Total Rewards Flashcards
Benefits
Mandatory or voluntary payments or services provided
to employees, typically covering retirement, health care,
sick pay/disability, life insurance, and paid time off.
Broadbanding
Combining several salary grades or job classifications
with narrow pay ranges into one band with a wider salary
spread.
Perquisites
Compensation provided on an individual basis in the form
of goods or services.
Compa-ratio
Pay rate divided by the midpoint of the pay range.
Compensation
All financial returns (beyond any tangible benefits
payments or services), including salary and allowances.
Compensation philosophy
Short but broad statement documenting an organization’s
guiding principles and core values about employee
compensation
Cost-of-living adjustment (COLA)
Pay adjustment given to eligible employees regardless of
performance or organizational profitability; usually linked
to inflation.
Domestic partners
Unmarried couples, of the same or opposite sex, who
live together and seek economic and noneconomic
benefits comparable to those granted to their married
counterparts.
External equity
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.
Flat-rate pay
Provides each incumbent of a job with the same rate of
pay, regardless of performance or seniority; also known
as single-rate pay.
General pay increase
Pay increase given to employees based on local
competitive market requirements; awarded regardless of
employee performance.
Green-circle rates
Situations in which an employee’s pay is below the
minimum of the range.
Incentive pay
Form of direct compensation where employers pay for
performance beyond normal expectations to motivate
higher performance.
Internal equity
Extent to which employees perceive that monetary and
other rewards are distributed equitably, based on effort,
skill and/or relevant outcomes
Job classification
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 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
organization or against similar jobs in competing
organizations.
Job ranking
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-content-based job evaluation
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.
Lump-sum increase (LSI)
One-time payment made to an employee; also called
performance bonus.
Market-based job evaluation
Job evaluation method in which the relative worth and
pay structure of different jobs are based on their market
value or the going rate in the marketplace.
Merit pay
Situation where an individual’s performance on the
job is the basis for the amount and timing of pay
increases; also called performance-based pay or pay for
performance.
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 highestranked job, etc.
Pay compression
Occurs when there is only a small difference in pay
between employees regardless of their experience, skills,
level, or seniority; also known as salary compression.
Pay for performance (P4P, PfP)
Situation where an individual’s performance on the job
is the basis for the amount and timing of pay increases;
also called merit pay or performance-based pay
Pay grades
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 ranges
Set the upper and lower bounds of possible
compensation for individuals whose jobs fall within a pay
grade.
Performance bonus
One-time payment made to an employee; also called a
lump-sum increase (LSI).
Performance-based pay
Situation where an individual’s performance on the job
is the basis for the amount and timing of pay increases;
also called merit pay or pay for performance.
Person-based pay
Pay systems in which employee characteristics, rather
than the job, determine pay.
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 organization; points are
assigned to each factor and then added to come up with
an overall point value for the job.
Productivity-based pay
Pay based on the quantity of work and outputs that can
be accurately measured.
Premiums
Payments in return for the achievement of specific, timelimited, targeted objectives.
Red-circle rates
Situations in which employees’ pay is above the range
maximum.
Remuneration surveys
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).
Single-rate pay
Provides each incumbent of a job with the same rate of
pay, regardless of performance or seniority; also known
as flat-rate pay.
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.
Total rewards
Direct and indirect remuneration approaches that
employers use to attract, recognize, and retain workers.
Total rewards strategy
Plan or method implemented by an organization that
provides monetary, benefits-in-kind, and developmental
rewards to employees who achieve specific business
goals
Benefits
Mandatory or voluntary payments or services provided
to employees, typically covering retirement, health care,
sick pay/disability, life insurance, and paid time off.
