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Pay structure

Pay structure

The way an organization applies pay rates and financial rewards to different jobs, skills, or competencies

Reward system

Policies determining returns individuals, teams, and the organization receive for their contributions

Relational returns

Nonmonetary incentives like learning opportunities, challenging work, and recognition

Total compensation

Package of compensation and benefits employees receive

Compensation

Employee reward including base pay and variable pay

Benefits

Employee rewards like health insurance, retirement programs, and work–life balance

Internal equity

Fairness of pay rates across jobs within an organization

Point-factor method

Job evaluation approach identifying compensable factors and assigning points to jobs

Compensable factors

Common dimensions by which jobs vary in worth to the organization

Benchmark job

Key job common across organizations in terms of job description

External equity

Fairness of pay for a job compared to similar jobs at other organizations

Individual equity

Fairness of pay distribution to employees in the same organization

Traditional-pay programs

Payment based on job descriptions, titles, or organizational levels

Pay-for-performance programs

Compensate based on exhibited behaviors and achieved goals

Expectancy theory

Theory suggesting motivation increases if efforts lead to valued outcomes

Pay compression

New employees earn as much as experienced ones in the same job

Compa-ratio

Ratio comparing actual pay to the espoused pay structure

Federal Insurance Contributions Act (FICA)

Payroll tax funding Social Security

Workers’ compensation

Program providing medical coverage for work-related injuries

Family and Medical Leave Act (FMLA)

Protects job security during unpaid leave for family or medical reasons

Employee Retirement Income Security Act (ERISA)

Establishes minimum standards for private employers' health care plans

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Protects health care coverage after job loss

Health Insurance Portability and Accountability Act (HIPAA)

Ensures privacy and security of health care data

Patient Protection and Affordable Care Act (ACA)

Provides rights and protections for health care coverage

Short-term disability insurance

Income protection for temporary inability to work due to illness or injury

Long-term disability insurance

Income protection after short-term disability benefits expire

Defined-benefit plan

Retirement plan providing pre-established benefits over a fixed period

Defined-contribution plan

Retirement plan with contributions to an investment fund

Life insurance program

Provides financial compensation to beneficiaries upon the insured's death

Paid time off (PTO)

Program compensating employees for time away from work

Educational-assistance program

Employer provides financial aid for employee educational expenses