39 Questions
What is the primary function of the compensation department?
To supervise the development of new compensation components
Which of these is the most common type of guaranteed pay?
Base salary
What is a variable pay contingent on?
Discretion, performance, or results achieved
Which of these benefits is typically mandatory and regulated by the government?
Medical insurance
What is the purpose of benefits in an employee's pay package?
To form the basis of an employee's pay package along with base salary and bonus
Which of these is NOT a type of compensation?
Project assignments
What differentiates income levels within a job-based pay structure?
The experience level of the employee
What type of pay is fixed and paid by an employer to an employee?
Guaranteed pay
What is the primary function of the compensation department regarding benefits?
To oversee the development of new benefits components
What are the three sub-divisions that HR organizations in large companies are typically divided into?
HR Business Partners, HR Center of Excellence, HR Shared Services
What are the two main influencers addressed in HR organizations?
Internal Influencers, External Influencers
What are the most important internal influencers in HR organizations?
Business Objectives, Labor Unions, Organizational Culture
Which of the following is NOT considered an external influencer in HR?
Employee Training Programs
What are the three classic objectives of Bonus Plans Benefits according to the text?
Adjust Labor Cost to Financial Results, Drive Employee Performance, Employee Retention
How does a well-designed bonus plan contribute to employee retention?
By paying more money to better performers
What is a critical aspect of compensating employees in an organization?
Adhering to existing legislation
What is the primary focus of Compensation and Benefits as a sub-discipline of Human Resources?
Employee compensation and benefits policy-making
What is the term used in the United Kingdom to refer to Compensation and Benefits?
Total Reward
What is a key responsibility of the Compensation and Benefits (C&B) department?
Ensuring internal fairness of total cash compensation
What is Compensation and Benefits considered in modern HR organizations?
An HR Center of Excellence
What is involved in the process of Compensation and Benefits?
Managing personnel expenses budget
What is the primary purpose of setting standards for individual salary increase and mass salary review?
To differentiate income levels within a job-based pay structure
What type of compensation is paid on an hourly, daily, weekly, bi-weekly, or monthly rate?
Guaranteed pay
What is a characteristic of benefits in an employee's pay package?
They form the basis of an employee's pay package
What is an example of a variable pay?
Overtime pay
What is a key difference between guaranteed pay and variable pay?
Guaranteed pay is fixed, while variable pay is non-fixed
What is the main purpose of the compensation department regarding compensation components?
To supervise the development of new compensation components
Which type of benefit plan is typically offered to select groups of employees?
Non-qualified benefit plans
What is the most common form of equity-based compensation?
Stock options
What is external equity in the context of compensation and benefits?
The similarity of a company's practices to those of other organizations in the same sector
Which aspect of equity in compensation and benefits refers to employee perceptions within the same organization?
Internal equity
Which department typically manages compensation and benefits in most companies?
Human resources department
What can result from problems with internal equity in compensation and benefits?
Conflict among employees, mistrust, low morale, anger, and legal action
What effect does an annually paid bonus have on employee retention?
It decreases the likelihood of employees leaving before the bonus payout
How does the 'Number of months in a year' factor into the daily rate calculation?
It is multiplied by the monthly rate
Which of the following is NOT one of the common issues faced by companies regarding compensation?
Benefits
What is the purpose of ensuring compliance with statutory obligations regarding compensation?
To ensure employees receive the minimum wage
In which situation would an employee receive an additional working day's payment?
In a leap year
What is the primary reason for an employee to receive a bonus?
To increase employee satisfaction and retention
Study Notes
Statutory Benefits and Obligations
- Statutory benefits are requirements that employers must provide to employees as determined by law in their province or territory.
- Key areas covered by legislation include: • Hours of work • Minimum wage • Public holiday entitlement • Overtime • Vacations and leave • Maternity and paternity leaves • Adoption and parental leaves • Emergency/sick leave • Bereavement leave • Grievance procedures • Termination of employment
Minimum Wage
- Designed to impose a broad and enforceable standard on employers to guarantee a minimum level of income for unskilled, non-unionized workers.
- Exceptions exist for students, self-employed, independent contractors, and commissioned sales people.
- Each province or territory has its own minimum wage guidelines and exceptions.
Statutory Benefits and Employment Insurance
- Provides temporary financial assistance to people who are sick, pregnant, or caring for a newborn or adopted child, as well as those caring for a family member who is seriously ill with a significant risk of death.
Compensation and Benefits
- An organization must adhere to existing legislation in areas of Labour Standards, pay equity, Human Rights, Employment Insurance, pension or retirement benefits, labour relations, and Occupational Health and Safety.
- Regularly reviewing HR Toolkit, key government websites, and connecting with an HR and/or legal professional helps ensure compliance with current legislation.
- Compensation and benefits is a sub-discipline of human resources, focused on employee compensation and benefits policy-making.
- Known in the UK as "total reward" and as "remuneration" in Australia and New Zealand.
Types of Compensation
- Guaranteed pay: fixed cash reward paid by an employer to an employee, such as base salary.
- Variable pay: non-fixed cash reward contingent on discretion, performance, or results achieved, such as bonus schemes, sales incentives, and overtime pay.
- Benefits: paid time-off (PTO), insurance, retirement plans, and access to company cars, among others.
- Equity-based compensation: employer compensation plan using employer's shares as employee compensation, such as stock options.
Compensation and Benefits Responsibilities
- C&B department is responsible for transparency in compensation practices and internal fairness of total cash.
- Supervises development of new compensation components and keeping general rules for compensation design.
- Sets standards for individual salary increase, mass salary review, and rules for bonus payout.
Bonus Plans
- Three classic objectives: • Adjust labor cost to financial results • Drive employee performance • Employee retention
Internal and External Influencers
- Internal influencers: business objectives, labor unions, internal equity, organizational culture, and organizational structure.
- External influencers: state of the economy, inflation, unemployment rate, labor law, relevant industry habits, and trends.
HR Organizations
- Typically divided into three sub-divisions: HR Business Partners, HR Center of Excellence, and HR Shared Services.
Test your knowledge on statutory benefits and obligations that employers are required to provide their employees as determined by the law. Topics covered include hours of work, minimum wage, public holiday entitlement, overtime, vacations leave, maternity and paternity leaves, and more.
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