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compensation
intrinsic and extrinsic rewards
Intrinsic Compensation
employees critical psychological states that result from performing their jobs
Extrinsic Compensation
monetary and non-monetary rewards
core compensation
money
employee benefits
non monetary items such as insurance, retirement plans, etc.
base pay (fixed) and incentives (variable)
What are the two forms of direct compensation?
wages and salary
What are the 2 types of base/fixed pay?
commissions,
piece rate,
bonuses,
stock options,
profit sharing,
gains sharing
What are examples of incentives/variable pay?
pay for time not worked,
insurance plans,
security plans,
employee services
What are the 4 types of indirect compensation?
vacations,
breaks,
holidays,
sick days,
jury duty
What are examples of pay for time not worked?
medical,
dental,
life
What are examples of insurance plans?
pension,
social security,
disability insurance
What are examples of security plans?
education assistance,
recreational programs,
food services
What are examples of employee services
competitive business strategy
planned use of company resources to promote and sustain a competitive advantage
human resource strategy
use of HR practices to reinforce competitive business strategy
strategic compensation
the design and implementation of compensation systems to reinforce the objectives of both HR strategies and competitive business strategies
cost leadership
the lowest cost producer in a market with focus on efficiency
differentiation
a unique product at a premium price This strategy relies on employee creativity and willingness to take risks and requires longer time frames
Innovation
Why does brand loyalty and research and development frequently go hand in hand with differentiation?
design and implementation
Competitive professionals support strategic initiatives through the ____ and ____ of compensation systems
reducing cost per employee
for a lowest-cost strategy, compensation professionals should focus on what?
risks
pay for differentiation differs because this strategy relies on employee creativity and willingness to take what?
time frames
differentiation strategies require longer what?
money
What is the heart of compensation?
1. employee's skill level
2. employee's effort
3. employee's level of responsibility
4. severity of the working conditions
What are the 4 compensable factors for compensation?
COLAs (cost of living adjustments)
adjustments for inflation and enables workers to maintain standard of living
Differentiation (tesla, apple)
this strategy relies on employee creativity and willingness to take risks and requires longer time frames
seniority pay
reward for length of service
human capital theory
states that employees' knowledge and skills add value and are more productive over time
human capital
What theory is seniority pay based on?
merit pay
rewards employee performance (added on to hourly wage)
incentive/variable pay
pay that fluctuates on a predetermined outcome
managerial, service, professional
what type of workers are likely to receive pay-for-knowledge pay?
physical labor
What type of workers are likely to receive skill-based pay?
discretionary benefits
employer chooses to give benefits such as action or paid leave
Legally Required Benefits
benefits mandated by law such as social security and workers compensation
from small groups to factories
In the industrial revolution, it changed the division of labor work from who to what
productivity measures and piecework plans (increase output)
What 2 concepts were formed from scientific management?
improving conditions for employees and personal management
What 2 things emerged from welfare practices and governmental regulation
competitive advantage
because of a pressure of globalized competition, employees were viewed as a source of what?
internally consistent compensation systems
employees in more complex jobs are paid more than employees in jobs that require fewer qualifications and less complex duties; clearly defines relative value of each job in an organization
important to perceptions of fairness
why is internal consistency in compensation important?
job analysis and job evaluation
What are 2 processes to achieve internal consistency?
job analysis
The systematic process of gathering and interpreting information about the job; job description
job evaluation
determines relative worth of jobs to organization and establishes pay differentials accordingly
market surveys
how is market competitiveness in compensation achieved?
Market Surveys
pay for data from competitors
recruit and retain employees
why does market competitiveness in compensation matter?
pay structures
represent pay rate differences for jobs of unequal worth and the framework for recognizing differences in employee contributions
pay grades
groups of similar jobs for pay policy application
pay ranges
minimum, maximum, midpoint of pay grades
employees, line managers, executives, unions, U.S. government
What stakeholders must a compensation system satisfy?
paid time off
gives employees pay for time when they are not working
services
Enhancements like tuition reimbursement or daycare assistance to employees and their families
conflicting goals
why might satisfying various stakeholders be a challenge for HR departments? (END OF CH 1)
maintain balance of power between employees and organizations
why are employment and labor relations laws needed?
Industry Wage Differentials
pattern of pay and benefits associated with an industry
capital intensity
extent to which a company uses large scale equipment
higher capital intensity tend to pay higher wages
How does capital intensity influence wages?
unionized industries tend to pay higher wages than non or lesser-unionized industries
what effect does unionization tend to have on pay?
knowledge, skills, and abilities
what are KSAs?
more complex KSAs receive higher pay
How do KSAs affect pay?
to restore equality bargaining power between employees and employers
What was the purpose of the National Labor Relations Act (NLRA)?
Collective Bargaining Agreement (CBA)
written document containing terms agreed upon by employees and management
pay, work hours, conditions of employment
What are some topics CBA includes
spillover effect
occurs when non-unionized companies offer similar benefits to unionized company to keep employees from joining union
right to work laws
prohibit management and union from making union membership a term of employment
the Great Depression
what major event in history led, in part, to the passage of income continuity, safety, and work hours legislation
1. minimum wage
2. overtime
3. child labor
what three broad issues did the fair labor standards act (FLSA) address?
exempt employees
overtime and minimum wage does not apply
Non-exempt employees
overtime and minimum wage do apply
Executive;
Administrative;
Learned Professional;
Creative Professional;
Computer;
Outside Sales
What are six categories of exemption from the FLSA
hours worked
what does the portal-to-portal act define
equal pay act
men and women should receive for equal pay for equal work, skill, effort, responsibility, and under similar working conditions
skill, effort, responsibility, and working conditions
what are compensable factors
1. seniority
2. merit pay
3. quantity or quality of work
4. any factor other than sex
What are the 4 exceptions to equal pay?
race,
color,
religion,
sex,
national origin
what 5 protected classes fall under the civil rights act of 1964?
disparate treatment
intentional mistreatment of workers based on their being in one of the protected classes
disparate impact
unintentional discrimination or unequal treatment of protected groups
4/5 rule
What is used to determine disparate impact?
ADEA (Age Discrimination in Employment Act)
protects those 40+ from age discrimination, protects pay and benefits
burden of proof shifts to the employees to the employer
how did the civil rights act of 1991 change the burden of proof? US citizens working overseas may file suit against U.S. businesses for discriminatory employment practices
pregnancy discrimination act of 1978 (PDA)
what act protects the following rights: same sick leave as temporary disability and protects accrued retirement, benefits, and seniority.
discrimination against individuals with mental/physical disabilities
What does the Americans with disabilities act prohibit
make reasonable accomodations
what does the Americans with disabilities act require employers to provide
15 or more
How many employees must an employer have to follow the ADA
$684. $1368. $2964. $35,568
What is the salary level for FLSA Exemption Criteria? Weekly or Biweekly. Annually.
salary basis
predetermined fixed salary that is not subject to reductions due to variations in quality or quantity of work performed
job duties
must meet criteria in one or more of the following exemptions
Waiting time
On-call time
Rest and meals periods
Sleeping time and certain other activities
Lectures, meeting and training programs
Travel time
Compensable work times
Home to work travel
Home to work on special day one assignment
Travel that is all in a day's work
Travel away from home community
Compensable work activities: Travel Time
Family and Medical Leave Act of 1993 (FMLA)
what act guarantees the same position and pay (or an equivalent position) upon return? (END OF CH 2)
seniority pay
Based on human capital theory
States that employees become more valuable over time
Rationale (seniority pay)
Employees knowledge and skills generate productive capital
Over time employees are more productive.
employees become more valuable over time
what do seniority and longevity pay plans assume?
unionized private sector and public sector organizations
seniority pay is common in what types of organizations
employees an count on same pay raises for average and exemplary work; hard workers are not recognized for their work
what are some disadvantages of seniority pay
pay steps
eligible for a wage increase after a certain amount of time
within-grade increases (WGI)
receive pay depending on the placement of steps
employees compensation over time should be determined by differences in job performance
what is the basic assumption of merit pay programs
Note
Flashcard