Human Resource Management – Final Exam Study Guide

Strategic Compensation

Designing pay systems that support the organization’s goals, motivate employees, remain legally compliant, and ensure fairness.

Compensation

All forms of pay or rewards employees receive for their work.

Direct Financial Payments

Wages, salaries, incentives, commissions, bonuses.

Indirect Financial Payments

Benefits such as insurance, paid leave, and retirement plans.

Nonfinancial Rewards

Recognition, flexible work, and career growth.

Equity Theory

Employees compare their inputs and rewards with others; perceived unfairness decreases motivation.

External Equity

Fairness compared to other organizations.

Internal Equity

Fairness among jobs within the organization.

Individual Equity

Fairness among employees doing similar work.

Procedural Equity

Fairness of processes used to determine pay.

Job Evaluation

A systematic comparison of jobs to determine their relative worth.

Ranking Method

Ranks jobs from highest to lowest value.

Job Classification Method

Places jobs into predefined classes or grades.

Point Method

Assigns points to compensable factors to determine job worth.

Factor Comparison Method

Compares jobs using key factors and monetary values.

Compensable Factors

Factors used to determine job worth, including skill, effort, responsibility, and working conditions.

Wage Curve

A graph showing the relationship between job value and pay rate.

Pay Grade

Group of jobs with similar value.

Pay Range

Minimum, midpoint, and maximum pay for a grade.

Comparable Worth

Equal pay for jobs requiring comparable skills and responsibility, even if jobs differ.

Market Competitive Pay Plans

Compensation plans that are based on salary surveys comparing to competitors.

Salary Survey

Collection of wage data from other employers.

Broadbanding

Combining several pay grades into fewer broad salary bands to increase flexibility and reduce hierarchy.

Incentive Plans

Plans that connect employee performance to rewards.

Expectancy Theory

Employees are motivated when they believe effort leads to performance, performance leads to rewards, and rewards are valuable.

Herzberg’s Two-Factor Theory

Hygiene factors prevent dissatisfaction, while motivators create satisfaction.

Reinforcement Theory

Behavior that is rewarded is likely to be repeated.

Goal-Setting Theory

Specific and difficult goals improve performance.

Incentive Pay

Extra compensation tied to performance.

Piecework

Employees paid for each unit produced.

Standard Hour Plan

Employees rewarded for completing work faster than standard time.

Merit Pay

Permanent salary increase based on performance.

Bonus

One-time payment for performance.

Sales Incentives

Includes commission, straight salary, and combination plans.

Gainsharing

Programs where employees receive bonuses for productivity improvements.

Profit Sharing

Employees receive part of company profits.

Employee Stock Ownership Plans (ESOPs)

Programs that give employees ownership in the company through stock.

Executive Compensation

Includes salary, bonuses, stock options, long-term incentives, and benefits.

Stock Options

The right to buy company stock at a fixed price.

Employee Engagement

Emotional commitment of employees to their organization.

Benefits

Indirect rewards provided in addition to pay.

Legally Required Benefits

Mandatory benefits such as workers’ compensation and unemployment insurance.

Workers’ Compensation

Income and medical benefits for work-related injuries.

Unemployment Insurance

Temporary income for employees who lose jobs through no fault of their own.

Social Security / Pension Systems

Government retirement support.

Defined Benefit Plan

Employer guarantees retirement income.

Defined Contribution Plan

Employer contributes a fixed amount to employee accounts.

Insurance Benefits

Benefits including health, dental, life, and disability insurance.

Paid Time Off

Includes vacation, sick leave, holidays, and parental leave.

Flexible Benefits

Benefits chosen by employees from a list of options.

Employee Services

Programs that offer assistance such as childcare, wellness programs, and educational assistance.

Employee Rights

Rights concerning privacy, fair treatment, freedom from discrimination, and due process.

Labor Union

Organization representing employees in collective negotiations with employers.

Collective Bargaining

Negotiation process between union and employer regarding wages, working conditions, and benefits.

Collective Bargaining Agreement

Written contract between employer and union.

Union Organizing Process

Steps employees must follow to form a union.

Strikes

Employees stop working to pressure the employer.

Lockout

Employer prevents employees from working during a dispute.

Grievance

Formal complaint by employee or union regarding contract violation.

Occupational Safety

Protection from workplace injuries and accidents.

Accident Prevention Techniques

Measures taken to prevent workplace accidents.

Occupational Health

Protection from illness caused by workplace conditions.

Workplace Stress

Emotional or physical reaction to workplace demands.

Burnout

State of emotional and physical exhaustion caused by prolonged stress.

Workplace Violence

Threats or physical acts against employees.

Risk Management

Identifying and reducing organizational risks.

Crisis Management

Preparing for and responding to unexpected emergencies.