WGU C202 Managing Human Capital All

Direct financial compensation

compensation received in the form of salary, wages, commissions, stock options or bonuses

indirect financial compensation

all the tangible and financially valued rewards that are not included in direct compensation including free meals, vacation time and health insurance

nonfinancial compensation

rewards and incentives given to employees that aren't financial in nature

base pay

reflects the size and scope of an employee's responsibilities

severance pay

give to employees upon termination of their employment

fixed pay

pays employees a set amount regardless of performance

variable pay

bases some or all of an employee's compensation on employee, team, or organizational

pay structure

the array of pay rates for different work or skills within a single organization

pay mix

the relative emphasis give to different compensation components

pay leader

organization with a compensation policy of giving employees greater rewards than competitors

pay follower

an organization that pays its front-line employees as little as possible

resource dependence theory

proposition that organizational decisions are influenced by both internal and external agents who control critical resources

wage differentials

differences in wage between various workers, groups of workers, or workers within a career field

labor market

all of the potential employees located within a geographic area from which the organization might be able to hire

cost of living allowances

clauses in union contacts that automatically increase wages base on the U.S. Bureau of Labor Statistics' cost of living index

market pricing

uses external sources of information about how others are compensating a certain position to assign value to a company's similar job

Compensation surveys

surveys of other organizations conducted to learn what they are paying for specific jobs or job classes

benchmark jobs

jobs that tend to exist across departments and across diverse organizations allowing them to be used as a basis for compensation comparisons

job evaluation

a systematic process that uses expert judgement to assess differences in value between jobs

ranking methos

subjectively compares jobs to each other based on their overall worth to the organization

job classification method

subjectively classifies jobs into an exiting hierarchy of grades and categories

point factor method

uses a set of compensable factors to determine a job's value. skill, resp, effort, working cond.

compensable factor

any characteristic used to provide a basis for judging a job's value

skills, responsibilities, effort, working conditions

Four categories of compensable factors

Hay Group Guide Chart - Profile Method

a point-factor system is used to produce both a profile and a point score for each position.

know how

problem solving

accountability

working conditions

Know-how, problem solving, accountability, working conditions

Hay Group Method based on four main factors

Position Analysis Questionnaire

a structured job evaluation questionnaire that is statistically analyzed to calculate pay rates based on how the labor market is valuing worker characteristics. a copyrighted, standardized, structured job analysis questionnaire. 6 sections covering 187 job elements.

job pricing

the generation of salary structures and pay levels for each job based on the job evaluation data

single rate system, pay grades and broadbanding

Three most common job pricing systems

pay grade (pay scale)

the range of possible pay for a group of jobs

broadbanding

using very wide pay grades to increase pay flexibility

internal equity

when employees perceive their pay to be fair relative to the pay of other jobs in the organization

employee equity

the perceived fairness of the relative pay between employees performing similar jobs for the same organization

external equity

when an organization's employees believe that their pay is fair when compared to what other employers pay their employees who perform similar jobs

comparable worth

if two jobs have equal difficulty requirements, the pay should be the same, regardless of who fills them

wage rate compression

starting salaries for new hires exceed the salaries paid to experienced employees

golden parachute

lucrative benefits given to executives in the event the company is taken over

Cost-of-living adjustments

pay increases to account for a higher cost of living in one country versus another

Housing allowance

payments to subsidize or cover housing and related costs

hardship premiums

increased salary for living in an area with a lower quality of life, less safety, etc.

tax equalization payments

increased salary to make up for higher taxes that reduce take-home pay and decrease employee's purchasing power

inflation adjustments

larger and/or more frequent raises to maintain employee's purchasing power in the face of inflation

Fair Labor Standards Act of 1938

a federal law that sets standards for minimum wages, overtime pay, and equal pay for men and women performing the same jobs

exempt employees

employees who meet one of the FLSA exemption tests, are paid on a fixed salary basis and are not entitled to overtime pay

non-exempt employees

employees who do not meet any of one of the FLSA exemption tests and are paid on an hourly basis and covered by wage and hour laws regarding minimum wage, overtime pay and hours worked

workers' compensation

a type of insurance that replaces wages and medical benefits for employees injured on the job in exchange for relinquishing the employee's right to sue the employer for negligence

fixed rewards

predetermined compensation (salary and benefits)

variable rewards (incentives)

"at risk" rewards which are linked to factors determined as valuable, including performance, skills, competence and contribution

- Recognize and reward high performers

- Increase the likelihood of achieving corporate goals

- Improve productivity

- Move away from an entitlement culture

Top four reasons organizations give for tying pay to performance ar

- Preference of individual employees

- Size of the rewards for high performance

- Method of motivating individual job performance

- Objectivity of the evaluation process that determines the rewards

Before designing an incentive pay plan to motivate performance, it is important to consider the

- Company performance

- Reduced merit increases

- Reductions in head count

- Reduced benefits

- Pay freezes

Most common way employers fund variable pay programs

reward differnentiation

differentiating rewards based on performance rather than giving all employees the same reward

short-term incentives

one-time variable rewards used to motivate short-term employee behavior and performance (typically one year or less). ie bonus or profit sharing. to motivate attendance, cust serv, safety, production quality and quantity

profit sharing

the distribution of organizational profits to all employees

stock options

the right of an employee to buy shares of the company's stock at a certain price (the exercise price) during some future period of time

long-term incentives

incentives that motivate behaviors and performance that support company value and long-term organizational health. ie stock options

vesting

the point at which employees can sell or transfer the stock option

pay for performance programs

rewards employees based on some specific measure of their performance

variable pay plans

pay for performance plans that put a small amount of base pay at risk, in exchange for the opportunity to earn additional pay if performance meets or exceeds a standard

spot awards

awards given immediately when a desired behavior is seen

extrinsic motivation

motivation that comes from outside the individual, including performance bonuses

intrinsic motivation

derived from an interest in or enjoyment from doing a task

skill-based pay

rewards for employees based on the range and depth of their knowledge and skills. effort and coop w/supervisor

limited ability, partial proficiency, full competence

limited ability

ability to perform simple tasks without direction

partial proficiency

ability to apply more advanced principles on the job

full competence

ability to analyze problems associated with the job

competency-based pay

skill-based pay for professional jobs

multi-crafting

employees gain proficiency in two or more trades

recognition awards

rewards for specific achievements like tenure with the organization, helping a coworker or attendence

compressed workweek

40 hour work week in less than five days

job sharing

two or more people split a single job

flextime

scheduling option that lets employees decide when to work within parameters

telecommuting

allows employees to work from home and link to the company's offices via computer.

gainsharing

a program in which the firm shares the value of productivity gains with employees

scanlon plans

gainsharing programs based on implementing employee suggestions for lowering the cost per unit produced

improshare

a gainsharing plan based on a mathematical formula that compares a performance baseline with actual productivity during a given period with the goal of reducing production time

employee stock ownership plans

tax-exempt, employer-established employee trusts that hold company stock for employees

errors of commission

an employee receives an undeserved reward

errors of omission

an employee who deserves a reward doesn't receive one

employee benefits

nonwage compensation or rewards given to employees (indirect compensation)

Social Security, Unemployment Insurance, Workers' Compensation, Family Medical Leave Act, COBRA

5 Mandatory Benefits

Social Security

provides retirement income to qualified workers and their spouses after working a certain number of hours

unemployment insurance

provides temporary income during periods of involuntary unemployment

workers' compensation insurance

pays for medical costs and sometimes time off if an employee suffers a job-related sickness or accident, and survivor benefits in the case of an employee's death in exchange for relinquishing the employee's right to sue the employer for negligence

Family and Medical Leave Act of 1993

requires most employers to provide employees up to 12 weeks of unpaid leave to care for family members

Consolidated Omnibus Budget Reconciliation Act

provides a continuation of group health coverage for employees and qualified beneficiaries that might otherwise be terminated when an employee experiences a qualifying event

Customary benefits

commonly provided benefits that are viewed as an entitlement by employees

insurance, retirement plans

Life Insurance

pays a beneficiary or beneficiaries a sum of money after the death of an insured individual

Disability insurance

supplements workers' compensation insurance to provide continued income in the event of an employee becoming disabled

health insurance

health care coverage for employees and their dependents

presenteeism

an employee physically comes to work but does not function at his or her full potential

defined benefit retirement plans

promise participants a monthly benefit at retirement

Employee Retirement Income Security Act of 1974

a federal law that protects employees' retirement benefits from mismanagemen

domestic partners

two people who are not married, but are in a same-sex or opposite-sex arrangement similar to marriage

flexible spending account

an employer-sponsored benefit that allows you to pay for eligible medical expenses on a pretax basis

total compensation statement

communicating total compensation in detail through a written summary of employee direct and indirect compensation

flexible benefits plans

give employees a set amount of credits or dollars to allocate among different benefits options provided by the employer

safety culture

the shared safety attitudes, beliefs and practices that shape employees' safety behavior

ergonomics

designing the work environment to reduce the physical and psychological demands placed on employees

cumulative trauma disorders

skeletal and muscle injuries that occu when the same muscles are used to preform tasks repetitively