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