Chapter 9 - Managing Compensation

Question 1

Compensation: 3 components

Answer 1

• direct
• indirect
• non-financial

Question 2

Direct

Answer 2

encompasses employee wages and salaries, incentives, bonuses, and commissions

Question 3

Indirect

Answer 3

benefits supplied by employers

Question 4

Non Financial -

Answer 4

employee recognition programs, rewarding jobs, organizational support, work environment, and flexible work hours to accommodate personal needs

Question 5

Total rewards -

Answer 5

capture all three components, plus all other aspects of organizational rewards. Combination of total compensation (pay/benefits), plus opportunities for personal growth

Question 6

Strategic compensation

Answer 6

compensation of employees in ways that enhance motivation and growth while at the same time aligning their efforts with the objectives, philosophies, and culture of the organization

Question 7

Objective key results system

Answer 7

setup an objective for your team and for the individuals within the team, set up a number of key results that are quantifiable. Must clarify expectations, balance aspirational with operational, consider additional performance factors

Question 8

Equity theory

Answer 8

motivation theory that explains how people respond to situations in which they feel they have received less (or more) than what they deserve

Question 9

Expectancy theory

Answer 9

predicts that one’s level of motivation depends on the attractiveness of the rewards sought and the probability of obtaining those rewards

• high valence: valued by employees
• high instrumentality: employees believe that the attainment of goals and objectives must result in the promised rewards
• excpectancy - they can do the required task

Question 10

Hourly work -

Answer 10

work paid on an hourly basis

Question 11

Piecework

Answer 11

work paid according to the number of units produced

Question 12

Internal factors

Answer 12

Compensation strategy of an organization, The worth of a job, Employees relative worth, Employers ability to pay

Question 13

External factors -

Answer 13

Labour market conditions, Area wage rates, Cost of living, CPI

Question 14

Consumer price index (CPI) -

Answer 14

the measure of the average change in prices over time in a fixed market basket of goods and services

Question 15

Escalator clauses

Answer 15

clauses in collective agreements that provide for quarterly cost of living adjustments in wages, basing the adjustments on changes in the consumer price index

Question 16

Collective bargaining - Real wages

Answer 16

wage increases larger than rises in the consumer price index, that is, the real earning power of wages

Question 17

Job evaluation

Answer 17

a systematic process of determining the relative worth of jobs to establish which jobs should be paid more than others within an organization

Question 18

Job ranking system

Answer 18

• the simplest and oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth

Question 19

Job classification system

Answer 19

a system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades

Question 20

Point system -

Answer 20

a quantitative job evaluation procedure the determines the relative value of a job by the total points assigned to it

Question 21

The point manual

Answer 21

contains a description of the compensable factors and the degrees to which these factors may exist within the jobs

Question 22

Job Evaluation for Management Positions: Hay Profile Method

Answer 22

a job evaluation technique using three factors - knowledge, mental activity, and accountability - to evaluate executive and managerial positions

Question 23

Wage and salary survey -

Answer 23

a survey of the wages paid to employees of other employers in the surveying organizations relevant labour market

Question 24

Employer initiated surveys

Answer 24

employers wishing to conduct their own wage and salary survey must first select the job to be used in the survey and identify the organizations with which they compete for employees

Question 25

Wage curve

Answer 25

a curve in a scattergram representing the relationship between the relative worth of jobs and wage rates

Question 26

Pay Grades

Answer 26

Groups of jobs within a particular class that are paid the same rate

Question 27

Red circle rates -

Answer 27

payment rates above the maximum of the pay range

Question 28

Broadbanding

Answer 28

Collapses many traditional salary grades into a few wide salary bands

Question 29

Competency-Based Pay

Answer 29

Pay based on an employee’s skill level, variety of skills possessed, or increased job knowledge

Question 30

The Canada Labour Code

Answer 30

Set minimum labour standards for all employees and employers in works or undertakings that fall within federal jurisdiction, including interprovincial highway and rail transportation, pipeline, telecommunications, air transport, fishing, and banking

Question 31

Employment Standards Legislation

Answer 31

Establishes the minimum standards with a view to protecting both employees and employers in certain employment situations

Question 32

Pay equity

Answer 32

equal pay for work of equal value

Question 33

Measuring Comparability

Answer 33

Using one evaluation system

Question 34

The Issue of Wage-Rate Compression

Answer 34

- Compression of differentials between job classes, particularly the differential between hourly workers and their managers