HRMN 3423 - Chapter 9 and 10

compensation survey

A means of obtaining data regarding what other firms are paying for specific jobs or job classes within a given labor market.

human capital theory

A theory premised on the idea that employees' knowledge and skills generate productive capital known as human capital. Employees can develop knowledge and skills from formal education or on-the-job experiences.

whole life insurance

A type of life insurance that provides protection to employees' beneficiaries during employees' employment and into the retirement years.

two-tier wage systems

A wage structure where newly hired workers are paid less than current employees for performing the same or similar jobs.

In addition to identifying the relative job​ worth, the factor comparison method also determines which of the​ following?

Absolute value of the position

clawback policy

Allows the company to recover compensation if subsequent review indicates that payments were not calculated accurately or performance goals were not met.

6-year graduated schedule

Allows workers to become 20 percent vested after two years and to vest at a rate of 20 percent each year thereafter until they are 100 percent vested after six years of service.

vesting

An employee's acquired non-forfeitable rights to pension benefits.

job structure

An ordered set of similar jobs based on worth.

General Schedule

Classification of federal government jobs into 15 classifications (GS-1 through GS-15), based on such factors as skill, education, and experience levels. In addition, jobs that require high levels of specialized education (e.g., a physicist), significantly influence public policy (e.g., law judges), or require executive decision making are classified in three additional categories: Senior Level (SL), Scientific & Professional (SP) positions, and the Senior Executive Service (SES).

Pay mix compensation policies

Combination of direct (core compensation) and indirect financial compensation (employee benefits) components that make up an employee's total compensation package.

relocation benefits

Company-paid shipment of household goods and temporary living expenses, covering all or a portion of the real estate costs associated with buying a new home and selling the previously occupied home.

person-focused pay

Compensation for developing the flexibility, knowledge, and skills to perform a number of jobs effectively.

competency-based pay

Compensation plan that rewards employees for the capabilities they attain.

broadbanding

Compensation technique that collapses many pay grades (salary grades) into a few wide bands to improve organizational effectiveness.

incentive pay

Compensation, other than base wages or salaries, that fluctuates according to employees' attainment of some standard (e.g., a pre-established formula, individual or group goals, or company earnings).

Which of the following legislation gave employees the opportunity to continue their health insurance coverage for a period of time after terminating​ employment?

Consolidated Omnibus Budget Reconciliation Act

401(k) plan

Defined contribution plan in which employees may defer income up to a maximum amount allowed.

job-based pay

Employee compensation for jobs employees currently perform

exempt employees

Employees categorized as executive, administrative, professional, or outside salespersons.

nonexempt employees

Employees not categorized as executive, administrative, professional, or outside salespersons, and required to receive overtime pay for work beyond the completion of standard work hours.

cliff vesting schedule

Employers must grant employees 100 percent vesting after no more than three service years. That is, after three years of participation in the retirement plan, an employee has the right to receive all the accrued employer's contributions made on the employee's behalf.

company stock shares

Equity segments of equal value, which increase with the number of stock shares held.

cost-of-living adjustment (COLA)

Escalator clause in a labor agreement that automatically increases wages as the U.S. Bureau of Labor Statistics cost-of-living index rises.

Mark Zuckerberg, like many new parents, benefited from the __________________________, which mandates that most companies provide employees up to 12 weeks of unpaid leave for family reasons.

Family and Medical Leave Act of 1993

wage curve

Fitting of plotted points to create a smooth progression between pay grades (also known as the pay curve).

The practice of allowing employees to choose what hours they​ work, within certain​ limits, is called​ what?

Flextime

Scanlon plan

Gain sharing plan that provides a financial reward to employees for savings in labor costs resulting from their suggestions.

Which​ team-based financial reward plan focuses on aligning an​ organizations' people strategy with its business strategy by providing an incentive payment based on improved company​ performance?

Gain sharing plans

pay grade

Grouping of similar jobs to simplify pricing jobs.

prepaid medical services

HMOs are sometimes described as providing prepaid medical services because fixed periodic enrollment fees cover HMO members for all medically necessary services only if the services are delivered or approved by the HMO.

managed care plans

Health care delivery that emphasizes cost control by limiting an employee's choice of doctors and hospitals. These plans also provide protection against health care expenses in the form of prepayment to health care providers.

Which of the following is NOT a benefit of offering company child care on​ site?

Increased hours per day at the job

Mark Zuckerberg, Facebook's CEO, announced he would be taking a two-month paternal leave of absence. Paternal leave would be considered _________________________________.

Indirect financial compensation

________, also known as employee​ benefits, consists of all financial rewards not included in direct financial compensation.

Indirect financial compensation

referral plans

Individual incentive pay plans for rewarding the referral of new customers or recruiting successful job applicants.

behavioral encouragement plans

Individual incentive pay plans that reward employees for specific such behavioral accomplishments as good attendance.

classification method

Job evaluation method in which classes or grades are defined to describe a group of jobs.

job evaluation ranking method

Job evaluation method in which the raters examine the description of each job being evaluated and arrange the jobs in order according to their value to the company.

factor comparison method

Job evaluation method that assumes there are five universal factors consisting of mental requirements, skills, physical requirements, responsibilities, and working conditions; the evaluator makes decisions on these factors independently.

point method

Job evaluation method where the raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth.

Which of the following has been identified as the MOST desired benefit a company can offer in lieu of a salary​ increase?

Job security

seniority

Length of time an employee has been associated with the company, division, department, or job.

merit bonuses

Lump sum monetary awards based on employees' past job performances. Employees do not continue to receive nonrecurring merit increases every year. Employees must instead earn them each time.

If a firm wants to use compensation as a method to draw​ high-quality employees to the​ organization, what type of compensation policy should be​ utilized?

Market lead

paid time off (PTO) banks

Means of dealing with the problem of unscheduled absences by providing a certain number of days each year that employees can use for any purpose.

real hourly compensation

Measure of the purchasing power of a dollar.

What type of pay increase is added to an​ employee's base pay based on job​ performance, to reward effort or​ results, motivate future​ performance, and retain valued​ employees?

Merit pay

hourly pay (wage)

One type of base pay. Employees earn hourly pay for each hour worked.

salary

One type of base pay. Employees earn salaries for performing their jobs, regardless of the actual number of hours worked. Companies generally measure salary on an annual basis.

deductible

Over a designated period, employees must pay for services before the insurance plan begins to pay for services.

interindustry wage or compensation differentials

Pattern of pay and benefits associated with characteristics of industries.

merit pay

Pay increase added to employees' base pay based on their level of performance.

The combination of direct and indirect compensation components in an​ employee's compensation package is determined based on which​ policy?

Pay mix compensation policy

compensation policy

Policies that provide general guidelines for making compensation decisions.

labor market

Potential employees located within the geographic area from which employees are recruited.

flextime

Practice of permitting employees to choose their own working hours, within certain limitations.

job evaluation

Process that determines the relative value of one job in relation to another.

term life insurance

Protection for providing monetary payments to an employee's beneficiaries upon the employee's death, and offered only during a limited period based on a specified number of years or maximum age.

fee-for-service plans

Provide protection against health care expenses in the form of a cash benefit paid to the insured or directly to the health care provider after the employee has received health care services. These plans pay benefits on a reimbursement basis. Three types of eligible health expenses are hospital expenses, surgical expenses, and physician charges.

workers' compensation

Provides a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses

unemployment insurance

Provides workers whose jobs have been terminated through no fault of their own monetary payments for up to 26 weeks or until they find a new job.

defined benefit plan

Retirement plan that provides the participant with a fixed benefit upon retirement.

cash balance plan

Retirement plan with elements of both defined benefit and defined contribution plans.

Discretionary benefits fall into three broad categories. Which of the following is a discretionary benefit that offers a type of protection program for​ workers?

Retirement plans

perquisites (perks)

Special benefits provided by a firm to a small group of key executives and designed to give the executives something extra.

When a sales person receives the same salary regardless of​ sales, what type of compensation system is being​ utilized?

Straight salary

skill-based pay

System that compensates employees for their job-related skills and knowledge, not for their job titles.

health savings account (HSA)

Tax-free health spending and savings accounts available to individuals and families who have qualified high-deductible health insurance policies as determined by IRS regulation.

sabbaticals

Temporary leaves of absence from an organization, usually at reduced pay.

nominal hourly compensation

The face value of a dollar.

copayments

The fixed amounts that vary by the service. For example, the copayment to visit the primary care physician tends to be lowest (e.g., $20) and emergency room visits are usually most expensive (e.g., $250).

out-of-pocket maximum

The maximum amount an employee pays for health care during a calendar or plan year.

base pay

The monetary compensation employees earn on a regular basis for performing their jobs. Hourly pay and salary are the main forms of base pay.

coinsurance

The percentage of covered expenses paid by the insured. Most fee-for-service plans stipulate 20 percent coinsurance. This means that the insured will pay 20 percent of covered expenses, whereas the insurance company pays the remaining 80 percent.

employee stock plans

The right to purchase shares of company stock.

Which of the following is NOT a factor when determining pay policies for sales​ people?

The skill level of the sales person

company stock

The total equity or worth of the company.

What happens when firms offer somewhat higher wages and benefits to discourage union​ representation?

There is a spillover effect.

volunteerism

Time allotted to support a meaningful cause.

When the Social Security Act of 1935 was​ passed, what was its original​ intent?

To create a retirement benefits program

job sharing

Two part-time people split the duties of one job in some agreed-on manner and are paid according to their contributions.

telecommuting

Work arrangement whereby employees, called "teleworkers" or "telecommuters," are able to remain at home (or otherwise away from the office) and perform their work using computers and other electronic devices that connect them with their offices.

When an employee is temporarily injured on the​ job, what type of legally required benefit would they​ receive?

Workers' compensation

There continues to be ____________associated with fathers who choose to take time off (paid or unpaid) following the birth or adoption of a child.

a social stigma

When a Walmart employee receives a recurring wage for work performed, this is known as _____________________.

base pay

Using fewer pay grades within the​ organization, allowing for lateral development of​ employees, can be accomplished using​ ________.

broadbanding

In 2015, Walmart raised the compensation level for new employees to $9.00 per hour. Their hourly wage is considered to be ________________________.

direct financial compensation

While new Walmart employees' hourly rate is $9.00, any benefits (healthcare, child care, etc.) that are extended to the employee are known as ___________________________.

indirect financial compensation

Walmart's wage increase decision was also based on​ ________________.

interindustry wage differentials

Walmart's decision to raise new employees' hourly rate was based in part on ___________________.

labor market dynamics

Mark Zuckerberg's paternal leave helped to ___________________________.

legitimize paternal leave

Which type of health care plan offers protection against health care expenses on a reimbursement​ basis?

​Fee-for-service plans

Mark Zuckerberg's parental leave is considered what type of benefit?

A discretionary benefit

discretionary benefits

Benefit payments made as a result of unilateral management decisions in nonunion firms and from labor/management negotiations in unionized firms.

customized benefit plan

Benefit plan that permits employees to make yearly selections to largely determine their benefit package by choosing between taxable cash and numerous benefits.

management incentive plans

Bonuses to managers who meet or exceed objectives based on sales, profit, production, or other measures for their division, department, or unit.

nonfinancial compensation

Derives from within an employee's self. For example, nonfinancial compensation can come from the satisfaction that a person receives from the job itself or from the psychological or environment in which the person works.

primary care physician

Designated by HMOs to determine whether patients require the care of a medical specialist. This functions to control costs by reducing the number of medically unnecessary visits to expensive specialists.

pay level compensation policies

Determine whether the company will be a pay leader (market lead), a pay follower (market lag), or assume an average position (market match) in the labor market.

Which of the following is a discretionary​ benefit?

Health insurance

piecework

Incentive pay plan in which employees are paid for each unit they produce.

stock options

Incentive plan in which employees can buy a specified amount of stock in their company in the future at or below the current market price.

pay range

Minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference.

matching contribution

Money the employer deposits into an employee's defined contribution account contingent on the employee contributing first.

spillover effect

Non-union companies' offer of similar compensation unionized companies with the goal of is reducing the likelihood that nonunion workforces will seek union representation.

The satisfaction one receives from the job​ itself, or the environment in which the person works is which type of​ compensation?

Nonfinancial

pay compression

Occurs whenever a company's pay spread between newly hired or less qualified employees, and more qualified job incumbents is small. In extreme cases, less experienced employees are paid as much as or more than employees who have been with the organization a long time because of a gradual increase in starting salaries and limited salary adjustments for long-term employees.

market lag policies

Pay policy that distinguishes companies from the competition by compensating employees less than most competitors. Lagging the market indicates that market levels fall below the market match line.

market lead policies

Pay policy that distinguishes companies from the competition by compensating employees more highly than most competitors. Leading the market denotes market levels above the market match line.

seniority pay

Pay program in which pay increases are based on length of service.

pay structures

Pay rate differences for jobs of unequal worth and the framework for recognizing differences in employee contributions.

direct financial compensation (monetary compensation)

Pay that a person receives in the form of wages, salaries, commissions, and bonuses.

say on pay

Provision that gives shareholders in all but the smallest companies an advisory vote on executive pay.

When evaluating jobs based on order of importance and value to the​ organization, which evaluation method is being​ used?

Ranking

indirect financial compensation (employee benefits)

Refers to extrinsic compensation other than hourly wages or annual salary. This form of compensation includes a wide variety of rewards of monetary value such as such as paid vacation and medical care.

defined contribution plan

Retirement plan that permits employees to contribute to their accounts based on a chosen percentage of annual pay. At their discretion, the company makes matching contributions.

Which of the following allows for increased pay for long term employees while offering a lower starting salary to new​ employees?

Two-tier pay structures

nonqualified plans

Welfare and pension plans that do not meet at least one requirement set forth by the Employee Retirement Income Security Act of 1974 (ERISA), disallowing favorable tax treatment for employee and employer contributions.

compressed workweek

Any arrangement of work hours that permits employees to fulfill their work obligation in fewer days than the typical five-day workweek.

human capital

As defined by economists, refers to sets of collective skills, knowledge, and ability that employees can apply to create economic value for their employers.

market match policies

Average pay that most employers provide for a similar job in a particular area or industry.

Which of the following retirement plans allows an employee to defer pretax income for​ retirement?

A​ 401(k)

golden parachute contract

Perk that protects executives if another company acquires their firm or if the executive is forced to leave the firm for other reasons.

gain sharing

Plans that describe group incentive systems that reward employees with an incentive payment based on improved company performance for increased productivity, increased customer satisfaction, lower costs, or better safety records.

profit sharing

Plans that pay a portion of company profits to employees, separate from base pay, cost-of-living adjustments, or permanent merit pay increases. These plans award cash to employees, typically on a quarterly or annual basis.

high-deductible health insurance plans (HDHPs)

Plans that require substantially higher deductibles compared to managed care plans and traditional fee-for-service plans.

consumer-driven health care plans (CDHPs)

Refers to the objective of helping companies maintain control over costs, while also enabling employees to make greater choices about health care.

spot bonuses

Relatively small monetary gift provided employees for outstanding work or effort during a reasonably short period of time.

Company-paid shipments of household goods during a temporary move are what type of​ benefit?

Relocation benefit

total compensation

Represents both the intrinsic and extrinsic rewards employees receive for performing their jobs.

qualified plans

Welfare and pension plans that meet various requirements set forth by the Employee Retirement Income Security Act of 1974; these plans entitle employees and employers to favorable tax treatment by deducting the contributions from taxable income. Qualified plans do not disproportionately favor highly compensated employees.