Chapter 12 HRM Vocab

Compensation

(financial and nonfinancial compensation) that an employer is able and willing to offer in exchange for employee contributions.

(HMO) Health maintenance Organization

A specified group of doctors and hospitals provide the care. A gatekeeper must approve all services before they are performed

Pay systems are design to

ARM Attract retain motivate

Doctrine of Constructive Receipt

An individual must pay taxes on benefits that have monetary value when the individual receives them.

Flexible Benefits

Core of basic life coverage

Flexible Spending Accounts (FSA)

Deducted from paycheck. You don't pay taxes as long as it goes to pay qualified expenses.

Market -based pay system

Direct market pricing approach for all of a firms jobs

Yearly Renewable Term Insurance

Each employee is insured one year at a time. (Group Life Insurance)

Expatriates

Employees assigned to work in another country

Lump-sum bonus

Employees receive an end of year bonus

Contributory Plans

Employees share in the cost of the premiums

Noncontributory Plans

Employer pays the full cost of the premiums

Defined Benefit Plan

Employer promises to pay a retiree a stated pension, often expressed as a percentage of pre-retirement pay.

Anti Discrimination Rule

Employers can obtain tax advantages only for those benefits that do not discriminate in favor of highly compensated employees.

Cash Balance Plan

Everyone gets the same, steady credit toward an eventual pension, adding to his or her pension account "cash balance"

Financial rewards

Financial rewards include direct payments (e.g., salary) plus indirect payments in the form of employee benefits.

(CDHP) Consumer Driven Health Plan

High deductible insurance plan combined with a health care spending account from which reimbursed health care costs are paid

(PPO) Preferred Provider Organization

In-network care comed from a specified group of physicians and hospitals. Patients can pay extra to get care from outside the network. There is generally no gatekeeper.

Workers Comp

Is a benefit requires by law in all 50 states. It provides payments to workers who are injured on the job or who contract a work-related illness.

Benchmark jobs

Jobs selected for a survey are generally characterized by stable tasks and stable job specifications

Protected Health Information

Medical information that contains any of a number of patients identifiers, such as name or social security number.

Nonfinancial rewards

Nonfinancial rewards include everything in a work environment that enhances a worker's sense of self-respect and esteem (opportunities for training and personal development, effective supervision, recognition)

(POS) Point of Service

POs combines the features of HMO and PPO. Patients can get care in or out of the network, but there is an in network gatekeeper who must approve all services.

Cost Shifting

People that have insurance has a higher premium because the people that don't have insurance still need care.

Profit sharing

Plan payouts if a firm meets its profitability

Relevant labor markets

Product market competitors Geographical boundaries

Disability Management

Programs that emphasize a partnership among the physician the employee, the manager, and the HR representatives known as facilitator.

Managed Care

System of cost controls

Vesting

The conveying to an employee of unconditional entitlement to a share in a pension fund

Host Country

The country ( other than the parent country) in which the organization operates a facility

Parent Country

The country in which the organization's headquarters is located

Pay compression

The difference in pay between newly hired or less qualifies employees and more experienced ones is small.

Multinational Company

This companies fo overseas on a broader scale. -They move production facilities from relatively high-cost locations to lower-cost locations in an effort to minimize production and distribution cost

Transnational HRM System

Type of HRM system that makes decisions from a global perspective, includes managers from many countries, and is based on ideas contributed by individuals representing a variety of cultures.

External equity

Wages paid by an organization fair in terms of competitive market rates outside the oirganization

Vested

When their receipt of pension benefits does not depend on future service aren't entitled to any benefits

Cafeteria Benefits

Workers chose the benefits that they need. They can pick and choose among alternative options.

Annuity problem

allow formerly productive individuals to slack off for several years and still earn high pay

International Organization

an organization that has set up operations in one or more foreign countries

Compensable factors

common job characteristics than an organization is willing to pay for, such as skill effort, responsibility and working conditions

Restricted stock

common stock that vests after a specified period

Individual equity

each individuals pay fair relatively to that of another individuals doing the same job

Sorting effect

employees don't want to have their pay tied to performance so they leave

Spot Bonus

employees performance has been exceptional, one time bonus

Global Organization

flexible organizations that compete by offering top products tailored to segments of the market while keeping costs as low s possible. -These organizations utilize cultural differences as an advantage

Organizational reward system

includes anything an employee values and desires than an employer is willing to offer in exchange for employee contribution

Gatekeeper

is a primary-care physician who monitors the medical history and care of each employee and his or her family.

Pension

is a promise by the employer to pay workers who are eligible an amount of money after they retire.

Hierachy of job worth

is defined when jobs are rank ordered from highest point to lowest point total

Incentives

one-time supplements to base pay ( sales commissions, bonuses profit sharing)

Internal equity

pay rates in terms of relative worth of an individual jobs to an organization

Disability Insurance

provides a supplemental, one-time payment when death is accidental, and it provides a range of benefits when employees are disabled. • Long-term disability (LTD) plans and short-term disability plans provide income replacement for employees whose illness or injury causes a longer absence from work. • Short-term disability usually starts after a one-to-two-week absence, and LTD usually goes into effect after six weeks to three months. • LTD recipients typically receive no more than 60 percent of their base pay, until they begin receiving pension benefits. • Disability leaves cost companies about 8.5 percent of payroll annually. • Although disability benefits traditionally were divided into salary continuation, short-term disability, and long-term disability, combined disability management programs now merge all three. • Doing so allows for a single claim application process and uniform case management.

Third Country

refers to a country that is neither the parent country nor the host country

Performance standards

relatively objective definition of the job, they give employees targets to shoot for.

Gain sharing

results based sharing program that generally links pay to performance ( areas where employees have control)

Restricted stock units

shares awarded over time to defer a specified period

Defined contribution Plan

stand alone retirement savings plan (stock bonuses, savings plans, profit sharing, stock ownership plans

Cultural Shock

the disillusionment and unfreezing of ideas that occur during the process of adjusting to a new culture

Repatriation

the process of preparing expatriates to return home from a foreign assignment

Balance

the relative size of pay differentials among different segments of the workforce

job evaluation

to provide a work related and business related logic to support decisions about pay

Cross Cultural Preparation

training to prepare employees and their families for an assignment in a foreign country. -This training is necessary in all 3 phases of an international assignment

Competency based pay system

workers are paid on the basis of the job they currently are doing, but rather on the basis of their skills or on their depth of knowledge

Unemployment Insurance

• Although 97 percent of the workforce is covered by federal and state unemployment-insurance laws, each worker must meet eligibility requirements in order to receive benefits. • An unemployed worker must: • Be able and available to work and be actively seeking work; • Not have refused suitable employment; • Not be unemployed because of a labor dispute (except in Rhode Island and New York); • Not have left a job voluntarily; • Not have been terminated for gross misconduct; and • Have been employed previously in a covered industry or occupation, earning a designated minimum amount for a specific minimum amount of time. • Many claims are disallowed for failure to satisfy one or more of these requirements. • The unemployment insurance system is a financial partnership between the federal and state governments. It is intended to accumulate and hold significant funds during good economic times, pay out benefits during bad ones, and stimulate stagnant economies (because unemployed workers spend most or all of their unemployment).Every unemployed worker's benefits are "charged" against one or more companies. • The more money paid out on behalf of a firm, the higher the unemployment insurance rate for that firm. • The tax in most states amounts to 6.2 percent of the first $7,000 earned by each worker. • Benefits ordinarily last 26 weeks in most states. Benefits are subject to federal income taxes and must be reported on workers' federal income tax returns. • In general, benefits are based on a percentage of a worker's earnings over a recent 52-week period, up to a state maximum amount.

Costing Benefits

• Despite the high cost of benefits, many employees take them for granted. • Employers have failed to do in-depth cost analyses of their benefit programs and thus have not communicated the value of their benefits programs to employees. • Four approaches are used widely to express the costs of employee benefits and services: • Annual cost of benefits for all employees • Cost per employee per year • Percentage of payroll • Cents per hour

Severance Pay

• Severance pay is not legally required, and because of unemployment compensation, many firms do not offer it. • However, severance pay has been used extensively by firms that are downsizing. • While length of service, organization level, and the cause of the termination are key factors that affect the amount of severance pay, those amounts have been declining. • The typical manager now gets just 10 weeks of severance pay, down from 22 weeks in 1999. • Chief executive officers with management contracts may receive two to three years' salary in the event of a takeover.

Cafeteria, or Flexible, Benefits

• The theory underlying cafeteria benefits is simple: Instead of all workers at a company getting the same benefits, each worker can pick and choose among alternative options, "cafeteria style." • The typical plan works like this: Workers are offered a package of benefits that includes "basic" and "optional" items. Employees can then use "flexible credits" to choose among such additional benefits as full medical coverage, dental and eye care, more vacation time, additional disability income, and higher company payments to the retirement fund. • About 31 percent of firms offer flexible-benefit plans. • Two studies found substantial improvements in satisfaction and understanding after the plan was implemented. • Flexible plans allow employers to pass cost increases on to workers more easily. • Flexible spending accounts (offered at almost 3 out of 4 of all large firms) allow employees to save for expenses such as additional health insurance or day care with pretax dollars, up to a specified amount. • Major communications efforts are needed to help employees understand their benefits fully. • Because employees have more choices, they often experience anxiety about making the "right" choices. • Careful attention to communication can enhance recruitment efforts, help cut turnover, and make employees more aware of their total package of benefits.

Hospitalization, Surgical, and Maternity Coverage•

• These are essential benefits for most working Americans. • Self-insurance is out of the question since the costs incurred by one serious, prolonged illness could easily wipe out a lifetime of savings and assets and place a family in debt for years to come. • The U.S. health insurance system is based primarily on group coverage provided by employers. The system is characterized by statistics such as: • There is widespread anxiety about the reliability of the system. • Between 1999 and 2012, health insurance premiums increased by 182%. • Workers also are paying much more for health benefits today than they were in 1999. • Because employers pay most of the nation's health care premiums, over time such increases may make them less competitive in global markets. • What is driving these increases in the cost of health care? • An aging population • An increase in obesity • General inflation • Excess medical inflation • Mergers among local hospitals • Costly new drugs • Rising prescription volumes • The cost of new technology

Group Life Insurance

• This type of insurance is usually yearly renewable term insurance; that is, each employee is insured one year at a time. • Typical coverage is one to two times the employee's annual salary. • The more expenses and dependents you have, the more life insurance you will need. • About 85 percent of all companies offer this benefit. • To discourage turnover, almost all companies cancel this benefit if an employee terminates. • Flexible benefits programs typically provide a core of basic life coverage and then permit employees to choose greater coverage as part of their optional package

Workers' Compensation

•is a benefit required by law in all 50 states. • The payments cover three areas: • Payments to replace lost wages • Medical treatment and rehabilitation costs • Retraining to perform a different type of work (if necessary) • These payments vary by state. • Disability benefits in some states it has been extended to cover stress-related claims, but employees must be able to demonstrate some bodily injury manifestation of stress. • A state's industrial structure also plays a big part in setting disability insurance rate; loggers are more prone to injury than are assembly-line workers.