Compensation and Benefits C236

What is a Flexible Benefit Plan?

provide employees options in which benefits they receive

What is included in the bulk of the job description?

written documents that serve as the primary source of information about jobs for many uses within the organization, and these descriptions play a key role in the design and implementation of total reward systems

List and define 3 types of Paid Leave.

-Holiday Pay is provided for many federally recognized holidays -Sick Days are also days that an employee is paid even though they do not attend work, but the expectation is that an employee is actually unwell when the days are used -Personal Days on which the employee is free to not come into work, even if they are not sick

What is the Fair Labor Standards Act?

-commonly referred to as the Wage and Hour Law or FLSA -sets minimum wage standards, overtime pay standards, and child labor restrictions

Define job design and state what is its purpose?

-is the process of systematically constructing jobs to make them functional, efficient, and motivational -these are important because they have implications for how quickly employees can learn jobs, how well they perform on them, and compensation policies

Define Broadbanding and explain what it involves?

-more loosely organized "Banded" structures for grade structures -entails the use of a few broad bands (or grades) to organize work for pay purposes

What are the implications of Job Analysis on the compensation system?

-provides a process for understanding how work is organized and serves as the basis for most reward systems -Job Analysis will detail the knowledge, skill, and ability requirement for a job, which will have a direct connection to the reward strategy for that particular job -job analysis defined the nature of the work which serves as an important determinant of Fair Labor Standards Act status -provides an understanding of the nature of the work performance which is vital for determining the likely effectiveness of performance-based pay systems

Explain the different categories of Total Rewards outcomes.

-sustain quality performance in each area over time (enable long term and short term) -attraction and retention -perceptions of fairness&satisfaction

How are these three elements of total rewards connected?

-three forms of rewards act in concert to influence employee behavior -Total Rewards perspective will allow employees to consider each of the components independently, but also collectively, enabling them to create an effective reward system

Define Strategy Shift.

A gradual shift towards being involved in businesses with a more value-driven purpose as organizations systematically define their activities in light of their values.

How are Spot Awards generated?

Cash bonuses given out based on weekly or daily behavior, to recognize extra effort.

What analysis method does an organization use to overcome some of the limitations of interview methods?

Custom Questionnaires contain a series of questions that job incumbents complete on their own

Perceptions that are based upon employees' views of the distribution of rewards in the organization are known as what?

Distributive Justice

Describe the importance of Peer Relationships.

Due to the increasing complexity and interdependence of work, working with others is a necessity of the modern workplace

What three areas contribute to the overall performance of an organization?

Employee performance, team performance, and OCBs

What is an example of an Organizational Citizenship Behavior?

Employees who go beyond their defined responsibilities to help a colleague at work

Distributive Justice is also known as __________________?

Equity Theory

What two distinctions define the Individual Bonus?

First, it is a monetary reward given to a single employee based upon that employee's performance.Second, bonuses do not accumulate into base pay.

Why is Organizational Culture an important consideration for Total Rewards design?

First, the Organizational Culture is a major driver of how employees experience the organization.Second, the Total Rewards systems in an organization can have a large impact on the culture of the organization.

What is a Cafeteria Plan?

Flexible Benefit Plan

How does the FLSA require a company to cover compensatory time?

In the public sector, employers are allowed to grant paid time off instead of overtime pay

What does an employee contribute to the organization to create value?

Jobs are ways to understand how employees create value and are the most fundamental basis for organizing rewards systems

What is the difference between Leading the Market, Lagging the Market, and Matching the Market?

Leading:used to indicate a Rewards Strategy in which the firm is trying to provide more of a given reward than its competitors for those employees Lagging:refers to an organization providing a lesser amount of the reward than its competitors Matching:refers to a rewards strategy of providing an amount of the reward equal to the market average

What does the Merit pay Matrix support?

Merit Pay: his matrix is created by putting different levels of performance along one axis and an employee's position in their pay grade in the other.

What is the difference between exempt status and non-exempt status?

Non-exempt employees are those who are covered by the minimum wage and overtime pay provisions of the FLSA.Exempt Employees are exempt from the overtime requirements of the Fair Labor Standards Act, such as outside salespeople and executives who have administrative or managerial responsibilities.

What are Motivational Preferences?

Not all employees are motivated by the same rewards and systems should be designed with enough flexibility to allow for as much customization as possible

How are Data and Broad Input used in developing the Design Strategy?

Objective Data: external metrics and pay surveys justify choices Broad Input: employees from all levels of the organization are involved in system design

What is a benefit benchmark survey?

One tool that helps organizations better understand how employee benefits may impact their ability to attract and retain qualified employees

Is variable pay better than performance-based pay?

Performance based is variable

What kind of analysis is best to use when finding out how much a job family should be paid?

Regression analysis

Define Regression.

Regression analysis is simply a statistical technique for drawing that line, sometimes called the line of best fit

What graphical form can a company's Reward Level Strategy be displayed?

Reward Strategy Line: The extent to which a company will pay above, at, or below the market average, shown in graphical form.

What strategy can be used to determine if the Total Rewards System makes sense?

Rewards Strategy Coherence refers to the extent to which the parts of the strategy (e.g., reward forms, levels, communication, etc.) fit together in a logical and clear way

What is an employment-based reward?

Rewards that are only contingent on an employee maintaining employment with the organization.

How is Business Strategy Support Defined?

Supporting a business' approach to adapting to changes in its environment in order to compete and win

Define internal rewards alignment.

The extent to which an organization's Total Rewards System aligns each employee's rewards with those received by others in the organization

Describe downfalls to capability-based pay.

The most obvious cost is that the wages and salaries paid to employees will rise. That means that the per-employee labor cost will generally increase under these types of plans

What is Human Resource Strategy?

The policies, practices, and systems that manage the interface between the organization and its employees in order to enable long-term organizational performance

Are non-discretionary bonuses included in a non-exempt employee's overtime pay calculation?

The regular rate of pay includes the basic hourly rate of pay plus any non-discretionary bonuses, shift differentials, production bonuses, and commissions earned. yes it is calculated into overtime

What are Perquisites?

There are an almost unlimited number of ways that employers can provide value to the employees through unique forms of benefits. Often referred to as Perquisites, or Perks, many of these are not 'standard benefits' that employees necessarily expect.

How will this course help HR Managers?

This course will help you see how your total rewards strategy fits with your business strategy and the other facets of your HR systems such as staffing, recruiting, and training.

What are 3 job analysis methods available to a company to analyze a job?

Traditional Interviews, Panel Interview, and questionnaire

Define capability-based pay.

When a reward system explicitly attempts to vary rewards based upon the capabilities of the employee

What is Person-Organization Fit?

When the values of an employee align with the values of the organization

Explain the Job Performance Model.

a depiction that defines performance and outlines its causes

What are Negative Location Externalities?

a punishment or nuisance that an employee experiences by virtue of living in a particular location

What is a Flexible Spending Account?

allow employees to set aside pre-tax funds from their wages into an account that then can be drawn upon to receive reimbursement for health related expenses

What is a Defined Benefit Plan?

an organization uses a time-based formula to calculate how much pension an employee has earned, and upon retirement the organization pays the employee a guaranteed amount per year throughout retirement

What are the Salary Level Test, and the Salary Basis Test used to determine?

any employee paid less than $35,568 per year (or $684 per week) is non-exempt and covered by the FLSA for purposes of paying overtime. In addition, the Salary Basis Test signifies that any employee whose pay is reduced based on the hours worked is non-exempt

Define Cost Sharing.

approach in which the insurance only pays for a portion of medical expenses

How does a company use a Hybrid Strategy?

approach to business shows that many businesses use a mix of these approaches

Describe the Reinforcement Theory.

as derived by behavioral scientist B.F. Skinner and others, is built on the assumption that behavior is a function of its consequences

What is competency based pay based upon?

based upon the assumption that employee competency drives performance.

Define critical success factors and explain how an organization can use the process?

capabilities, activities, customer perceptions, and market positions that allow an organization to outcompete its rivals.These factors arise out of the strategic analysis and take into account both the internal strengths of the organization and the external values of the customers and markets.

Define Task Identity.

characteristic of work that makes it more rewarding is the extent to which the employee completes a whole and identifiable piece of work

What are Principles of Transparency?

clear information on the who, what, when, and why of the reward system is available to all

Explain what an organization's Total Rewards Strategy is composed of?

combination of pay forms, plans, policies, and practices that enable long-term organizational performance.

What are competencies?

configurations of knowledge, skills, and traits that enable employee performance

What is Transformational Leadership?

creates a sense of purpose in the minds of employees, motivating them to transcend self-interest in order to accomplish the goals of the organization

Define Intangible Rewards.

defined as psychological, social, and contextual factors in organizations outside the traditional pay and employee benefits categories that are rewarding to employees

How does the FLSA monitor Child Labor?

defines the type of work appropriate for children and the ages at which children can work. Finally, the act specifies record keeping requirements that allow the organization to verify the classification and hours worked

What are Profit Sharing Plans and how are they designed?

designed to distribute a portion of the firm's annual profits back to the firm's employees

What is the importance of Motivational Judgement?

different views of motivation might be useful at different times

What potential problems can happen if there are flaws in a compensation system?

difficulties not only with employee morale and turnover, but also internal processes such as collaboration and information sharing

What does the performance-based pay draw upon?

draws upon the Performance Appraisal step of that process to obtain ratings of an employee's past performance

What can Organizational Performance include?

effectiveness at meeting customer needs, new product creation, and gains in market share, profits, and other measures of financial return on the firm's assets

What does a Cost Leadership Strategy emphasize?

emphasizes having a lower cost product or service as the highest priority throughout its processes

Describe the importance of Supervisory Relationships.

employee's satisfaction with work is heavily influenced by their immediate supervisor

What is the Intrinsic Motivation Theory (Maslow)?

employees are motivated to satisfy unmet needs including Physiological (food, water, sex), Safety (protection from harm), Social (relationships, belonging, social support), Esteem (autonomy, achievement, status), and Self-actualization (growth and meaning).

What is the purpose of Network Careers?

employees change jobs frequently, sometimes changing functions and industries to bring unique perspectives and competencies to their new roles

Social Security requires organizations to?

enacted in 1935 and updated in 1965 to require employers to both pay and collect taxes from employees to fund the United States Social Security, Medicare, and Medicaid systems

Why was the Employment Retirement Income Security Act formed?

established to regulate the retirement plans offered by organizations

When creating a job analysis who should you speak with for input?

every incumbent of a given job or a subset of the job incumbents to be involved in the process

Explain why Shadow Ranges exist?

exist within the range of the broad band and are applied to specific job families to provide guidance on appropriate compensation levels

Explain Organizational Cultural Fit as it relates to the Total Rewards System.

extent to which the Rewards Strategy aligns with and supports the ingrained practices, norms, and values of the organization

What do Scanlon Plans focus on?

focus on improvements in labor costs

Define Procedural Justice.

focuses on the process by which the reward distribution was determined

What does SWOT analysis refer to?

forces managers to look internally at the organization's Strengths and Weaknesses as well as externally at Opportunities and Threats that exist in the organization's environment

What is the best way to calculate the Campa-Ratio?

frequently used to measure this conformity. The Compa-ratio is calculated by dividing the average pay for the pay grade by the midpoint of that range

List the functions of Human Resources.

functions include workforce planning, recruiting, selection, training, rewards, performance management, and career management as well as the human resource information systems and strategic functions that integrate across those areas

What does an Independent Contractor have the ability to do?

generally have the ability to set their own hours and work processes, and they work and are paid on a project basis with the opportunity for profit or loss

What is the first and foremost outcome of a Total Rewards System?

higher performance

Describe Location Competitors.

if an employee can leave your organization and retain the benefits of living in a particular location (e.g., working for another company in town), then this will reduce the benefits your firm can accrue from the positive externalities.

A psychological contract refers to....

informal expectations and agreements between an employee and an organization

What is Long-term and Short-term Disability Policy?

injuries prevent an employee from returning to work for a relatively short period of time (e.g., three weeks), a Short-term Disability Policy will replace a portion of that employee's salary. For injuries preventing work for up to 3 months, a Long-term Disability Policy kicks in to replace a portion of the employee's pay

What does the Performance Management System Involve?

involves creating performance plans, providing support and resources, appraising performance, and providing feedback and coaching

Why is the Benchmark Competitor list important to the organization?

it creates the standard to which the rewards system is anchored

Using Job Analysis, what is all work organized into?

jobs

List an example of an employee benefit.

like a retirement plan

List an example of an intangible benefit.

like meaningful work and rewarding relationships

What is a Reward System?

mechanisms for exchanging value between two parties

Describe the importance of Customer Relationships.

meeting customer needs can also have a large impact on the employees' experiences at work

Define cash compensation.

monetary pay that employees receive in exchange for their work

Define the Expectancy Theory.

motivation is a function not only of the perceived contingency of the rewards, but also of how much the employee values the reward, and whether or not they believe that they can perform at the required level

How is the panel interview used to analyze a job?

multiple job incumbents (and sometimes multiple job analysts) all meet together to analyze the job

Who should be on the Benchmark Competitor List?

not an exhaustive list of all competitors in each market, but rather represents exemplars or representative samples of such competitors

When Does pay Inversion Occur?

occurs when new employees are paid more than those employees with substantial experience in the organization

How does an organization use Niche-Focused Strategy?

organization chooses a small and segmented market and competes only in that small arena

What is a Health Saving Account?

organizations or employees put pretax funds into an account upon which employees can draw for medical expense reimbursement

What are the different types of shift differentials?

overtime- 1.5 pay for anything after 40 hours shift pay - for nightshift hazard pay- on-call pay- call-back pay- called back to work for emergencies geographic - offsets cost of living weekend/holiday pay

What is Job Characteristics Theory?

pecifies those qualities of work that will be inherently motivating and rewarding to employees

How are Cost and Efficiency related to the outcomes of the rewards System?

people-related expenses make up a significant portion of the expenditures for many organizations, the levels of these expenditures have a big impact on the bottom line

What is variable pay?

performance-based rewards such as bonuses and commissions, as well as longer-term equity rewards such as stock options

How is differentiation strategy defined?

places a high priority on providing innovative, exceptional, and high-quality products and/or services to customers

What is considered the Communication Strategy for the Organization

plan for creating, sharing, and receiving information relating to its Total Rewards Systems

What do Stock Options provide an employee?

provide employees the right to purchase a set amount of shares of stock for a set price

What is the purpose of the Family Medical Leave Act?

provide employees time off with no pay while dealing with major life events so they don't lose their job

As a general rule, base pay strategies rarely lead the market by more than how much?

rarely lead the market by more than 10%

Define Green Circle Rates.

refer to employees whose pay is below the range for their job

Define Total Rewards.

refers to all forms of pay and compensation, tangible benefits, and other intangible rewards that an organization provides

What does Merit Pay Refer to?

refers to an annual increase in future compensation based on past performance

What do Red Circle Rates refer to?

refers to employees whose pay is above the range for their job

What is Interactional Justice?

refers to perceptions of the extent to which the employee was treated with due respect

Define Reward-Level Strategy.

refers to the extent to which a company will pay above, at, or below the market average

Define the benefit level strategy?

refers to the level of each benefit type provided as well as the overall company expenditure

Define the benefit matrix strategy.

refers to the particular combination of benefit types that an organization offers

What does the Reward Form Combination Strategy refer to?

refers to the reward forms offered (e.g., cash, benefits, etc.) and the way in which they relate to each other. For example, choosing to pay employees a salary is a specific reward form strategy, as is the choice to have a highly competitive work environment

What is Task Significance?

represents the extent to which the employee perceives that completion of their work has important consequences for others.

What does the Fair Labor Standards Act require of organizations?

requires that organizations determine the "employee status" of each job

What is HIPPA?

restricts the use of preexisting condition clauses from being used to deny new employees coverage for a particular medical condition that was previously covered under an insurance policy. in addition, HIPAA specifies restrictions on how employee health-related information is collected, stored, and shared to protect employees' privacy and prevent health-related information from impacting employment-related decisions.

What is a Defined Contribution Plan?

retirement plans in which employers contribute to a portable retirement account in the employee's name

How are Piece Rate Systems used?

reward employees with a fixed amount of compensation for each unit of work they produce

What are Positive Location Externalities?

reward or benefit, not paid for by the organization, that the employee experiences by virtue of living at a particular location

What is variable pay?

rewards will vary as performance varies

Define performance-based pay.

rewards with distributions dependent upon performance levels

What is base pay?

salary or hourly wages.

How is the Principle of Overlap used in pay grades or bands?

says that there should be overlap in the pay ranges for successive pay grades or bands

What is a Benchmark Competitor?

selection of primary organizations that exemplify the labor and product/service markets in which the organization competes

Define Organizational Culture.

shared beliefs, values, norms, and assumptions of the organization

What does the Principle of Inclusiveness Mean?

simply states that a pay range needs to be large enough to capture the pay range of all jobs in that grade or band

What is the Primary Duties Test?

specifies that an employee has significant discretion and exercises independent judgment

What is Total Rewards Content Strategy?

specifies the type, level, and combination of rewards offered to employees

Why do some companies choose to use Incentive Stock Options?

specify an exercise price that is above the current market price to take into account that the organization expects the employees to outperform expected market returns.

What is the Pay as Meaning Principle?

states that the rewards employees receive from organizations have informational value in addition to their economic value

How is the Principle of Control used?

states that the size of pay ranges should be kept sufficiently small to enable an organization to control labor costs

What is the Collaborative Environment?

teams of employees work in concert to be creative, solve problems, and produce results

How are Rucker Plans used?

that have a broader base of metrics, the key is to compare current performance to historic norms and share the improvements

Why is it necessary to gain buy in for a job analysis to create a value-added analysis?

the ability to use job analysis for a purpose is enhanced if people throughout the organization find it credible

What is considered the Business Strategy?

the collection of decisions, approaches, and activities that allow an organization to compete and win

How does the organization use Total Rewards Process Strategies?

the decisions, policies, and practices that define how Total Rewards are designed and implemented.

What is Growth Needs Strength?

the extent to which employees value and desire challenge and responsibility in work.

What is involved in the traditional interview?

the job analyst asks the job incumbent preset questions about the content, skills needed, and time spent on activities in the job

In a Job-Based System, what is the fundamental unit for designing the rewards system?

the job itself

What does Experience/Seniority Based pay assume?

the more experience an employee has, the higher their future performance can be expected to be

What does the Principle of Parity Suggest?

the more grades that are used the smaller the ranges will be.

Explain the Role and Control Strategy and State the two approaches used in the strategy.

the policies and practices that allocate design, implementation, and discretionary control of the rewards system. two approaches: Centralized approach in which the Human Resources department makes all decisions relating to pay strategy, as well as specific reward decisions such as salary offers to prospective employees, pay raises to current employees, and allocations of bonuses Decentralized approach allows such decisions to be made by the employee's immediate supervisor or manager

Define Performance Assessment.

the process of defining and measuring the performance of individuals, teams, units, and organizations

Define Job Analysis.

the process of systematically analyzing positions that result in completed work in organizations

Explain Skilled Based Pay.

the wage rate or salary received by the employee depends upon the skills they possess.

Define Dynamic Role- Based.

the work employees do changes on a regular basis, and organizations need a compensation system that facilitates those changes instead of impeding them.

Define Skill Variety.

to the extent to which work is designed to require a variety of skills and poses a reasonable degree of challenge to the employee

What is the goal of a job analysis?

to understand the work involved in creating value for the organization

What is the purpose of Job Specifications?

translates the TDRs into the Knowledge, Skills, Abilities, and Other (KSAOs) that an employee needs to perform the job at a satisfactory level

When are Commission-based Rewards Systems used?

used for jobs with a sales component and provide employees a set percentage of the sales that they make

What additional items are a part of the benefits package?

vacations, holidays, personal excused absences, and other opportunities for not working

Define the concept of Organizational Citizenship Behaviors.

value-creating activities in which employees engage but which are not part of their job

What is Pay form-specific reward strategies?

varying pay-level strategies across reward types

When do pay changes occur in the Job-Based system?

when an employee changes jobs

Explain Pay Compression.

when new employees and long-tenured employees are paid very similar amounts

What are Labor-driven Job Markets?

when the demand for a particular set of KSAs (knowledge, skills, and abilities) is high and the supply of these KSAs is low

Define Labor Markets.

where individuals are the sellers and organizations are the buyers

Explain the Tournament Theory.

which states that people are highly motivated to receive extremely valuable rewards, even when the probability of receiving the reward is quite small.