Compensation Chapter 1

Question 1

Refers to all forms of financial returns and tangible services and benefits that employees receive

Answer 1

Compensation

Question 2

Are the psychological returns people believe they receive in the workplace such as recognition and status, employment security, and learning opportunities

Answer 2

Relational Returns

Question 3

Pay received directly as cash such as base pay, merit increases, cola, incentives, stock, and indirectly benefits (vacation, pensions, and health insurance)

Answer 3

Total compensation

Question 4

Include cash compensation, benefits, and relational returns

Answer 4

Total rewards

Question 5

Tie pay increase directly to performance

Answer 5

Incentives (or variable pay)

Question 6

Other term for incentives

Answer 6

Variable pay

Question 7

Intended to focus employee efforts on multiyear results

Answer 7

Long-term incentives

Question 8

Cash compensation an employee receives for the work performed

Answer 8

Base Pay (Wage or Salary)

Question 9

Gives the same percentage increase to everyone else regardless of performance levels relative to increase in cost of living

Answer 9

Cost of Living Adjustment (COLA)

Question 10

Types of Benefits

Answer 10

1. Insurance and Pensions
2. Work/Life Programs
3. Allowances

Question 11

True or False
Some people see pay (and benefits) as a measure of justice

Answer 11

True

Question 12

True or False
Job losses (or gains) in a country is partly a function of labour costs (and productivity).

Answer 12

True

Question 13

True or False
Stockholders have a particular interest in executive pay.

Answer 13

True

Question 14

True or False
Linking executive pay to company performance increases stockholders’ returns

Answer 14

True

Question 15

True or False
Compensation is a major expense that must be managed

Answer 15

True

Question 16

Usually a major source of financial security

Answer 16

Pay

Question 17

Increments to base pay based on performance

Answer 17

Merit Increases

Question 18

Paid in a lump sum rather than becoming a part of base pay, based on performance. Can be long term or short term.

Answer 18

Incentives (bonuses)

Question 19

3 Building Blocks of Pay Model

Answer 19

1. Compensation objectives
2. Policies that form the foundation of compensation system
3. Techniques that make up compensation model

Question 20

Guide the design of the pay system and are standards for judging success

Answer 20

Pay objectives

Question 21

3 Strategic Objectives of Compensation

Answer 21

Efficiency
Fairness
Compliance

Question 22

4 Strategic Policies

Answer 22

Internal Alignment
External Competitiveness
Employee Contributions
Management

Question 23

Different Perspectives on Compensation

Answer 23

1. Society
2. Stockholders
3. Managers
4. Emlpoyees

Question 24

Refers to comparisons among jobs or skill levels inside a single organization

Answer 24

Internal Alignment

Question 25

Pertains to pay rates both for employees doing equal work and for those doing dissimilar work

Answer 25

Internal Alignment

Question 26

Refers to pay comparisons with competitors external to the organization.

Answer 26

External Competitiveness

Question 27

Refers to how employees are rewarded

Answer 27

Employee Contributions

Question 28

Making sure that the right people get the right pay for achieving the right objectives in the right way

Answer 28

Management

Question 29

Refer to the tools and mechanisms that are used to achieve the strategic objectives

Answer 29

Pay techniques