Chapter 2: compensation Flashcards by Colin Tan

What is compensation

total of all rewards provided to employees

in return for their services

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What are the components of compensation?

financial

non-financial

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What are the different types of direct financial incentive?

individual
group or team
company-wide

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What are examples of the individual-based incentive plan?

merit pay
piecework plan
commission

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What are examples of company-wide incentive programme?

profit sharing

gain sharing

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What are the profit-sharing plans?

current plan
deffered plan
combination plan

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What are the gainsharing plans?

scanlon

improshare

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What are the types of indirect financial compensation?

legally required/mandatory/compulsory
voluntary/discretionary
flexible/cafeteria benefits scheme

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What are examples of legally required indirect financial compensation?

CPF (Central Provident Fund)
WICA (Work injury compensation act)
Employment Act
WSJA (Workplace safety and health act)

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What are examples of voluntary discretionary benefits?

payment for time not worked
healthcare
life insurance
employee services
premium pay

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What are the purposes of all kinds of compensation

attract
retain
motivate employees

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What does direct financial compensation consist of

wages
salaries
commissions
bonuses
incentives

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Where does non-financial compensation come from?

satisfaction from job
psychological environment
physical environment

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What are the two ways companies can choose to base their compensation on?

seniority

performance

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For a compensation to motivate an employee, what must incentive be based on

performance

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What is performance-related compensation that increase productivity known as

incentive compensation

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When a company knows how to motivate employees to be more productive, what does it gain

competitive advantage

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the composition of the workforce changes with pay for performance because

high performers paid for, more motivated
below-average discouraged
buck up or leave

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What is merit pay?

absolute sum of money

added to base salary

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Who receives merit pay

deserving employees with good performance

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What is the problem with merit pay

treated as cost of living allowance

expect regular and frequent

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When do company’s hold back on merit pay

bad year

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What is set and established in a piecework plan?

minimal hourly wage rate

meeting a pre-established output

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What is the rate called when employee exceeds the standard

differential piece rate

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What is the advantage of using a piecework plan

simple and easily understood

What is the problem with piecework plan

change in payscale, new piece rate work does not come in neat piecemeal manner cannot attribute output to an individual

What kind of personnel work on a commission basis?

sales

What is a sales commission?

% of sales price | added to base wage

Overall, what do individual incentives create that motivates employees

clear performance objectives

If individual incentives fail, what will happen

dysfunctional competition encourage inflate perspectives reduced interaction and communication compromise on safety and quality

How are employees paid in a group incentive plan

for theircombined performance

When should group incentive plan be implemented?

tasks are interdependent | requires cooperation and teamwork

What is the disadvantage of team incentive plan

a single 'freeloader' can jeopardise the group | peer pressure- conform or leave

What good things does team incentive plan bring about

teamwork encourage peers to become counsellers watches helping hand

What does profit-sharing distribute?

predetermined percentage of company's profits

What do employees get in the current plan

cash | stock

When can employees get their incentives in the deffered profit sharing plan

retirement termination death

Where does the fund go to in defferred profit sharing plan

invested in securities

How do employees get their share of profit in deffered profit sharing

irrevocable trust of company | credited to employee accounts

What does the combination plan do for employees?

receive part of profits on current basis | defer the rest

What are the positive effects of profit-sharing

efficiency | lower cost

What is the negative effect of profit-sharing

``` do not know how they helped generate profit dilution effect (entitlement, expect and depend. less ownership) ```

What does gain sharing aim to do with employees

bind them with company productivity

What is the incentive based on gainsharing?

improved company performance

How is gainsharing different from profit sharing?

% vs payment

What does the scanlon plan reward employees for?

savings in labour costs

In the scanlon plan, savings in labour costs arise from

suggestions and ideas

What are the platforms used for generating ideas to improve productivity?

QCC WIT suggestion scheme

What does improshare use to determine staff bonuses?

mathematical formula

What are the goals of indirect financial compensation?

attract keep employees

Employee benefits are membership-based and there not related to productivity and does not serve as a direct

motivation

What are the purposes of employee benefits?

increase recruitment success rate improved morale enhance quality of work life improve overall productivity minimise union-management conflict gain favourable competitive position in industry

Where do contributions for CPF come from?

employee | employer

What kind of benefit scheme is CPF under?

retirement

What does WICA provide payment for?

death or accident at work | workplace diseases

Who receives the compensation from WICA

injured workman | or dependents

When is WICA void?

injury or death out of employement | injury caused when drunk or drugged

What is the purpose of the employement act

basic rights of employees | duties of employers

What are some things spelled out in the employment act?

``` annual leave entitlement overtime pay rate hours of work rest days maternity leave ```

What is the aim of WSHA

cultivate good safety habits | strong safety culture

How does WSHA decrease the risks

make stakeholders accountable

What are the examples of payment for time not worked

``` paid vacations paid sick leave sabbaticals compassionate marriage rest periods ```

What do paid vacations help with employees

rejuvenated | rest

What does paid sick leave do for employees?

too sick to report for work | receive their pay

What are sabbaticals

temporary leave of absence from organisation | at reduced pay

Healthcare benefits are the most expensive form of indirect financial compensation because

ageing population growing demand for medical care expensive technology inefficient administrative processes

Who receives the benefit of life insurance

employee's family | in death

Who pays for life insurance

employee pay part of premium

What benefits does employee services encompass

``` company subsidised food loans for housing renovation car club membership sports and wellness ```

What kind of employees get premium pay

work long hours | dangerous conditions

What are examples of premium pay

shift allowances | risk allowance/ hazard pay

What does a flexible/cafeteria benefits scheme allow employees to do?

choose from a range of available benefits

What is the purpose of flexible benefits scheme

employees see the cost and value of each benefit/ total benefit programme improvement in QWL productivity enhanced (loyalty and motivation)

What are the limitations of benefits package?

control cost of benefits against the expectation of employees limited motivation to increase motivation

What does non-financial compensation use to motivate people?

intrinsic value

What are examples of non-financial compensation

job content job environment work flexibility

What are components of the job environment

``` sound policies competent supervision good working colleagues status symbols comfortable working conditions ```

What does work flexibility give employees

greater control over their jobs

What are examples of work flexibility

compressed workweek flexitime job sharing telecommuting