4220 Final Exam

minimum wage

A _______ level for most Americans established by Congress as part of the Fair Labor Standards Act of 1938.

pay-for-knowledge plans

A compensation practice whereby employees are paid for the number of different jobs they can adequately perform or the amount of knowledge they possess.

Balanced Scorecard

A corporate-wide, overall performance measure typically incorporating financial results, process improvements, customer service, and innovation.

Fair Labor Standards Act of 1938 (FLSA)

A federal law governing minimum wage, overtime pay, equal pay for men and women in the same types of jobs, child labor, and record-keeping requirements.

balance sheet approach

A method for compensating expatriates based upon the belief that the employee should not suffer financially for accepting a foreign-based assignment. The expatriate's pay is adjusted so that the amounts of the financial responsibilities the expatriate had prior to the assignment are kept at about the same level while on assignment—the company pays for the difference.

tax equalization

A method whereby an expatriate pays neither more nor less tax than the assumed home-country tax on base remuneration.

comparable worth

A policy that women performing jobs judged to be equal on some measure of inherent worth should be paid the same as men, excepting allowable differences, such as seniority, merit, production-based pay plans, and other non-sex-related factors. Objective is to eliminate use of the market in setting wages for jobs held by women.

reopener clause

A provision in an employment contract that specifies that wages, and sometimes such nonwage items as pension/benefits, will be renegotiated under certain conditions (changes in cost of living, organization, profitability, and so on).

expatriate colony

A section of a large city where expatriates tend to locate and form a community that takes on some of the cultural flavor of their home country.

U.S. expatriates (USEs)

American citizens working for a U.S. subsidiary in a foreign country. Main compensation concerns are to "keep the expatriates whole" relative to their U.S.-based counterparts and to provide expatriates with an incentive wage for accepting the foreign assignment.

Equal Pay Act (EPA) of 1963

An amendment to the Fair Labor Standards Act of 1938 that prohibits pay differentials on jobs that are substantially equal in terms of skills, efforts, responsibility, and working conditions, except when they are the result of bona fide seniority, merit, production-based systems, or any other job-related factor other than sex.

compa-ratio

An index that helps assess how managers actually pay employees in relation to the midpoint of the pay range established for jobs. It estimates how well actual practices correspond to intended policy. Calculated as average rates actually paid divided by range midpoint.

local country nationals (LCNs)

Citizens of a country in which a U.S. foreign subsidiary is located. ______ compensation is tied either to local wage rates or to the rates of U.S. expatriates performing the same job.

valuation discrimination

Discrimination that focuses on the pay women and minorities receive for the work they perform. Discrimination occurs when members of these groups are paid less than white males for performing substantially equal work. This definition of pay discrimination is based on the standard of "equal pay for equal work." Many believe that this definition is limited and that valuation discrimination can also occur when men and women hold entirely different jobs (in content or results) that are of comparable worth to the employer. Existing federal laws do not support the "equal pay for work of comparable worth" standard.

access discrimination

Discrimination that focuses on the staffing and allocation decisions made by employers. It denies particular jobs, promotions, or training opportunities to qualified women or minorities. This type of discrimination is illegal under Title VII of the Civil Rights Act of 1964.

disparate treatment

Discrimination theory that outlaws the application of different standards to different classes of employees unless the standards can be shown to be business-related.

disparate impact

Discrimination theory that outlaws the application of pay practices that may appear to be neutral but have a negative effect on females or minorities unless those practices can be shown to be business-related.

Expatriates

Employees assigned outside their base country for any period of time in excess of one year.

third-country nationals

Employees of a U.S. foreign subsidiary who maintain citizenship in a country other than the United States or the host country. ________ compensation is tied to comparative wages in the local country, the United States, or the country of citizenship.

nonexempt employees

Employees who are subject to the provisions of the Fair Labor Standards Act.

Foreign Service Premiums

Financial payments over and above regular base pay, typically ranging between 10% and 30% of base pay, part of financial allowance

Exempt

Jobs not subject to provisions of the Fair Labor Standards Act with respect to minimum wage and overtime. _______ employees include most executives, administrators, professionals, and outside sales representatives.

prevailing-wage laws

Legislation that provides for a government-defined prevailing wage as the minimum wage that must be paid for work done on covered government projects or purchases. In practice, these prevailing rates have been union rates paid in various geographic areas.

Say on Pay

Non-binding vote by shareholders to approve or disapprove executive pay

living wage

Pay legislation in some U.S. cities that requires wages well above the federal minimum wage. Often applies only to city government employees.

Green Circle Rate

Pay rate that is below the minimum rate for a job or pay range for a grade

red circle rates

Pay rates that are above the maximum rate for a job or pay range/pay grade.

dual-career ladders

Presence of two different ways to progress in an organization, each reflecting different types of contribution to the organization's mission. The managerial ladder ascends through increasing responsibility for supervision or direction of people. The professional track ascends through increasing contributions of a professional nature that do not mainly entail the supervision of employees.

turnover effect

The downward pressure on average wage that results from the replacement of high-wage-earning employees with workers earning a lower wage.

Pay Transparency

The extent to which an organization communicates pay information and the extent to which employees are permitted to discuss pay with each other

spillover effect

The fact that improvements obtained in unionized firms "_______" to nonunion firms seeking ways to lessen workers' incentives for organizing a union.

Exchange Rate

The measure of how much one currency is worth in relation to another.

Mobility Premiums

Typically, lump-sum payments to reward employees for moving from one assignment to another

Union Wage Premium

Unionized workers in the US are generally estimated to have wages approximately 15% higher than comparable nonunion workers.

two-tier pay plans

Wage structures that differentiate pay for the same jobs based on hiring date. A contract is negotiated that specifies that employees hired after a stated day will receive lower wages than their higher-seniority peers working on the same or similar jobs.

core employees

Workers with whom a long-term, full-time work relationship is anticipated.

Deferred Wage Increase

____ is negotiated at the time of initial contract negotiations with the timing and amount specified in the contract.

Pay Equity

a goal to eliminate pay discrimination and to encompass an array of policies/practices intended to reduce/eliminate pay discrimination.

Agency Theory

a theory of motivation that depicts exchange relationships in terms of two parties: agents and principals. Both sides of the exchange will seek the most favorable exchange possible and will act opportunistically if given a chance. This theory would place part of the executive's pay at risk to motivate the executive to act in the best interests of the shareholders rather than in the executive's own interest.

Hardship Allowance

compensates expatriates for their sacrifices while on assignment, part of financial allowance

Clawback Provison

designed to allow companies to reclaim compensation from executives in some situations.

Stock Options

rights to buy a certain number of shares of stock at a specified price. its a type of deferred compensation.

Stocks

shares of ownership in a company

Purchasing Power

the ability to purchase goods and services

Nominal Wage

the dollar amount of the wage paid

Real Wage

the nominal wage adjusted for changes in the price level (inflation)