Total Rewards

Question 1

Benefits

Answer 1

Mandatory or voluntary payments or services provided to employees, typically covering retirement, health care, sick pay/disability, life insurance, and paid time off

Question 2

Perquisites

Answer 2

Compensation provided on an individual basis in the form of goods or services.

Question 3

Broadbanding

Answer 3

Combining several salary grades or job classifications with narrow pay ranges into one band with a wider salary spread.

Question 4

Compa-ratio

Answer 4

Pay rate divided by the midpoint of the pay range

Question 5

Compensation

Answer 5

All financial returns (beyond any tangible benefits payments or services), including salary and allowances.

Question 6

Compensation philosophy

Answer 6

Short but broad statement documenting an organization’s guiding principles and core values about employee compensation.

Question 7

Cost-of-living adjustment (COLA)

Answer 7

Pay adjustment given to eligible employees regardless of performance or organizational profitability; usually linked to inflation.

Question 8

Domestic partners

Answer 8

Unmarried couples, of the same or opposite sex, who live together and seek economic and noneconomic benefits comparable to those granted to their married counterparts.

Question 9

External equity

Answer 9

Situation in which an organization’s compensation levels and benefits are similar to those of other organizations that are in the same labor market and compete for the same employees.

Question 10

Flat-rate pay

Answer 10

Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as single-rate pay.

Question 11

General pay increase

Answer 11

Pay increase given to employees based on local competitive market requirements; awarded regardless of employee performance.

Question 12

Green-circle rates

Answer 12

Situations in which an employee’s pay is below the minimum of the range.

Question 13

Incentive pay

Answer 13

Form of direct compensation where employers pay for performance beyond normal expectations to motivate higher performance.

Question 14

Internal equity

Answer 14

Extent to which employees perceive that monetary and other rewards are distributed equitably, based on effort, skill and/or relevant outcomes.

Question 15

Job classification

Answer 15

Job evaluation method in which descriptions are written for each class of jobs; individual jobs are then put into the grade that best matches their class description.

Question 16

Job evaluation

Answer 16

Process of determining a job’s value and price for the purpose of attracting and retaining employees by comparing the job against other jobs within the organization or against similar jobs in competing organizations.

Question 17

Job ranking

Answer 17

Job evaluation method that involves establishing a hierarchy of jobs from lowest to highest based on each job’s overall value to the organization.

Question 18

Job-content-based job evaluation

Answer 18

Job evaluation method in which the relative worth and pay structure of different jobs are based on an assessment of their content and their relationship to other jobs within the organization.

Question 19

Lump-sum increase (LSI)

Answer 19

One-time payment made to an employee; also called performance bonus.

Question 20

Market-based job evaluation

Answer 20

Job evaluation method in which the relative worth and pay structure of different jobs are based on their market value or the going rate in the marketplace.

Question 21

Merit pay

Answer 21

Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases; also called performance-based pay or pay for performance.

Question 22

Paired-comparison method

Answer 22

Job evaluation method in which each job is compared with every other job being evaluated; the job with the largest number of “greater than” rankings is the highest-ranked job, etc.

Question 23

Pay compression

Answer 23

Occurs when there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority; also known as salary compression

Question 24

Pay for performance (P4P, PfP)

Answer 24

Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases; also called merit pay or performance-based pay

Question 25

Pay grades

Answer 25

Used to group jobs that have approximately the same relative internal or external worth and are paid at the same rate or within the same pay range.

Question 26

Pay ranges

Answer 26

Set the upper and lower bounds of possible compensation for individuals whose jobs fall within a pay grade.

Question 27

Performance bonus

Answer 27

One-time payment made to an employee; also called a lump-sum increase (LSI).

Question 28

Performance-based pay

Answer 28

Situation where an individual’s performance on the job is the basis for the amount and timing of pay increases; also called merit pay or pay for performance.

Question 29

Person-based pay

Answer 29

Pay systems in which employee characteristics, rather than the job, determine pay

Question 30

Point-factor system

Answer 30

Job evaluation method that looks at compensable factors (such as skills and working conditions) that reflect how much a job adds value to the organization; points are assigned to each factor and then added to come up with an overall point value for the job.

Question 31

Premiums

Answer 31

Payments in return for the achievement of specific, timelimited, targeted objectives.

Question 32

Productivity-based pay

Answer 32

Pay based on the quantity of work and outputs that can be accurately measured.

Question 33

Red-circle rates

Answer 33

Situations in which employees’ pay is above the range maximum.

Question 34

Remuneration surveys

Answer 34

Instruments that collect information on prevailing market compensation and benefits practices (including starting wage rates, base pay, pay ranges, statutory and market cash payments, variable compensation, and paid time off).

Question 35

Single-rate pay

Answer 35

Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as flat-rate pay.

Question 36

Time-based step-rate pay

Answer 36

System in which pay is based on longevity in the job and pay increases occur on a pre-determined schedule.

Question 37

Total rewards

Answer 37

Direct and indirect remuneration approaches that employers use to attract, recognize, and retain workers.

Question 38

Total rewards strategy

Answer 38

Plan or method implemented by an organization that provides monetary, benefits-in-kind, and developmental rewards to employees who achieve specific business goals.