Ch. 8 Flashcards
(27 cards)
Direct Financial Payments
Wages, salaries, incentives, commissions, bonuses.
Indirect Financial Payments
Benefits like insurance, vacations, and retirement contributions.
Internal Equity
Employee’s perception of pay fairness within the organization.
External Equity
Employee’s perception of pay fairness compared to other organizations.
Individual Equity
Fairness of an individual’s pay compared to coworkers based on performance.
Procedural Equity
Perceived fairness of the processes used to make pay decisions.
Pay Equity
Equal pay for jobs of equal value using gender-neutral criteria.
Job Evaluation
Systematic comparison to determine the relative worth of jobs.
Ranking Method
Simplest job evaluation method; jobs ranked based on overall difficulty.
Job Classification
Grouping jobs into classes based on compensable factors.
Point Method
Assigning points to compensable factors to evaluate job worth.
Compensable Factors
Skill, effort, responsibility, and working conditions.
Wage/Salary Survey
Survey to determine prevailing wage rates in the market.
Broadbanding
Reducing salary grades into fewer, wider bands for flexibility.
Pay-for-Knowledge
Pay based on an employee’s range, depth, and type of knowledge.
Fixed Pay
Compensation that is stable and not tied to performance.
Variable Pay
Compensation tied to productivity or performance outcomes.
Herzberg’s Theory
Motivation comes from job content; pay prevents dissatisfaction.
Deci’s Theory
Extrinsic rewards can weaken intrinsic motivation.
Vroom’s Expectancy Theory
Effort leads to performance (expectancy), performance leads to reward (instrumentality), reward has value (valence).
Profit Sharing
Employees share in the company’s profits as a group incentive.
Gainsharing
Employees share productivity gains achieved through group effort.
Executive Compensation
Emphasizes incentives; includes salary, bonuses, stock options.
Professional Pay
Market-priced; hard to quantify job value analytically.
