Unit 6 - Total Rewards Flashcards
What are 3 objectives of the total rewards program?
- Membership Behaviour – Candidates want to join your organization and employees want to stay.
- Task Behaviour – Employees do the tasks that are assigned to them.
- Organization Citizenship Behaviour – Employees are motivated to support the success of the organization.
What are the 3 content theories of motivation?
Maslow’s Hierarchy of Needs
Two-Factor Theory
Job Characteristics Theory
Content Theories
Content theories assert that people’s motivations are driven by need. A person’s economic and social needs can be addressed through the design of a total rewards strategy.
Process Theories
Process theories focus on the processes that people use to decide their actions. Understanding the consequences of their actions will help influence their behaviors.
What are the 3 process theories of motivation?
Equity Theory
Expectancy Theory
Reinforcement Theory
Job Characteristics Theory
Based on the belief that the TASK itself is key to employee motivation. Theory focuses on intrinsic motivation (responsibility, sense of worth, and knowledge of results) and various job characteristics that contribute to job enrichment.
Asserts that job design is an important element of a total rewards program. Job enrichment and job rotation are the two ways of adding variety and challenge.
What are the 5 job characteristics that increase job enrichment? (Job Characteristics Theory)
- Task Identity – doing the whole job
- Task Significance – social value
- Skill Variety – utilizing many skills
- Job Autonomy – freedom to act
- Job Feedback – self monitoring
Job Description
The duties & conditions of work (job title, responsibilities, and working conditions)
Job Specification
Competencies required to perform the job successfully (experience & qualifications)
KSAO’s
What are the 5 job analysis methods?
- Position Analysis Questionnaire (PAQ)
- Critical Incident
- Task Inventory
- Competency-Based
- Functional Job Analysis
Job Analysis - Position Analysis Questionnaire
Involving quantifiable data collection to determine the degree to which a large number of standard worker oriented tasks (job elements) are performed in a job (e.g., infrequent, occasional, moderate, considerable, substantial).
Standardized and can be used for a wide variety of jobs,
Job Analysis - Task Inventory Analysis
Itemized list of all of the tasks, or specific activities, that make up the performance of a specific job at a particular organization.
Job questionnaire that captures org-specific job tasks.
Job Analysis - Critical Incident Method
Job questionnaire that includes only tasks that lead to job success.
Job Analysis - Competency Based Analysis
Focuses on identifying the key competencies required in performing the job vs the tasks involved.
Job Analysis - Functional Job Analysis
Resulting in task statements comprised of 4 components. Focuses on job responsibilities and the processes for carrying out the work.
- Who performs what
- To whom or what
- With what tools, equipment of processes
- To achieve what purpose or outcome
A barista makes beverages to customers using an espresso machine in a manner that ensures quality and speedy service.
What are the 3 methods for determining base pay?
- Market Pricing
- Pay for Knowledge (competency or skill based)
- Job Evaluation
What are two non-quantitative methods of job evaluation? (Whole Job Methods)
- Ranking
2. Job Classification/Grading
What are two quantitative methods of job evaluation? (Compensable Factor Job Methods)
- Factor Comparison ($)
2. Point Factor (points)
What are compensable job factors?
Breaks up a job into factors that can be compensated for. Those factors are then assigned a dollar or point, that when summed, determine a jobs relative value.
What are 4 universal compensable factors that help contribute to pay equity?
Skill
Effort
Responsibility
Working Conditions
What are the 3 job comparison methods for establishing pay equity?
- Job to Job Method
- Proportional Value Method
- Proxy Comparison Method
Red Circling
When an employee’s pay rate is approved to be above the established salary maximum for that position. Hence, the employee is usually not eligible for further base pay increases until the range maximum surpasses the employee’s pay rate.
What does the direct compensation program include?
• Base Pay • Performance Pay - Merit Adjustments or Payments - Short-term Incentives - Long-term Incentives
Wage Curve - Spread/height of the wage
The difference btwn grade minimum & maximum
Wave Curve - Inter-grade differential
The difference btwn the one and the next grade mid-point.
Compa-Ratio
Used to assess the competitiveness of an employee’s pay level. A ratio of 0.75 means that the employee is paid 25% below the industry average and 1.15 would mean the employee is paid above the industry average.
How do you calculate an average compa-ratio?
Mean salary of ee’s / midpoint of the range
What are two types of group short-term incentives?
Goal & Profit Sharing
Goal Sharing
EE’s receive a reward for achieving a shared goal, which can include single/multiple goals.
Profit Sharing
EE’s receive a portion of the org’s profits. The reward can be distributed immediately, be differed on a future date, or a combination of the two.
Gain Sharing
The essence of gainsharing plans is that employees are rewarded for reducing costs.
Management system to increase profitability by motivating workers to increase efficiency.
Gain Sharing - Scanlon
Share in the resulting financial benefits from increase efficiency.
The greater the amount workers produce relative to the hourly wage they receive, the higher the extra compensation they’ll earn. For example, creating 200 vs. 150 thimbles per shift worked. Emphasizes quantity of output.
Gain Sharing - Rucker
Takes labor cost as % of value added
Incentives high quality of work and reduction of production costs. Its primary focus is an appraisal of quality and not quantity of output.
Gain Sharing - Improshare
Based on the number of labour hours worked per unit of output (productivity gains).
Is similar to a Scanlon plan in that it rewards production efficiency. Unlike a Scanlon plan, however, the Improshare approach measures the number of production hours rather than the cost of labor.
Gain Sharing - Family of Measures
Uses multiple measures to evaluate the size of the bonus pool.
What are 4 long-term reward performance pay plans?
- Employee Stock Bonus Plans
- Employee Share Purchase Plans
- Employee Stock Option Plans
- Phantom Shares
Employee Stock Bonus Plans
Receive shares at no cost
Employee Share Purchase Plans
Purchase shares at a discounted rate
Employee Stock Option Plans
Purchase stock in the future at today’s market price (encourages the ee to stay w/ the org)
Phantom Shares
Receive unit equivalent to the value of shares they would have received. Then receive cash payments based on share value as if they were actual shares.
Stock Appreciation Rights
Type of employee compensation linked to the company’s stock price during a preset period. Unlike stock options, SARs are often paid in cash and do not require the employee to own any asset or contract.
Employee Stock Bonus & Option Plan
Defined Contribution Plan
The ee does not know the pension benefit that they will receive when they retire. The only know the contribution that has been made.
Defined Benefit Plan
The ee knows how much has been contributed and the pension benefit they will receive upon retirement.
Deferred Profit Sharing Plan
DPSPs are a type of pension fund. On a periodic basis, the employer shares the profits made from the business with all employees or a designated group of employees through the DPSP. Employees who receive a share of the profits paid out by the employer do not have to pay federal taxes on the money received from the DPSP until it is withdrawn.
List 3 methods in which benefits are funded
- Non-contributory – fully funded by employer
- Fully Contributory – fully funded by employee
- Contributory – cost-shared
Wage Curve
Shows the relationship between target pay and the pay structure. Shows the minimum, target, and maximum rates of pay for successive pay bands or grades.
To develop a fair and responsible compensation program, the following are required:
- Pay policies that accurately reflect the internal wage relationships among different jobs
- An evaluation system that provides a credible relationship between performance and pay adjustments
- Pay policies that are limited by earned profits and other financial resources available to the organization
Lynn has just been assigned to a job evaluation committee and has been instructed to assign monetary rate of pay to each compensable factor for each key job. Which system is she using?
Factor comparison system
In translating the results of a salary survey into actual wage rates, what statistical technique would be most appropriate to use?
Least squares method (line of best fit)
Job Classification System
A job evaluation system that groups jobs according to a series of predetermined grades.
What are 3 required payroll deductions for employees?
- Employment Insurance
- CPP
- Income Tax
Equity Theory
Calls for a fair balance to be struck between an employee’s inputs (hard work, skill level, acceptance, enthusiasm, and so on) and an employee’s outputs (salary, benefits, intangibles such as recognition)
Employees will be demotivated if they believe that the rewards they receive underrepresent the value they contribute.
Employees want to feel that their efforts are fairly rewarded & that their pay is similar to others doing similar work and that they have fair access to promotions.
Merit Pay
Performance-related pay which provides bonuses or base pay increases for employees who hit the target or perform their jobs effectively, according to measurable criteria over a predetermined period of time.
Split pay range
Combines seniority and performance in determining pay increases.
When creating your compensation strategy, the first thing that is necessary is to:
Understand your organization’s strategy and the work it oversees.
What type of benefit plan provides all employees with the same benefits with the option of adding additional coverage?
Semi-flexible benefit plan
Procedural Justice
Perceived fairness of rules and decision processes used to determine outcomes. The manner in which merit pay is determined is fair.
E.g., valid performance evaluation plan, job evaluation plan, and merit system
Distributive Justice
Perceived fairness of outcomes or resource allocations.
