Compensation Management Test #1 MGT 4543 Mississippi State University Medina

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