PRE-FINALS HRM

AUQ NA. TAMA NA.

Compensation

is defined as the total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required

Compensation

is the total of an employee’s pay and benefits

Compensation costs

are frequently the largest part of the total cost at today's firms.

Compliance.

Compensation must comply with the law, such as Republic Act No. 602 or an act to establish a minimum wage law, and for other purposes. Adhering to standards can complicate compensation management, but it will help protect the company against litigation and ensure fairness across the board.

Attract Top Talents.

One of the primary goals of compensation is to recruit qualified talents. When a company has a competitive compensation plan in place, it can attract top industry talents.

Retain & Reward Personnel.

Compensation affects the process of both attracting and retaining employees.

Boost Employee Motivation

When a compensation plan is structured effectively, it can drive motivation across teams in the organization.

Maximize Return on Investment (ROI)

Suppose the organization can create a compensation plan that stays within the budget while driving productivity through pay-for-performance and other motivational tactics. In that case, it can be both equitable for the company and advantageous for hardworking employees.

compensation system

includes anything that an employee may value and desire and that the employer is willing and able to offer in exchange.

Compensation components.

All rewards classified as monetary payments and in-kind payments such as base pay, allowances, bonuses, and commissions constitute the compensation component.

Non-compensation components.

All rewards other than monetary and in-kind payments such as free food in the cafeteria and gym membership constitute the non-compensation component.

Job Descriptions.

are defined in writing the responsibilities, requirements, functions, duties, location, environment, conditions, and other aspects of jobs. It may be developed for jobs individually or for entire job families.

Job Analysis.

It is the process of analyzing jobs from which job descriptions are developed. Its techniques include the use of interviews, questionnaires, and observation.

Job Evaluation.

It is a system for comparing jobs to determine appropriate compensation levels for individual jobs or job elements.

Job Ranking 

This method is one of the simplest to administer. Jobs are compared to each other based on the overall worth of the job to the organization. The 'worth' of a job is usually based on judgments of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions.

Job Classification 

In this method, jobs are classified into an existing grade/category structure/hierarchy. Each level in the grade/category structure has a description and associated job titles.

Factor Comparison

A set of compensable factors are identified as determining the worth of jobs. The typical number of compensable factors is small (4 or 5).

Point-Factor 

This is an extension of the factor comparison method where a set of compensable factors are identified as determining the worth of jobs

Pay Structures

It is useful for standardizing compensation practices.

Salary Surveys.

This part includes the collections of salary and market data. It may also include average salaries, inflation indicators, cost of living indicators, and salary budget averages.

Policies and Regulations.

This part depends on the company’s or organization’s policies and regulations.

Base pay.

It is typically a flat rate, either as an hourly wage or salary. In the National Capital Region (NCR), the daily minimum wage rate is Php 537.00.

Wage and salary add-ons.

These include overtime pay, shift differential, allowances, premium pay for working weekends and holidays, and other add-ons.

Incentive pays.

These are also known as variable pays. It is a pay for performance, and it commonly includes items such as piece work in production and commissioned sales.

Benefits

It is indirect compensation that provides something of value to the employee. This may include health insurance (those payments to employees if they are unable to work because of sickness or accident), retirement pay contributions, and provision of a wide variety of desired goods and services such as cafeteria service, tuition reimbursement, and many other items.

Direct compensation.

It is the form of compensation that goes directly to the employees as part of their paycheck. The first three (3) compensation components, such as base pay, add-ons, and incentive pay

Indirect compensation

It is the compensation where employees do not get any funds, such as a benefits program. Employees never see these funds, and most do not realize how costly these benefits are to the firm.

Expectancy Theory

It is a process theory of motivation which means that an individual goes through a cognitive process to evaluate a situation. It proposes that employees are motivated when they believe they can accomplish a task and that the rewards are worth the effort. 

Expectancy

is the person’s perception of their ability to accomplish or probability of accomplishing an objective.

Instrumentality

is the perception that a particular level of performance is likely to provide the individual with the desired reward.

Valence

refers to the value a person places on the outcome or reward because not all people value the same reward.

Equity Theory

developed by J. Stacy Adams

Equity Theory

proposes that people are motivated to seek social equity in the rewards they receive (outcomes) for their performance (input).

equity theory

proposes that employees are motivated when the ratio of their perceived outcomes to inputs is at least roughly equal to that of other referent individuals.

under rewarded

they may try to reduce the inequity by increasing outcomes (e.g., requesting a raise or committing theft), decreasing inputs (e.g., doing less work, being absent, taking long breaks, etc.), or rationalizing (e.g., finding a logical explanation for the inequity).

overrewarded

When most employees perceive that they are _______, they rationalize it in some way and accept it.

equitably rewarded

When employees perceive that they are ______, they are motivated to continue to put forth the same effort for the organization so long as they are content that inputs and outcomes are in balance.

longevity or seniority

means accumulating years of service with the firm by promotions and raises over time (assuming the employee meets minimal organizational standards) regardless of performance because they have been loyal members of the organization.

performance

which means being able to complete certain tasks or doing certain things faster or better than average, or just being there and being loyal to the firm.

Skill

It means the company pays members of the workforce for individual skills or competencies that they bring to work, whether those skills are necessary for the individuals to do their current job.

Competencies

involve the individual’s level of knowledge in a particular area.

Skill

involve the ability to apply that knowledge set in that field.

competencies

this include negotiating contract agreements, applying physics principles to a new equipment design, or making a high-quality decision based on a good analysis of a situation.

Efficiency wage theory

states that if a company pays higher wages, it can generally hire better people who will be more productive.

A salary structure (or pay scale)

is a system that employers use to determine an employee’s compensation.

standard salary structure

considers merit, length of employment, and pay compared to similar positions

Traditional salary structures

These are the second most commonly used system. These are divided into numerous pay grades. Salary increases are relatively small jumps between pay grades. Employers can use traditional structures to prevent employees from capping out at the maximum salary too quickly.

Broadband structures 

These are more flexible than traditional salary structures. These salary structures utilize fewer pay grades, and each pay grade has a wider salary range than traditional structures.

Market-based structures 

This structure is now the most popular system. These are based on what other employers pay employees. Under this salary structure, it conduct an external pay audit to determine your salary ranges for each position.

Salary structures and wages 

are determined by factors such as nature of work, workplace location, working hours, type of industry/sector, and others.

Labor Code of the Philippines

which prescribes employment regulations and labor laws for companies operating in the Philippines.

25%

Payment of overtime work shall consist of an addition of at least ____  of the regular wage per hour worked

30%

Payment of overtime work during holidays or rest days shall consist of an addition of at least

pay structure

is a hierarchy of jobs and their rates of pay within the organization. It allows individuals to identify what the pay range is for each job.

job structure

the workers' job hierarchy from the lowest to the highest level.

Pay levels

also known as pay grades, can be made up of different jobs, and each pay level has a maximum pay rate and a minimum pay rate.

Labor market competitions

refer to the labor supply and demand in the market that should be recognized to set the minimum value for a particular pay level.

Product market competition

is a function of the value of the product or service sold to the customer that determines the top of the pay level.

pay curve

Once the benchmark jobs are placed in a plot of the company’s pay levels, the market pay line comes after, which is also called a

rate range

which provides the maximum, minimum, and midpoint of pay for certain jobs

red-circle rates

Individual pay rates that fall outside the pay range on the high side are called

green-circle rates

those that are lower than the bottom of the pay range are

Delayering

is changing the company structure to get rid of some of the vertical hierarchy (reporting levels) in an organization

Broadbanding

is accomplished by combining multiple pay levels into one.

compensation plan

is a complete package that lists details about employees' wages, salaries, benefits, and payment terms.

Premium Pay

It is overtime pay for rest days and official holidays.

Regular Holidays

These refer to fixed dates like Christmas, Independence, or New Year's Day.

Special Holidays

These are also known as Special Non-Working Holidays. They fall on flexible dates, depending on the circumstance.

Double Holidays 

This is a rare occurrence wherein a regular holiday and a special holiday fall on the same day.

Night shift differential

This is also known as night shift pay. It applies to employees who work between 10:00 PM and 6:00 AM.

Separation pay

is also part of the Labor Code and is given to employees terminated from the company.

1/2 Month Pay per Year of Service

the separation from the service is because of retrenchment to save the company from pitfalls, closure, or termination of the operations due to bankruptcy and other bad instances, and grave illness incurable within six (6) months or harmful for co-workers.

One-Month Pay per Year of Service

because of: installation of devices or machines that reduce the number of laborers, redundancy, or when there is excessive manpower, impossible reinstatement to the former position because of significant reasons.

Retirement pay

Upon the age of 60 years or more, an employee who has served at the establishment for at least five (5) years may be granted a retirement pay equivalent to at least one-half month of salary for every year of service.

Labor Relations

this refers, in a broader sense, to the relationships between the employees on the one hand and the management on the other hand, or the relationship between management and labor unions

Management Prerogatives

every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees.

Workers' Rights

These are constitutional rights derived from Sec. 3, Art. XIII, of the 1987 Philippine Constitution, namely: the right to organize; to conduct collective bargaining or negotiation with management;

Law / CBA

Such relationships between management and employees are governed by the existing laws and other agreements under the ___

Isabelo delos Reyes

the father of Philippine trade unionism.

Agricultural Land Reform Code

The passage of R.A. No. 3844 on August 8, 1963, made a slight improvement on the living conditions of the tenants.

four-fold test

it is court decisions that give some guides in determining the existence of employer-employee relationship by applying the

The power of dismissal.

The termination of an individual's employment by the employer.

control test

Its absence means there is no employer-employee relationship between parties. Not every form of control has the effect of establishing an employer-employee relationship.

Evidence of Employment Status

appointment letters, employment contracts, payrolls, organizational charts, SSS Registration, personnel lists, and testimonies of co-employees.

Presidential Decree No. 442

A decree instituting labor code, thereby revising and consolidating labor and social laws to afford protection to labor, promote employment and human resources development and ensure industrial peace based on social justice.

Article 1. Name of Decree 

This decree shall be known as the "Labor Code of the Philippines."

Labor Code of the Philippines.

It is the principal labor law of the country that had gathered in one volume sixty (60) pieces of law that were in force when the codification began in 1968, such as the Eight-hour Labor Law, the Minimum Wage, and the Termination Pay Law.

Labor Legislation

is a broader category than labor law that aims to protect and promote society's welfare or segments in the furtherance of social justice. It is classified into labor standards and labor relations.

Labor Standards Law

sets out the minimum terms, conditions, and benefits of employment that employers must provide or comply with and to which employees are entitled as a matter of legal right.

Labor Relations Law

defines the status, rights, and duties and the institutional mechanisms that govern the individual and collective interactions between employers, employees, and their representatives.

Article 2. Date of Effectivity 

This Code shall take effect six (6) months after its promulgation. On Labor Day, May 1, 1974, a draft labor code was signed into law by the martial law President under P.D. 442, but because of further revisions, the effectivity date was deferred to November 1, 1974.

Article 3. Declaration of Basic Policy

The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employers. 

Constitutional Balance

The constitution wants the State to protect labor. But protection to labor does not mean oppression or destruction of capital. Justicia nemini negarda est – justice is to be denied to none.

International Labor Law

Not only constitutional commands but also international labor commitments govern our labor policy because the Philippines has been an ILO member since 1948.

Equal Opportunities

The phrase "regardless of sex, age, or creed" signifies that employers can not disqualify an applicant just because of his gender, age, or religion, but also has the discretion to exercise the management prerogative by a selection of employees based on personality, skills possessed, or educational background is not controlled by law.

Article 4. Construction in Favor of Labor 

All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

star provision

the policy is to apply the Code to a greater number of employees, but it is not correct to think that the aim of the law is always to favor labor

Article 5. Rules and Regulations 

The Department of Labor and Employment, other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations.

Department of Labor and Employment (DOLE)

is the lead agency in enforcing labor laws, and it possesses the rule-making power in the enforcement of the Code. A rule or regulation that exceeds the department's rule-making authority is void.

Article 6. Applicability 

All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply similarly to all workers, whether agricultural or non-agricultural.