Strategic Pay Plans in Human Resources Management

These flashcards cover key concepts related to strategic pay plans and total rewards in human resources management.

What are the main components of employee compensation?

Direct financial payments and indirect financial payments.

What is equity theory of motivation?

A theory suggesting that people are motivated to maintain a balance between their contributions and their rewards.

What are the three types of equity relevant in pay?

External equity, internal equity, and individual equity.

What does a job evaluation committee do?

Evaluates the relative worth of jobs within a firm and ensures fair representation of job requirements.

What is the ranking method of job evaluation?

A method that involves ranking jobs relative to each other based on overall factors such as job difficulty.

What is the purpose of a wage/salary survey?

To determine prevailing wage rates and ensure competitive compensation.

What is total rewards in compensation management?

Includes all forms of pay and rewards that employees receive, including financial and non-financial rewards.

What is the significance of job classes in job evaluation?

Groups of jobs categorized based on similar compensable or comparable factors for pay purposes.

What is pay equity?

Providing equal pay to job classes of equal value, determined by gender-neutral criteria.

How can managers address equity issues in compensation?

Using salary surveys, job analysis, performance appraisals, and communication.

What are compensable factors?

Fundamental elements of a job, such as skill, effort, responsible and working conditions, used to determine job worth.

What is broadbanding in compensation?

Reduces the number of salary grades and ranges into a few wide levels or 'bands' to allow flexibility in salary adjustments.

What distinguishes pay-for-knowledge plans?

They reward employees based on their range, depth, and types of knowledge rather than the job title.

What challenges do employers face in compensating professional employees?

Difficulties in measuring compensable factors such as creativity, problem-solving, and technical expertise.

External Equity

refers to the fairness of an organization's pay relative to similar roles in the external job market, ensuring competitive compensation to attract talent.

Internal Equity

the fairness of pay within an organization, ensuring that employees in similar roles receive similar compensation based on their responsibilities and performance.

Individual Equity

pertains to the fairness of compensation based on an individual's skills, experience, and performance level relative to others within the organization.

Procedural Equity

focuses on the fairness of the processes used to determine compensation and promotions within an organization, ensuring equal and transparent treatment for all employees.

Pay Equity

the principle that employees should receive equal pay for work of equal or comparable value, regardless of gender, race, or other factors.