Wage & Salary 1

What goals do piecework plans typically target?

individual production versus objective standards, quantity and/or quality production goals, individual performance standards using objective and subjective criteria

How do piecework plans incorporate subjective criteria?

Awards based on performance standards using objective and subjective measures

What can piecework plans base awards on?

Individual production versus objective standards

In what way is incentive pay nonrecurring compared to traditional?

Increases base pay only upon goal attainment, not permanently

How does traditional pay differ from incentive pay?

Provides annual salary or hourly wage with permanent increases on seniority or merit

What benefits does incentive pay provide to companies?

Controls costs and motivates through explicit goal setting

What distinguishes incentive pay additions to base pay?

Nonrecurring basis upon goal attainment

How does incentive pay fluctuate?

According to preestablished formula, individual/group goals, or company earnings

What steps link pay for performance effectively?

Link appraisals to business goals, analyze jobs, establish effective appraisals, empower employees, differentiate performers, communicate expectations

Why is MBO considered highly effective?

Directly ties performance to measurable goals for professionals and managers

What is Management-by-Objectives (MBO) in performance appraisals?

Supervisors and employees set objectives; rate on achievement

What is the primary use of goal-oriented systems in appraisals?

Evaluate managerial and professional progress toward strategic objectives

What do behavioral systems assess in appraisals?

Extent of successful job performance behaviors

How do comparison systems work in performance appraisals?

Rank employee performance against others

What are trait systems in performance appraisals?

Evaluate employees on traits like judgment, leadership, dependability

What elements ensure effective merit pay programs?

Periodic reviews, realistic standards, performance-reflective increases, and meaningful amounts

What basis does merit pay use for adjustments?

Objective and subjective indicators of job performance

In what sector is longevity pay commonly used?

Most government employees, including federal General Schedule system

How does longevity pay typically function?

Provides periodic increases not part of base pay

For what purpose is longevity pay primarily designed?

Address pay for employees reaching seniority-based maximum rates

What distinguishes longevity pay from seniority pay?

Rewards employees at maximum pay grade without base pay addition

According to human capital theory, why do employees receive seniority pay increases?

Employees become more valuable over time through experience

What does the Walsh–Healey Public Contracts Act of 1936 mandate?

Minimum wages, hours, and safety on government contracts over $10,000

What is the purpose of the Davis–Bacon Act of 1931?

Prevailing wages on federal construction projects

What employee rights does the Family and Medical Leave Act of 1993 provide?

Unpaid leave for family and medical reasons with job protection

How does the Americans with Disabilities Act of 1990 (amended 2008) affect pay?

Requires reasonable accommodations without undue hardship

What does the Pregnancy Discrimination Act of 1978 require?

Treat pregnancy as temporary disability for benefits and leave

What enhancements did the Civil Rights Act of 1991 add to compensation practices?

Strengthens anti-discrimination provisions including damages for intentional discrimination

What does the Age Discrimination in Employment Act of 1967 protect against?

Age-based discrimination (amended 1978, 1986, 1990)

How does the Lilly Ledbetter Fair Pay Act (2009) combat pay discrimination?

Extends statute of limitations for pay discrimination claims

What does the Bennett Amendment (1964) relate to?

Aligns state equal pay laws with federal under EPA

What does Title VII of the Civil Rights Act of 1964 prohibit?

Employment discrimination based on race, color, religion, sex, or national origin

What is the focus of the McNamara–O’Hara Service Contract Act of 1965?

Minimum wages and safety on government service contract

What does the Work Hours and Safety Standards Act of 1962 cover?

Overtime and safety for certain employees

How does the Equal Pay Act of 1963 address pay discrimination?

Prohibits wage discrimination based on sex for equal work

What purpose does the Portal-to-Portal Act of 1947 serve?

Clarifies compensable work time under FLSA

What does the Fair Labor Standards Act of 1938 regulate?

Income continuity, safety, and work hours

What protections does the Fourteenth Amendment, Section 1 provide?

No abridging citizen privileges, due process, and equal protection of laws

What does the Fifth Amendment guarantee regarding due process?

No deprivation of life, liberty, or property without due process of law

What freedoms does the First Amendment protect?

Religion establishment prohibition, free exercise, speech, press, assembly, and petition for redress

What power does Article 1, Section 8 of the Constitution grant Congress regarding commerce?

Regulate commerce with foreign nations, among states, and with Indian tribes

What challenge affects public sector unionization decline?

Increased scrutiny and restrictions on public unions

What do right-to-work laws do to unions?

Prohibit requiring union membership as employment condition

What globalization aspect contributes to union decline?

Shifting jobs to lower-wage countries

How has legislation lessened unions' role in decline?

Reduced unions' influence in workplace matters

What is the spillover effect in labor union influence on pay?

Nonunion employers pay higher to avoid unionization

What example shows geographic cost-of-living differences?

$464,000 average housing in Boston vs. $214,000 in Fargo

How do cost-of-living differences cause geographic pay differentials?

Influence pay rates, often signaled by housing prices

What are geographic pay differentials?

Annual or hourly pay differences based on regions vs. national average

What labor factor influences occupational wage differentials?

Supply relative to employer demand for labor

How do KSAs differences within an occupational group affect wages?

Higher KSAs lead to higher pay, e.g., pharmacist vs. pharmacy technician

What explains occupational wage differentials based on job content?

Differences in knowledge, skills, and abilities (KSAs)

What role does unionization play in interindustry wages?

More unionized industries pay higher due to collective bargaining leverage

How does industry profitability influence wages?

Higher knowledge, skills, and abilities contribute to profitability and higher wages

What is capital intensity and its wage impact?

Use of large-scale equipment associated with higher wages

How does product market competition affect interindustry wages?

Little competition allows higher wages, like in mining or utilities

What are interindustry wage differentials?

Patterns of pay and benefits associated with industry characteristics

What tasks do compensation generalists handle?

Variety of HR areas including building job structures and pay systems

What roles do compensation executives perform?

Report directly to CEO or head of major division

What examples fall under services in discretionary benefits?

Tuition reimbursement and day care assistance

What is paid time-off in discretionary benefits?

Pay for time when employees are not working

What do protection programs in discretionary benefits provide?

Family benefits, health promotion, and guard against income loss

What are the three broad categories of discretionary benefits?

Protection programs, paid time-off, and services

What is incentive pay also known as?

Variable pay that rewards attaining predetermined work objectives

What assumption underlies merit pay programs?

Compensation should reflect differences in job performance

How does seniority pay work?

Rewards employees with base pay additions based on length of service

What are COLAs in base pay adjustments?

Periodic base pay increases based on consumer price index changes

What forms can a differentiation strategy take?

Design, brand image, technology, features, customer service, and price

What job characteristics make differentiation strategy effective?

Highly creative behaviors, long-term focus, and risk-taking

What characterizes a differentiation strategy?

Offering unique goods or services to create brand loyalty

What example illustrates a lowest cost strategy?

IKEA reduces costs by sourcing from low-labor countries and low service

When is lowest cost strategy effective for jobs?

When jobs require autonomous activity and focus on quantity of output

What behaviors are associated with lowest cost strategy?

Predictable behaviors with short-term focus

What characterizes a lowest cost strategy?

Focus on being the lowest cost producer or seller of goods or services

What are the two main competitive business strategy choices for advantage?

Lowest cost strategy and differentiation strategy

What role do discretionary benefits play in employee behavior?

Promote desired employee behaviors

How does skill-based pay apply in the workplace?

Increases pay for employees mastering new skills in physical work

What is the purpose of pay-for-knowledge plans?

Reward learning specific curricula for managerial, service, or professional workers

How do incentive programs help reduce employee entitlement?

By tying pay to performance rather than automatic increases

What do well-designed merit pay and incentive programs reinforce?

Excellent job performance

How can compensation professionals leverage human capital value?

Through merit pay, incentive programs, pay-for-knowledge, and skill-based pay

What is human capital in the context of value creation?

Collective skills, knowledge, and abilities employees apply to create employer value

How do HR functions serve as strategic business partners?

By leveraging human capital for value creation like income and reputation

What role do compensation professionals play as strategic business partners?

Provide CEO and CFO understanding of how employees contribute to shareholder value

What types of capital are involved in competitive business strategy?

Financial capital, equipment capital, and human capital

How is competitive business strategy defined?

Planned use of company resources to promote and sustain competitive advantage over multiple years

What does strategic compensation primarily aim to reinforce?

Objectives of HR strategies and competitive business strategies