Chapter 6

Point-factor system:

Determines the value of a job by calculating the total points assigned to it

Job classification system:

every job is classified and grouped based on the knowledge and skills required for the job, years of experience, and amount of authority for that job - ex - US military

Fair Labor Standards Act (FLSA):

- was established in 1938 and set a minimum wage for jobs, overtime laws, and child labor laws - divides workers into exempt and nonexempt status

Core values:

are usually summarized in the mission state or in the statement of core values

Compensation package:

can include pay, healthcare benefits, and other benefits such as 401(k) plans

Job evaluation:

defined as the process of determining the relative worth of jobs to determine pay structure

Paired comparison:

individual jobs are compared with every other job, based on a ranking system, and an overall score is given for each job, determining the highest-valued job to the lowest-valued job

Expectancy theory:

is another key theory in relation to pay - says that employees will put in as much work as they expect to receive

Equity theory:

is concerned with the relational satisfaction employees get from pay and inputs they provide to the organization

Market compensation policy:

is to pay the going rate for a particular job, within a particular market based on research and salary studies

Nonexempt employee:

is usually an hourly employee - OT allowed

Exempt employee:

is usually paid a salary and includes executive, professional, outside sales, and administrative positions

Equal Pay Act of 1963:

makes it illegal to pay different wages to men and women if they perform equal work in the same workplace

Market compensation philosophy:

pays higher than the average

Market minus philosophy:

pays less than the market rate - ex - organization may decide to pay lower salaries but offer more benefits

Reinforcement theory:

says that if high performance is followed by some reward, that desired behavior will likely occur in the future

Comparable worth:

states that people should be given similar pay if they are performing the same type of job

Lilly Ledbetter Fair Pay Act of 2009:

the first law signed by President Obama amends the Civil Rights Act stating that the 180-day statute of limitations for filing an equal pay lawsuit regarding pay discrimination resets with each discriminatory paycheck

Compensation factors:

the points given to a specific job

What happens when employees receive raises?

their raises stay within the range of their individual pay grade, until they receive a promotion that may result in a higher pay grade

Pay grading:

this is the process of setting the pay scale for specific jobs or types of jobs