Compensation Management Overview

Compensation given directly to employees as part of their paycheck, including base pay, add-ons, and incentive pay.

Employee benefits that are not paid directly to them, such as health insurance, retirement contributions, cafeteria service (or any other benefit), and tuition reimbursement.

A theory about employee motivation where motivation depends on an individual's belief in their ability to complete a task and the worthiness of the reward.

A person's perception of their likelihood of successfully completing a task (probability of success).

The employee's perception that high performance leads to a desired reward.

The value an employee assigns to a potential reward.

A common set of guidelines used to evaluate job worth and determine fair wages, focusing on job duties, skills, knowledge, and other trade/labor aspects.

Key job characteristics (e.g., skill, responsibility, effort, working conditions) used to measure job worth.

Jobs chosen to represent the range of compensable factors for accurate evaluation, crucial for equitable pay.

A job evaluation method that uses a small set of predefined compensable factors to determine job worth relative to others.

An advanced job evaluation method where compensable factors are defined into specific skills, responsibilities, effort, and working conditions, each with assigned point values.

A factor in point-factor method encompassing experience, education, and ability.

A factor in point-factor method encompassing fiscal and supervisory duties.

A factor in point-factor method classifying mental and physical demands of a job.

A factor in point-factor method including location, hazards, and extremes of environment.

Method used to rate jobs across the identified factors, calculating a total points-based score.

A salary structure with multiple pay grades, each with a specific salary range. Employees progress through these grades based on performance and tenure.

A level within a salary structure that defines a specific range of compensation.

A salary structure with fewer pay grades, each having a wider salary range, offering more flexibility in adjusting employee compensation.

Difference in pay between employees, potentially due to biases like race, gender, or disability.

A salary structure based on market rates and competitor compensation for similar roles.

A review of compensation practices of companies in the same industry to determine appropriate salary ranges for specific positions.

The minimum and maximum compensation levels for a particular job or pay grade.

A system that organizes jobs by level, with each level having a pay range.

Groups of similar jobs with similar compensation.

The lowest amount of pay for jobs within a particular pay level.

The highest amount of pay for jobs within a particular pay level.

Competition among workers for jobs, influencing the minimum pay.

Competition for customers, affecting the maximum pay level.

Graphical representation of how worker supply and demand affect average pay.

State where labor supply matches demand, leading to a stable pay.

A comprehensive plan outlining employee wages, salaries, benefits, and payment terms, including bonuses, incentives, and potential raises.

Steps involved in developing a fair and effective compensation structure, considering program objectives, budget, and employee types.

A structured plan for the compensation system, including objectives, implementation deadlines, and budget allocation.

The company's guiding principles for compensation, considering pay differences, market rates, and benefits.

Evaluating all positions to understand required tasks, responsibilities, and skills to determine proper compensation levels.

Establishing and documenting company-wide policies for compensation, including merit raises, cost-of-living adjustments, bonuses, reviews, and promotions.

Evaluations of the financial impact of proposed salary adjustments on the company.

Developing a strategy for informing employees about changes to compensation policies and programs.

Putting a new salary program into effect within the company.

Process to observe the newly implemented salary adjustments for feedback and modifications, ensuring its effects and adjustments, if needed, after the program's launch.

Gaining formal approval from top-level executives regarding proposed salary adjustments/programs.

Formal assessment of the new salary program.