Chapter 1 Flashcards
What is Compensation?
all forms of tangible services and benefits
How does society view compensation?
a measure of justice
How much do employers spend on benefits?
44 cents on top of every dollar paid for wages and salaries
How do some stockholders view compensation?
- Creates sense of ownership
* linking executive pay to performance increases stockholders’ returns
How do managers view compensation?
- Major expense
* Can be used to influence employee behavior and improve organizational performance
How do employees view compensation?
- Major source of financial security
* an entitlement for being an employee of the company
What does pay affect?
Motivational intensity, direction and persistence of employees
What is “incentive effect”?
The degree to which pay influences individual and aggregate motivation among employees at any given time
What is “sorting effect”
An indirect influence of pay that affects the composition of the workforce. Different types of pay strategies cause different types of people to apply and stay with the job.
What was the result of the study by Edward Lazear measuring employee productivity before and after an incentive plan dependent on individual performance?
An overall increase in plant productivity of 44%.
Half of increase due to more productive employees, other half due to less motivated employees leaving and being replaced by more productive candidates excited for the opportunity to earn more.
What does “compensation” mean in English?
Something that counterbalances, offsets or makes up for something else.
What does “compensation” mean in Chinese?
Traditional symbols for logs and water=necessities of life
Modern word is “dai yu”=how you are treated,-your wages, benefits, training opportunities, etc.
What does “compensation” mean in Japanese?
“kyuyo”- kyu and yo both mean giving something…traditionally thought of as something given by one’s superior. Today, many substitute “hou-syu” which means “reward”
What is “teate”
Japanese word for the many allowances that are part of the Japanese compensation systems…family, housing and commuting allowances.
What is total compensation?
pay directly as cash and indirectly as benefits
