increases
Performance bonus
One time payment made to an employee
Time based step rate pay
System in which pay is based on longevity in the job and pay increases occur on a pre-determined schedule
Green circle rates
Situations in which an employee’s pay is below the minimum of the range
General Pay increase
Pay increases given to employees based on local competitive market requirements; awarded regardless of employee performance
External equity
situation in which an company compensation levels and benefits are similar to those of other companies that are in the same labor market for the same employees
Total rewards
Direct and indirect remuneration approaches that employers use to attract, recognize, and retain workers
Pay compression
Occurs when there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority
Cost of liviing adjustment
Pay adjustment given to eligible employees regardless of performance or company profitability; usually linked to inflation
Total reward strategy
Plan or method implemented by a company that provides monetary, benefits in kind, and developmental rewards to employees who achieve specific business goals
Market based job evaluation
Job evaluation methos in which the relative worth and pay structure of different jobs are based on their market value or the going rate in the marketplace
Job content based job evaluation
job evaluation methos 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 company
Lag market competition
Controls the labor cost by setting low pay rates
Offer other benefits that are attractive
Match market competition
Offers wages and benefits that are similar to the competition.
very competitve
Lead market competition
Offers higher and better benefits that the competition. higher quality employees do better work
Lead lag market
Leads during the first half of the year and lags in the second
