Wage and Salary Administration - Exam 1 Audio Study Guide

Comprehensive vocabulary flashcards covering key definitions, legal contexts, pay structures, performance appraisals, incentive plans, and person-focused pay models for Wage and Salary Administration (Z441 Exam 1).

Compensation

The rewards employees receive for performing their jobs, encompassing both intrinsic and extrinsic forms.

Intrinsic Compensation

The psychological satisfaction an employee receives from performing the job itself.

Extrinsic Compensation

Rewards that come from outside the employee, including monetary rewards (core compensation) and nonmonetary rewards (employee benefits).

Strategic Compensation

The design and implementation of compensation systems that reinforce both human resource strategies and competitive business strategies.

Competitive Business Strategy

The planned use of company resources (financial capital, equipment capital, and human capital) to promote and sustain competitive advantage.

Human Capital

The collective knowledge, skills, and abilities employees can use to create value for an organization.

Lowest-Cost Strategy

A competitive business strategy in which a company attempts to become the lowest-cost producer or seller of its goods or services.

Differentiation Strategy

A competitive business strategy in which a company offers unique product features, design, brand image, technology, or customer service to build customer loyalty.

Base Pay

The regular compensation employees receive, generally provided as an hourly wage or annual salary.

Protection Programs

A category of discretionary benefits that protect employees and their families from financial problems associated with disability or serious illness.

Paid Time Off

A category of discretionary benefits where employees receive compensation during periods when they are not working.

Services (Discretionary Benefits)

Discretionary employee benefits offered by employers, such as tuition reimbursement or day-care assistance.

Interindustry Wage Differentials

Differences in compensation across industries caused by industry characteristics such as product market competition, capital intensity, industry profitability, and unionization.

Capital Intensity

The extent to which an industry relies on expensive, large-scale equipment; industries with high capital intensity tend to pay higher wages.

Occupational Wage Differentials

Differences in pay between occupations caused by variations in required knowledge, skills, and abilities (K-S-As) and labor supply and demand.

Spillover Effect

The phenomenon occurring when nonunion employers offer higher compensation than they otherwise would to reduce employees' desire to unionize.

Fair Labor Standards Act (FLSA)

Federal legislation establishing standards for minimum wage ($7.25 per hour), overtime pay (1.5 times the regular rate for hours over 40 in a workweek), and child labor.

Portal-to-Portal Act of 1947

Legislation that broadened the FLSA by defining what counts as compensable hours worked and work activities.

Equal Pay Act of 1963

Law prohibiting sex-based wage discrimination for employees performing equal work.

Title VII of the Civil Rights Act of 1964

Federal legislation prohibiting employment discrimination on the basis of race, color, religion, sex, or national origin.

Disparate Treatment

Intentional employment discrimination against individuals based on protected characteristics.

Disparate Impact

Unintentional employment discrimination where an apparently neutral policy or practice results in disproportionately unequal effects on a protected group.

Lilly Ledbetter Fair Pay Act

Law establishing that a pay discrimination charge can be filed within 180 days of receiving a discriminatory paycheck.

Bennett Amendment

An amendment connecting Title VII pay discrimination claims directly with the standards of the Equal Pay Act.

Age Discrimination in Employment Act (ADEA)

Federal legislation protecting individuals age 40 and older from age-based employment discrimination.

Americans with Disabilities Act (ADA)

Federal law protecting qualified individuals with disabilities from employment discrimination.

Family and Medical Leave Act (FMLA)

Law providing qualifying employees with job-protected, unpaid leave for family and medical reasons.

Davis-Bacon Act of 1931

Prevailing-wage law establishing wage standards for workers on federal construction projects.

Walsh-Healey Public Contracts Act of 1936

Prevailing-wage law covering contractors and manufacturers selling supplies, materials, and equipment to the federal government.

Seniority Pay

Pay system that rewards employees with periodic permanent additions to base pay according to length of service.

Human Capital Theory

Theory stating that employees accumulate valuable knowledge and skills through experience over time, increasing their overall organizational value.

Longevity Pay

Pay system for employees who have reached the maximum pay rate of their grade, providing periodic payments that do not become part of base pay.

General Schedule (GS) System

Federal classification system containing 15 pay grades based on skills, education, and experience through which employees advance via within-grade steps.

Merit Pay

Pay system awarding permanent increases to base pay based on performance evaluation ratings.

Trait Systems

Performance appraisal methods that evaluate employees based on personal characteristics or traits.

Comparison Systems

Performance appraisal methods that evaluate an employee's performance directly relative to that of other employees.

Forced Distribution

A comparison appraisal method that places employees into predetermined performance categories.

Paired Comparison

A comparison appraisal method where employees are evaluated directly against one another in pairs.

Behavioral Systems

Performance appraisal approaches evaluating specific, observable job behaviors rather than personal characteristics.

Critical Incident Technique (CIT)

A behavioral appraisal method focusing on documentation of specific examples of effective or ineffective job performance.

Behaviorally Anchored Rating Scales (BARS)

An appraisal method using rating scales anchored by specific, objective examples of job behavior.

Management by Objectives (MBO)

An evaluation system where supervisors and employees jointly set performance objectives and evaluate progress against those targets.

360-Degree Performance Appraisal

An evaluation system collecting performance feedback from multiple sources, including supervisors, peers, subordinates, clients, and self-ratings.

Bias (Rating Error)

An appraisal error occurring when non-job-related personal characteristics influence an evaluator's rating.

Contrast Error

An evaluation error where a supervisor compares an employee to another worker rather than against clear performance standards.

Central Tendency Error

An evaluation error occurring when raters rate almost all employees near the middle of a scale.

Leniency Error

An appraisal error where raters consistently evaluate employees' performance more favorably than warranted.

Strictness Error

An appraisal error occurring when raters consistently evaluate employees' performance overly harshly.

Incentive Pay

Compensation fluctuating according to preestablished formulas, goals, or earnings, generally providing a nonrecurring payment.

Piecework Plan

An individual incentive plan rewarding employees for units produced beyond an established standard production rate.

Management Incentive Plan

An individual incentive plan awarding bonuses to managers for achieving or exceeding operational objectives.

Behavioral Encouragement Plans

Individual incentive plans providing bonuses for specific employee behaviors such as good attendance or safety achievements.

Referral Plans

Individual incentive bonuses offered to employees for referring qualified applicants who accept employment.

Spot Bonuses

Small monetary awards given to employees for exceptional short-term performance.

Gainsharing

A group incentive program rewarding employees for organizational productivity improvements, cost savings, or safety efficiency.

Scanlon Plan

A gainsharing plan emphasizing labor cost relative to sales value of production (SVOP), where smaller ratios reflect higher efficiency.

Sales Value of Production (SVOP)

The metric representing sales revenue plus the total value of goods currently in inventory.

Rucker Plan

A gainsharing plan using a value-added formula relative to employment costs, where larger ratios indicate greater efficiency.

Value Added

The mathematical difference between the sales value of a product and the cost of materials purchased to produce it.

Improshare

A gainsharing program focusing on time efficiency and physical output by comparing standard production time against actual time used.

Free Riders

Individuals who benefit from group incentive payouts without contributing an equitable share of performance effort.

Profit Sharing

A company-wide plan paying employees cash bonuses (current) or trust allocations (deferred) based on company financial earnings.

Stock Option

An incentive granting an employee the right to purchase company stock at a pre-designated price.

Person-Focused Pay

A pay structure compensating employees for acquiring job-related knowledge, skills, and competencies.

Pay-for-Knowledge

A person-focused pay plan rewarding managerial, service, or professional employees for completing specified curricula.

Skill-Based Pay

A person-focused pay plan generally used for physical work that increases compensation as workers master additional discrete skills.

Competencies

An individual's capability to combine and apply knowledge and skills consistently to perform work successfully.

Horizontal Skills

Additional skills acquired at approximately the same level of difficulty or responsibility.

Vertical Skills

Supervisory or managerial skills, such as scheduling, coordinating, training, and leadership.

Depth of Skills

The degree of specialization or expertise developed within a specific functional or subject area.

Stairstep Model

A person-focused pay model where jobs belong to the same job family and become sequentially more complex.

Skill-Block Model

A person-focused pay model within a job family where skills do not necessarily build directly on one another, emphasizing horizontal and vertical skill development.

Job-Point Accrual Model

A person-focused model where employees earn points for acquiring skills across different job families to increase compensation.

Cross-Departmental Model

A person-focused pay model training employees to perform tasks in other departments to maximize organizational staffing flexibility.