Podcast
Questions and Answers
What is the term used to describe the payment given by an employer to an employee during their period of employment?
What is the term used to describe the payment given by an employer to an employee during their period of employment?
- Reward
- Wage
- Salary
- Remuneration (correct)
What type of rewards include praise for completing a project or meeting performance objectives?
What type of rewards include praise for completing a project or meeting performance objectives?
- Extrinsic rewards
- Monetary rewards
- Intrinsic rewards (correct)
- Nonmonetary rewards
What is the term used to describe the basic compensation that an employee receives, usually as a wage or salary?
What is the term used to describe the basic compensation that an employee receives, usually as a wage or salary?
- Base pay (correct)
- Variable pay
- Direct compensation
- Indirect compensation
What type of compensation program consists of employee benefits?
What type of compensation program consists of employee benefits?
What is the main reason employers must be competitive with compensation?
What is the main reason employers must be competitive with compensation?
What is the general term used to describe both monetary and nonmonetary rewards?
What is the general term used to describe both monetary and nonmonetary rewards?
What is a potential drawback of a payment system that links pay to performance?
What is a potential drawback of a payment system that links pay to performance?
What type of payment system has been growing in popularity in recent years?
What type of payment system has been growing in popularity in recent years?
What theory of motivation is related to the growth of performance-related pay?
What theory of motivation is related to the growth of performance-related pay?
What is the basis for traditional performance-related pay systems?
What is the basis for traditional performance-related pay systems?
What type of performance-related pay system relates directly to performance levels against agreed, measurable standards?
What type of performance-related pay system relates directly to performance levels against agreed, measurable standards?
What is an example of a job where performance-related pay is common?
What is an example of a job where performance-related pay is common?
What is a critical issue in procedural fairness as it applies to compensation?
What is a critical issue in procedural fairness as it applies to compensation?
What refers to the perceived fairness of the amounts given for performance?
What refers to the perceived fairness of the amounts given for performance?
What happens if an outstanding employee receives the same raise as an employee with mediocre performance?
What happens if an outstanding employee receives the same raise as an employee with mediocre performance?
What is a consequence of supervisory favoritism or other non-job-related factors?
What is a consequence of supervisory favoritism or other non-job-related factors?
What type of pay system keeps information about pay grades and ranges secret?
What type of pay system keeps information about pay grades and ranges secret?
What is one of the two critical issues in procedural fairness as it applies to compensation?
What is one of the two critical issues in procedural fairness as it applies to compensation?
Why do organizations aim to pay market rates?
Why do organizations aim to pay market rates?
What do smaller employers often assume about pay rates?
What do smaller employers often assume about pay rates?
What affects an employer’s pay policies in a unionized organization?
What affects an employer’s pay policies in a unionized organization?
What is necessary before developing a base pay system?
What is necessary before developing a base pay system?
What type of systems use job descriptions and job specifications?
What type of systems use job descriptions and job specifications?
What are job descriptions used for in the development of a wage and salary system?
What are job descriptions used for in the development of a wage and salary system?
What happens if an organization does not provide compensation that is viewed as fair by its employees?
What happens if an organization does not provide compensation that is viewed as fair by its employees?
What do organizations use to track external equity?
What do organizations use to track external equity?
What is the consequence of an equitable compensation program?
What is the consequence of an equitable compensation program?
What do employees believe if they are compensated fairly?
What do employees believe if they are compensated fairly?
What must an organization have to ensure equity and compensation activities?
What must an organization have to ensure equity and compensation activities?
Why is it important for HR professionals and managers to develop compensation programs?
Why is it important for HR professionals and managers to develop compensation programs?
Study Notes
Definition and Nature of Compensation
- Compensation refers to any payment given by an employer to an employee during their period of employment.
- Types of compensation: intrinsic (praise, psychological and social effects) and extrinsic (tangible, monetary, and non-monetary rewards).
Types of Compensation
- Direct compensation: base pay and variable pay (monetary rewards).
- Indirect compensation: employee benefits.
Base Pay
- Basic compensation an employee receives, usually as a wage or salary.
- Organizations want to "pay market" to ensure external equity.
Market Pricing
- Smaller employers set pay rates at market price, the typical wage paid for a job in the immediate labor market.
Unions and Compensation
- Unionized employees have their pay set according to the terms of a collective bargaining contract.
- Non-union organizations have more flexibility in determining pay levels and policies.
Development of a Base Pay System
- Based on task-based systems focusing on work done in specific jobs.
- Requires accurate job descriptions and job specifications.
- Job descriptions are used for job evaluation and pay surveys.
Performance-Related Pay
- Links pay to individual, team, or organizational performance.
- Can be based on sales, output, or performance against agreed standards.
Individual-Based Systems
- Relates pay to individual performance levels against agreed standards.
- Requires procedural fairness in determining base pay, allocating pay increases, and measuring performance.
Pay Openness and Equity
- Pay openness refers to the degree of openness or secrecy regarding pay systems.
- External equity concerns the fairness of compensation in relation to other organizations.
- Organizations track external equity using pay surveys.
Importance of Equity and Compensation
- Equitable compensation programs attract and retain qualified employees and reduce turnover.
- Consequences of inequitable programs include higher turnover, recruitment difficulties, and lower productivity.
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Description
Test your understanding of compensation in the workplace, including its importance, types, and role in hiring and retaining employees. Learn how compensation affects employee performance and why it's crucial for employers to be competitive.
