Total Rewards Flashcards
Total Rewards
encompasses direct and indirect remuneration approaches that employers use to attract, recognize and retain workers; “remuneration” and compensation and benefits” have the same meaning.
Benefits
tangible payments or services provided to broad groups of employees to cover common issues, in addition to those required by law.
Compensation
refers to all other financial returns, including salary and allowances
Perquisites
compensation provided on an individual basis in the form of goods or services
Incentives or permiums
Payments in return for the achievement of specific, time-limited, targeted objectives; often calculated as a percentage of base salary and paid as lump sums or ongoing payments
Compensation philosophy
A short (but broad) statement documenting the organizations guiding principles and core values about employee compensation
Objectives of a Total Rewards Strategy
Compatible with the organizations mission and strategy
Compatible with the organizational culture
Appropriate for the workforce
internally and externally equitable
Advantages of Pay Transparency
Supports the achievement of strategic business objectives
Reduces conflicts among employees and between employees and management regarding pay
Challenges to Pay Transparency
Can lead to jealousy and performance problems
Poses a risk that information may be used for inappropriate or unintended purposes
Requires protection of employee privacy and propriety information
Raises individual and cultural concerns about fairness in the global environment
Due Diligence should include an understanding of relevant:
International standards and regulations
Extraterritorial application of national law
Application of national laws to international-owned subsidiaries operating within a nation’s borders
Compensation System Design
Job Analysis–>Job Documentation–>Job Evaluation–> Pay Structure
Job Analysis
Knowledge, Skills & Abilities
Job Evaluation
determines the relative worth and pay structure of jobs based on an assessment of their content and relationship to other jobs in the organization.
Market-Based Job Evaluation
determines the relative worth and pay structure of different jobs based on their market value or the going rate in the marketplace.
Benchmarking
Initiative range from informal networking and knowledge sharing to formal engagements with private firms. Helps to identify gaps in policies and procedures compared to competitors and best practices.
Creating a Pay Structure
Establish pay grades
Set pay ranges
Compa-Ratios
divide the pay rate of an employee by the midpoint range.
Broadbanding
Combines salary grades to create larger ranges. Allows people to move within their job without outgrowing the pay scale.
Base-Pay Systems
in the form of an hourly wage or salary
Performance Based Merit
Pay linked to measures of work quality or goals.
Employers must be able to defend practices.
Differential Pay
Pay based on when an employee works:
- Shift pay
- premium pay
- on-call or call-back pay
Incentive Pay
Pay that motivates employees to perform at higher levels. Paid for performance and must be related to aspects of the job.
Health Benefits
funded through social or private insurance: affected by culture and location.
ex. medical, dental, wellness, employee assistance
Disability Benefits
Pays employees unable to work because of illness or injuries; causes may be in or outside the workplace; may be funded by government, employer and employee.
