WGU C202 Managing Human Capital All - Questions and Answers (Complete Solutions) Direct financial compensation compensation received in the form of sala... [Show More] ry, wages, commissions, stock options or bonuses Indirect financial compensation all the tangible and financially valued rewards that are not included in direct compensation including free meals, vacation time and health insurance Nonfinancial compensation rewards and incentives given to employees that aren't financial in nature Base pay reflects the size and scope of an employee's responsibilities Severance pay give to employees upon termination of their employment Fixed pay pays employees a set amount regardless of performance Variable pay bases some or all of an employee's compensation on employee, team, or organizational Pay structure the array of pay rates for different work or skills within a single organization Pay mix the relative emphasis give to different compensation components Pay leader organization with a compensation policy of giving employees greater rewards than competitors Pay follower an organization that pays its front-line employees as little as possible Resource dependence theory proposition that organizational decisions are influenced by both internal and external agents who control critical resources Wage differentials differences in wage between various workers, groups of workers, or workers within a career field Labor market all of the potential employees located within a geographic area from which the organization might be able to hire Cost of living allowances clauses in union contacts that automatically increase wages base on the U.S. Bureau of Labor Statistics' cost of living index Market pricing uses external sources of information about how others are compensating a certain position to assign value to a company's similar job Compensation surveys surveys of other organizations conducted to learn what they are paying for specific jobs or job classes Benchmark jobs jobs that tend to exist across departments and across diverse organizations allowing them to be used as a basis for compensation comparisons Job evaluation a systematic process that uses expert judgement to assess differences in value between jobs Ranking methods subjectively compares jobs to each other based on their overall worth to the organization Job classification method subjectively classifies jobs into an existing hierarchy of grades and categories Point factor method uses a set of compensable factors to determine a job's value. skill, resp, effort, working cond. Compensable factor any characteristic used to provide a basis for judging a job's value Four categories of compensable factors skills, responsibilities, effort, working conditions Hay Group Guide Chart - Profile Method a point-factor system is used to produce both a profile and a point score for each position. know how problem solving accountability working conditions Hay Group Method based on four main factors Know-how, problem solving, accountability, working conditions Position Analysis Questionnaire a structured job evaluation questionnaire that is statistically analyzed to calculate pay rates based on how the labor market is valuing worker characteristics. a copyrighted, standardized, structured job analysis questionnaire. 6 sections covering 187 job elements. Job pricing the generation of salary structures and pay levels for each job based on the job evaluation data Three most common job pricing systems single rate system, pay grades and broadbanding Pay grade (pay scale) the range of possible pay for a group of jobs Broadbanding using very wide pay grades to increase pay flexibility Internal equity when employees perceive their pay to be fair relative to the pay of other jobs in the organization Employee equity the perceived fairness of the relative pay between employees performing similar jobs for the same organization External equity when an organization's employees believe that their pay is fair when compared to what other employers pay their employees who perform similar jobs Comparable worth if two jobs have equal difficulty requirements, the pay should be the same, regardless of who fills them Wage rate compression
starting salaries for new hires exceed the salaries paid to experienced employees Golden parachute lucrative benefits given to executives in the event the company is taken over Cost-of-living adjustments pay increases to account for a higher cost of living in one country versus another Housing allowance payments to subsidize or cover housing and related costs Hardship premiums increased salary for living in an area with a lower quality of life, less safety, etc. Tax equalization payments increased salary to make up for higher taxes that reduce take-home pay and decrease employee's purchasing power Inflation adjustments larger and/or more frequent raises to maintain employee's purchasing power in the face of inflation Fair Labor Standards Act of 1938 a federal law that sets standards for minimum wages, overtime pay, and equal pay for men and women performing the same jobs Exempt employees employees who meet one of the FLSA exemption tests, are paid on a fixed salary basis and are not entitled to overtime pay Non-exempt employees employees who do not meet any of one of the FLSA exemption tests and are paid on an hourly basis and covered by wage and hour laws regarding minimum wage, overtime pay and hours worked Workers' compensation a type of insurance that replaces wages and medical benefits for employees injured on the job in exchange for relinquishing the employee's right to sue the employer for negligence Fixed rewards predetermined compensation (salary and benefits) Variable rewards (incentives) "at risk" rewards which are linked to factors determined as valuable, including performance, skills, competence and contribution Top four reasons organizations give for tying pay to performance are - Recognize and reward high performers - Increase the likelihood of achieving corporate goals - Improve productivity - Move away from an entitlement culture Before designing an incentive pay plan to motivate performance, it is important to consider the - Preference of individual employees - Size of the rewards for high performance - Method of motivating individual job performance - Objectivity of the evaluation process that determines the rewards Most common way employers fund variable pay programs - Company performance - Reduced merit increases - Reductions in head count - Reduced benefits - Pay freezes Reward differentiation differentiating rewards based on performance rather than giving all employees the same reward Short-term incentives one-time variable rewards used to motivate short-term employee behavior and performance (typically one year or less). ie bonus or profit sharing. to motivate attendance, cust serv, safety, production quality and quantity Profit sharing the distribution of organizational profits to all employees Stock options the right of an employee to buy shares of the company's stock at a certain price (the exercise price) during some future period of time Long-term incentives incentives that motivate behaviors and performance that support company value and long-term organizational health. ie stock options Vesting the point at which employees can sell or transfer the stock option Pay for performance programs rewards employees based on some specific measure of their performance [Show Less]
