Total Rewards and Compensation Flashcards
Total Rewards
Monetary and non-monetary rewards provided by companies to attract, motivate, and retain employees.
Tangible rewards
Elements of compensation that can be quantitatively measured and compared between organizations.
Intangible rewards
Elements of compensation that cannot be as easily measured or calculated.
Base pay
Basic compensation that an employee receives, usually as a wage or salary.
Wages
Payments calculated directly from the amount of time worked by employees.
Salary
Consistent payments made each period regardless of the number of hours worked.
Variable pay
Compensation linked directly to individual, team, or organizational performance.
Benefit
Indirect reward given to an employee or group of employees as part of membership in the organization.
Exempt employees
Employees who are not paid overtime.
Nonexempt employees
Employees who must be paid overtime.
Prevailing wage
An hourly wage determined by a formula that considers the rate paid for a job by a majority of the employers in the appropriate geographic area.
Garnishment
A court order that directs an employer to set aside a portion of an employee’s wages to pay a debt owed to a creditor.
Entitlement philosophy
Assumes that individuals who have worked another year are entitled to pay increases, with little regard for performance differences.
Pay-for-performance philosophy
Assumes that compensation changes reflect performance differences.
Expectancy theory
An employee’s motivation is based on the probability that his or her efforts will lead to an expected level of performance that is linked to a valued reward.
Equity theory
Individuals judge fairness (equity) in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others.
Procedural justice
Perceived fairness of the process and procedures used to make decisions about employees.
Distributive justice
Perceived fairness in the distribution of outcomes.
Competency-based pay
Rewards individuals for the capabilities they demonstrate and acquire.
Offshoring
Moving jobs to lower-wage countries.
Home-country-based approach
Maintain an expatriate’s standard of living in the home country.
Host-country-based approach
Compensate the expatriate at the same level as workers form the host country.
Job evaluation
Formal, systematic means to identify the relative worth of jobs within an organization.
Compensable factor
Job value commonly present throughout a group of jobs within an organization.
Market pricing
Use of the market pay data to identify the relative value of jobs based on what other employers pay for similar jobs.
Pay survey
Collection of data on compensation rates for workers performing similar jobs in other organizations.
Benchmark jobs
Jobs found in many organizations that can be used for the purposes of comparison.
Pay grades
Groupings of individual jobs having approximately the same job worth.
Market line
Graph line that shows the relationship between job value as determined by job evaluation point and job value as determined by pay survey results.
Market banding
Grouping of jobs into pay grades based on similar market survey amounts.
Broadbanding
Practice of using fewer pay grades with much broader ranges than in traditional compensation systems.
Red-circled employee
Incumbent who is paid above the range set for a job.
Green-circled employee
Incumbent who is paid below the range set for a job.
Pay compression
Occurs when the pay differences among individuals with different levels of experience and performance become small.
Compa-ratio
Pay level divided by the midpoint of the pay range.
Seniority
Time spent in an organization or on a particular job.
Lump-sum increase
(LSI) one time payment of all or part of yearly pay increase.
