week 8 Flashcards
(82 cards)
1
Q
employee compensation includes
A
all forms of pay, very broad o Direct financial payment: like commission salary and bonus
o Indirect compensation usually financial benefit like paid vacation
Employer insurance
2
Q
strategy reagrding compensation must
A
- Align total reward with employee behavior to achive strategy
o Total reward includes things like more challenging jobs, recognition programs etc
3
Q
how to se if compensation policy align with org strat
A
o What our strategic aims
o What employee behaviour or skills we need
o What compensation policy help produce this
4
Q
what considerations in compensation policy
A
Does the firm want to be a leader or follower regarding
pay?
* Business strategy
* Cost of different types of compensation
5
Q
legal considerations of pay include
A
o Labor standard act like min wage, max hours OT, paid vacation stat holidays etc
Could be piece rate but must meet minimum wage
Pay euity act: equal pay for men and women
May have employee come back if not done correctly and receive retro pay
Public in all province but ONT/QUE
Hr act
pensions
EI
workers comp
6
Q
Union consideration in pay
A
worker define job worth, pay work conditions, managers lowball work, negotiate relation with other union
7
Q
equity theory suggests
A
people motivated to maintain balance as what they think Is their contributuion vs rewards, if inequity will rebalance by: leave, lower output to match rewards, change their reference–> reduce output
8
Q
external equiy is
A
is an employee’s perception of pay as fair given the pay rates of comparable jobs in other organizations
9
Q
internal equity is
A
perception of compensation in some way not reflective of what other people in similar roles within org get
Can look different roles but what you think is similar
10
Q
why internal and external equity important
A
o Internal equity important because: fairness, ineuquity internally= feel bad complain etc
o
o External equity important because: leave to join other org, high turnover
Respond n similar way of reduce output, absenteeism etc but external = more exit vs interval = reduce output
11
Q
individual equity is
A
o Individual equity: compare us to co worekers for similar jobs but based on performance, ability to do job
12
Q
procedural equity is
A
o Procedural equity: understand how pay is determined and ensure done in fair way allocation of pay for different roles and classes and individuals
13
Q
pay equity tries to
A
Original purpose is to redress systremic gender discrim in compensation
14
Q
how adress external inequity
A
o Important to do salary survey for external equity, compares to outside same industry
Heres info for external and here where we are important because popel will go especially if they are good
15
Q
how adress iternal inequity
A
o Job anlsyis and compare for internal equity otherwise people will try to reduce output
16
Q
mantain individual equity by
A
o Good performance appraisal system: things at manager discretion must be qual to maintain individual equity fair comprehensive and effective so greater internal and preodural equity and PA
17
Q
how mantain procedural equity
A
o Communication about pay how determined and valuation important for procedural equity
And why people receive certain jobs and promotions
, greivance mechanism, employee participation
18
Q
3 steps establish pay rate
A
1- prep for job eval, wage survey, determine pay for jobs
19
Q
what is job eval and prep for job eval by
A
systematic comparision to determine worth relative of job within firm
Often start with benchmark job that is well understood, exists in other org and can easily break into pieces
then determine compensable factor essential to job like skill
20
Q
why use job ecval comitee and incl who
A
reduce bias
* Incl employee in job hr staff managers and union rep if uniozed
21
Q
Job eval comittee does what
A
- ID key benchmak job then understand relative value of other job compared to benchmark job , use classification methods
22
Q
Ranking method to determine compensation for job adv and dadv
A
- 1- obtain job info on each role like JD
- 2- group and select job
- 3- compensable factors
- 4- rank jobs
- 5- combine ratings
- Compare current pay with salary survey
- 6- compare current pay with salary survey externally
- Assign pay scale
- A: easy
- D: not accurate enough, how much more difficulty? Not enough consideration of details
23
Q
Job class method adv and dadv
A
- Categorizing similar value jobs into diff group for pay purpose
- Create class or grades based on similarities such as independent judgement or skill
- A: eventually job grouped this way any way
- D: less objective, hard to to do, judgement req
24
Q
job class vs job grade
A
- Job classes: groups that classify job like effort usually for similar jobs
- Job grades: group of job based on set of rles for each grade where jobs are similar in difficulty but otherwise different (grades often contain dissimilar jobs, such as office managers, mechanics, and firefighters)
25
steps in job class
* 1. Identify compensable factors (e.g., skill, effort, responsibility, working conditions).
2. Define subfactors for clarity and consistency.
3. Assign points based on the degree of each factor.
4. Sum points to determine job value.
5. Group jobs into pay grades based on point ranges.
26
what is point method
* Each job get points and get to certain category you get put into certain class
* Degree to which each factor preent determined and overall point value calculated
27
what is hay group and common factors
* Hay group: know how- problem solving, accountability and working conditions
skill effort reponsibility
28
what is compensation analyst role in poiunt method
* Compensation analyst grade job and get info from manager, employee etc
29
conducting wage salary is to
determine what other people are paying and same larger or smaller sizes \
o Determine pay based on marketplace rate
30
3 stypes wage survey
o Formal survey: send out survey to other similar org and if you provide us with data we will compile and share with you provided by employer
o Informal: chat with people calling counterpart at other org
o Can also buy from gov survey like stat can or a company, pro assoc may do salary surveys, not make huge salary decision on inaccurate info
31
determining pay for job
o Use everything gathered to assign pay rates to each grade
o Use external info we find to put tog pay rate for each grade and dev ranges
32
wage curve shows what and steps
Use wage curve which shows market pay rates currently paid for jobs relative to the points assigned to each job by eval
Vertical is pay rates and horizontal is points for pay grade
Steps: find average pay for each grade, plot the pay for each grade, then fit a line (wage line) then determine pay
33
why do most org have range of pay and factors effecting pay in range
Allows for performance differences and KSA diff or seniority
Opens door for inequity but if pay everyone the same then individual inequity
o Factors affecting pay within the range:
Entry level.
Time in the grade.
Merit increases.
Performance-based differences
34
benefit of pay ranges
flexibility, performance differentiation and overlap
35
2 ways do pay range include
broadband and pay grades
36
what is broadbanding and important things
reduce bucket of grades but wider so more flex and do in sitation for role with high degree of variability
* May have procedural inequity
* Allow make good performers you want to keep
* Decide number of bands, assign salary range, increased pay range less need for constant promotions
37
pay grades must have
rigid step to maintain procedural equity
But may cause internal inequity bc they have experience but not good not perform as well
38
how to correct out of line rates
Underpaid move up to pay they should receive
Overpaid tricky, but 1 method is freeze rate until matches level, called red circle rate =pay above max for range
* Could try transfer or promote into a job level they paid at
* Red circle them keep pay you that much but next person hired into your job they will get paid lower
* Maybe red circle for 6 months try find position level paid at or just leave, may have individual inequity
* Transfer to job matches rate, freeze rate for period if promo not possible then cut to max in pay range
39
what is compentancy based pay
Pay more bc skills or competency they have not the job
40
what are diff competnecies to be paid off
Functional competencies: org function
Behavioral competencies: expected behaviors
41
with competneacy based pay must be able to do what and greatest challenge and how make work
measure it and challenge is subjectivity
God when layer competency and performance tog what they can do with it
42
paying exec depends on
Firm size explains 40% of CEO pay variance; performance less than 5%.
Salary can depend on persons work in org and how responsibility carried out
High incentive for performance not always company performance
43
issue with short turn around time in exec pay
Often CEO cycle through short period of time and why is CEO tied so much to performance where many outcomes attributed to employees there before
44
pay for professional jobs hard bc and now move towards
compensable factor not easily measured where things happen in people heads
Focus on creativity, job scope and technical knowledge
Many job move toward broad bands
Rely o external info and broad band greater extent
45
job eval dont show professional work well so
Job eval doesn’t show value of pro work knowledge is difficult to quantify and measure
Usuaplly use market pricing approach to determine compensation for pro jobs based on benchmark job in market
Salary Structure: Slot professional jobs into a salary structure based on market data.
Grade Levels: Each professional discipline typically has 4-6 grade levels with broad salary ranges.
46
fixed pay vs variable pay
o Fixed pay
Compensation that is consistent and independent of org perform level
Incl base pay and other benefits
Jobs with predictable performance expectations
o Variable pay
Tied to other org measure like productivity
Can be inconsistent depending on extent to which pay is variable
47
o Employers often prefer variable pay plans while holding salary increases of fixed compensation at modest levels so must have
accurate performance apprasie
48
what is pay for performance
Paid bonus bc done well linked to productivity profitbality etc
49
group vs individual pay for performance
Individual like: every year someone get specific amount or spot bonus: you get 2K after doing well on specific work
Group incentives: team gets bonus and distributed among people profit share or gain share
50
what is hertzberg motivation
Most motivation come from job with challenging recognition
Satisfactory pay and working conditions just keeps the person from becoming dissatisfied
* Hygeiones address lower level need like salasy work conditions
51
what is deci motivation
When emphasize extrinsic motivation can detract from intrinsic motivation
May feel guilty how much money making
May find it demaning and lose desire – pay for productivity
52
Vroom motivation
Expectancy: effort lead to performance
* Training to dev confidence to do job
Instramentaiity: I perform I get reward
* Understand incentive plan and deliver on promised rewards
* Link perform award
Valence: perceived value on reward I want the reward take individual prefrences into account
* Reward match employee individual prefrences
Any comnponent low motivation is weak
53
Merit pay is
Salary increase based on individual performance
granted at designated time of year
It is different from a bonus in that it usually represents a continuing increment, whereas the bonus represents a one-time payment
54
adaptations of merit pay
Adaptations
* Lump sum merit raise: not into salary no need to pay every year
* Often prefer one time lump sum as an org
55
adv and disadv of merit pay
A: rewards performance *
D: Appraisal system needs to be accurate, politicking, fairness
56
what is ESOP
Give option to buy stock within company, maybe provide at reduced rate or matching scheme
Trsut distributes stock to employee on reitement, speration from service or otherwise mentioned
Idea is to feel connected to org as I am a part owner
Tax advantage for both groups, but if value drops then pay tax on gteater amount than receive
57
types of proft share plans
(e.g. in cash plans, the most popular, a percentage of profits, usually 15-20%, is distributed as profit shares at regular intervals)
58
adv and dadv for profit share
A: Help attract, retain, and motivate workers; offer tax advantages; easy to administer; broad appeal to employees; encourages OCB
* Reduce waste ex
D: Might produce one time productivity improvement only, line of sight, actual effect, annual payout, diminishing returns
* May reduce costs for selfish decision to improve productivity
59
what is gainshare
o Gain sharing is common effort to achieve productivity objectives and share the gains, not profit based
60
gain share good when and how payout
stable org payout based on salary and union agreements
61
imposhare is part of gain share what is
set production standards for departments
62
incentive for pro employees is extrinsic bc
Many times extrinsic focus will diminish intrinsic
Reward is solving the problem and when offer too may incentives can diminish that
Non-financial and recognition based forms of rewards
* Celebration or announcements further encourage intrinsic recognition type aspects
63
operations worker incentive incl adv and dadv
piece work : pay based on the number of items processed by each worker in a unit of time, such as items per hour/day. Need job eval and industrial engineer
* Oldest and most common for operations employee
* A: simple o calc, appears equitable
* D: employer raise standard, cutting corners
64
straight peice work is
set pmt for each peice
65
guranteed peicework is
min hourly wage plus incentive for each unit
66
differntial peicework is
paid basic hourly rate + extra % of base rate for production exceeding standard
67
team incentive is and types
Production standard set for work group and all members get paid if exceed standard
individual based group
group output based
68
individual based group incentive is and payment forumla
Individual-Based Group Incentives:
* Work Standards: Set for each group member, with output tracked individually.
* Payment Formulas:
o All members receive pay earned by the highest producer.
o All members receive pay earned by the lowest producer.
o All members receive pay equal to the average earned by the group
69
group output based
Group Output-Based Incentives:
* Group Production Standard: Set based on the final output of the entire group.
* Payment Basis: All members receive the same pay, based on a piece rate or standard hour plan for the group's job.
70
adv and dadv for group incentives
A: great for inter related job where individual performance hard and people interchange and support each other and planning reduce jealousy, encourage others to perform
D: less effective if reward not based on own effort
Most effective if high level of communication and workers involved in design of group bonus
71
Measurable Group Performance Criteria:
Measurable Group Performance Criteria:
* Broad Criteria: Use measurable definitions of performance, such as total labor hours per product.
o Flexibility: Does not require engineered standards like piecework.
72
considerations for senior management incentives
Considerations: eligibbilty, fund size, individual awards
Short term and long term incentive
73
SR vs LR incentive for seniro manageers
Short term incentive = motivate to perform for that year which may screw org in future years
LR = encourage to stay with company like stock options
74
what types of share unit plans and what are they for exec
* Performance Share Unit Plans:
o Definition: Units granted based on achievement of financial targets, equal to share price.
o Outcome: Value paid in cash or stock if goals are met.
* Restricted Share Unit Plans:
o Definition: Units promised but forfeited if the executive leaves before the vesting period.
o Outcome: Full value payable in cash or stock after vesting.
* Deferred Share Unit Plans:
o Definition: Units promised, payable when the executive leaves the company.
75
what are golden parachute for senior exec
* Definition: Extraordinary payments made in connection with a change in company ownership or control.
o Comb0: severance, accel vesting and other beenfits.
* Purpose: Protect executives from loss of job due to mergers or acquisitions.
76
incentive for sales people more willing LR relation with
fixed salary and incentive
* Easier to switch areas with salaries and more likleu to share work
* Loyalty, but not tied to performance and often linked to seniority
77
comission plan only adv and dadv
* A; cost proportional to sales, attract top performers, easy to calc,
* D: people pushy, SR thinking, Damage relations, top performer stop worker when hit comssion
78
fixed + comission for sales most effective model =
motivate sales avoid exessive comission
75% of sales force quota or better
10% achive higher perform then before
5-10% below wuaota
79
Employee engagement is often not included as a goal of an
organization’s compensation plan
* To encourage employee engagement:
Measure extent managers encourage staff to be engaged
* Reward managers for improving employee engagement
* Get employees involved in developing rewards programs
80
when to use incentives
Performance pay cant replace good management
People leave bc leader is most common
Incentive plan that rewards pieces of production could lead to rush work and lower quality *
Pay is only a temporary motivator; build other motivators into jobs *
Rewards rupture relationships *
Rewards may undermine responsiveness *
Careful management of rewards enhances performance
81
how implement incentives it
o How to implement it
Pay perform tied to org goals
Link incentive to other acitivty like career dev
Value measured competency
Match incentive to company culture
Keep group clear and simple
Over communicate to recognize employee
Meaningful work can be more motivating
Recognition ongoing
82
