NCSU MIE 330 Exam 4 Ritter

Piecework rate

Rate of pay per unit produced.

Straight Piecework Plan

Incentive pay in which the employer pays the same rate per piece, no matter how much the worker produces. Incentive pay in which the employer pays the same rate per piece, no matter how much the worker produces.

Differential Piece Rates

incentive pay in which the piece rate is higher when a greater amount is produced.

Standard Hour Plan

An incentive plan that pays workers extra for work done in less than a preset "standard time."

Merit pay

A system of linking pay increases to ratings on performance appraisals

Retention bonuses

one-time incentives paid in exchange for remaining with the company—to top managers, engineers, top-performing salespeople, and information technology specialists

Sales Commissions

Rewarding sales employees with a percentage of sales volume or profits generated.

Gainsharing

group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each gain to employees

Conditions for Effective Gainsharing

1.Management commitment

2.Need for change or commitment to continuous improvement

3.Management acceptance and encouragement of worker input

4.High levels of cooperation and interaction

5.Employment security

6.Information sharing on productivity and costs

7.Goal setting

8.Commitment of all parties to process improvement

9.Performance standards and calculations that are fair, relevant, and understandable

10.Employees who value working in groups

Group Bonuses

tend to be for smaller work groups

reward the members of a group for attaining a specific goal, usually measured in terms of physical output

Team Awards

Similar to group bonuses, but more likely to use a broad range of performance measures:

Cost savings

Successful completion of a project

Meeting deadlines

Profit Sharing

incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary

Stock options

rights to buy a certain number of shares of stock at a specified price

ESOP

employee stock option plan: a method for employees to purchase the business for which they work

Organizational performance

A measure of how efficiently and effectively a manager uses resources to satisfy customers and achieve organizational goals.

Balanced Scorecard

a combination of performance measures directed toward the company's long and short term goals and used as the basis for awarding incentive pay

short term incentives

Bonuses based on ROI, year's profits, or other measures related to the organization's goals.

Actual payment of bonus may be delayed to gain tax advantages.

long-term incentives

Include stock options and stock purchase plans.

Rationale is that executives will want to do what is best for the organization because that will cause the value of their stock to grow.

Performance Measures for Executives

- balanced scorecard

- Securities and Exchange Commission (SEC) has required companies to more clearly report executive compensation levels and the company's performance relative to that of competitors

- Dodd-Frank Wall Street Reform and Consumer Protection Act requires that public companies report the ratio of median compensation of all its employees to the CEO's total compensation

Employee Benefits

compensation in forms other than cash

Social Security

federal program of disability and retirement benefits that covers most working people

Unemployment Insurance

a government program that partially protects workers' incomes when they become unemployed

Experience Rating

the number of employees a company has laid off in the past and the cost of providing them with unemployment benefits

Workers Compensation

health insurance plan providing treatment for workers injured on the job

no-fault liability

an employee does not need to show that the employer was grossly negligent in order to receive compensation, and the employer is protected from lawsuits

Family and Medical Leave Act (FMLA)

Federal law requiring organizations with 50 or more employees to provide up to 12 weeks of unpaid leave after childbirth or adoption; to care for a seriously ill family member or for an employee's own serious illness; or to take care of urgent needs that arise when a spouse, child, or parent in the National Guard or Reserve is called to active duty

Patient Protection and Affordable Care Act

health care reform law passed in 2010 that includes incentives and penalties for employers providing health insurance as a benefit

paid leave

employee is paid while he or she is not working; for example, vacation or sick days

Group Insurance

A type of health insurance in which all those insured have the same coverage and pay a set premium

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Federal law that requires employers to permit employees or their dependents to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff, reduction in hours, or the employee's death.

Short-Term Disability Insurance

insurance that pays a percentage of a disabled employee's salary as benefits to the employee for six months or less

Long-Term Disability Insurance

insurance that pays a percentage of a disabled employee's salary after an initial period and potentially for the rest of the employee's life

Contributory plan

retirement plan funded by contributions from the employer and employee

noncontributory plan

retirement plan funded entirely by contributions from the employer

defined benefit plan

pension plan that guarantees a specified level of retirement income

Employee Retirement Income Security Act

Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation

Pension Benefit Guarantee Corporation

federal agency that insures retirement benefits and guarantees retirees a basic benefit if the employer experiences financial difficulties

defined contribution plan

retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account

Cash Balance Plan

retirement plan in which the employer sets up an individual account for each employee and contributes a percentage of the employee's salary; the account earns interest at a predefined rate

Vesting Rights

guarantee that when employees become participants in a pension plan and work a specified number of years, they will receive a pension at retirement age, regardless of whether they remained with the employer

Summary Plan Description (SPD)

report that describes a pension plan's funding, eligibility requirements, risks, and other details

Job Structure

the relative pay for different jobs within the organization

Pay Structure

the pay policy resulting from job structure and pay-level decisions

pay level

the average amount (including wages, salaries, and bonuses) the organization pays for a particular job

Fair Labor Standards Act (FLSA)

Federal law that establishes a minimum wage and requirements for overtime pay and child labor

Exempt employees

Managers, outside salespeople, and any other employees not covered by the FLSA requirement for overtime pay.

Nonexempt employees

employees covered by the FLSA requirements for overtime pay

Pay Ratio Reporting

•Must report ratio of CEO pay to pay of median employee

•Dodd-Frank Wall Street Reform

•Consumer Protection Act of 2010

•Intended to increase transparency and make social responsibility a more vital part of pay policies

Product Markets

organizations with similar goods and services that compete on quality, service, and price.

labor market

organization must compete to obtain hr and establish minimum pay to hire an employee for a job

Benchmarking

a process by which a company compares its performance with that of high-performing organizations

External Equity

fairness of ones pays relative to what other employees in other organizations makes for the same job

internal equity

The fairness of pay rates when comparing to coworkers

job evaluation

a process that determines the worth of each job in a company by evaluating the market value of the knowledge, skills, and requirements needed to perform it

compensable factors

1.Experience

2.Education

3.Complexity

4.Working conditions

5.Responsibility

Key Jobs

benchmark jobs that have relatively stable content and are common to many organizations so that market-pay survey data can be obtained.

Pay Policy Line

a graphed line showing the mathematical relationship between job evaluation points and pay rate

pay grades

sets of jobs having similar worth or content, grouped together to establish rates of pay

Pay ranges

a set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job or a job within a particular pay grade

Pay Differential

adjustment to a pay rate to reflect differences in working conditions or labor markets

ex-working night shift you earn more

Delayering

Reducing the number of levels in the organization's job structure

Skill-Based Pay Systems

pay structures that set pay according to the employees' levels of skill or knowledge and what they are capable of doing

Compa-Ratio

average/midpoint