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143 Cards in this Set

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  • Back
A major decision in the design of a compensation system that examines how much money is paid for different jobs within the same organizations.
What is: Wage-structure decision
One of the major decisions involved in designing a compensation system; compares the wages paid in one organization with the pay in other organizations for employees performing similar work.
What is: Wage-level decision
The line on a wage structure graph that shows higher levels of pay associated with higher-level jobs. Most wage curves using the point method are straight lines (linear curve) which are constructed by drawing a freehand line or through regression equations.
What is: Wage curve
A reduction in the relative wage differentials between high-and-low paying jobs. Upper-level jobs do not provide sufficient incentives to justify the higher levels of responsibility and skill required to perform them.
What is: Wage comparison
The employee's right to receive the money contributed to his or her pension fund by an employer even if the employee terminates employment with the employer.
What is: Vesting
Performance-based pay that includes individual performance bonuses, executive bonuses, gainsharing, group incentives, profit sharing, and other incentives tied to productivity (as opposed to fixed base pay)
What is: Variable pay
Money provided by the unemployment compensation funds to temporarily assist employees who are laid off through no fault of their own.
What is: Unemployment compensation
The special assistance provided to an employee who is transferred to a new location. Examples include a transfer bonus, moving allowance, assistance in buying and selling a home, and help in finding employment for the employee's spouse.
What is: Transfer assistance
When employees receive pay increases to the point that their salaries max out their pay ranges. Pay increases based on performance and receive higher salaries only as the entire wage curve has increased.
What is: Topped outf
A budgeting method that requires each program to be justified from the ground up each fiscal year. The alternative is to use the prior funding level for that program as the basis for further adjustments.
What is: Zero based budgeting
A survey of wages, salaries, and benefits offered by different organizations. The wage survey is the major tool used in making the wage level decision. Many organizations conduct their own surveys, but the most sophisticated wage surveys are conducted by the BLS (Bureau of Labor Statistics)
What is: Wage Survey
The compensation provide for employees who are injured on the job regardless of who was responsible for the accident.
What is: Workers Comp
To gain an understanding of the diversity in wage rates in society, the overall labor force needs to be separated into three labor markets: blue collar and non-supervisory white collar employees, professional and technical employees, and supervisors and managers.
What is: Three labor markets
Expectancy, Instrumental and Valence
What are: 3 components of the expectancy theory of motivation
Special funds provided by employers as a result of a labor agreement that provides supplementary benefits to employees who are laid off.
What is: S.U.B - Supplemental Unemployment Benefits
An individual incentive plan that provides a fixed rate of incentive pay for each item produced.
What is: Straight piecework
A part of the executive compensation program that allows employees to buy shares of the company's stock, usually at a reduced price.
What is: Stock option
Pay increases that are based on performance and length of service.
What is: Step increases
An individual or group incentive plan that pays a fixed rate per hour where the hour is measured by an hour's worth of work rather than by a standard sixty minutes.
What is: Standard hour plan
A legal document required by ERISA for each welfare benefit plan offered by an employer that describes:1.the plan's eligibility requirements, 2. a summary of the benefits provided, 3.the procedures for claiming benefits and appealing claim denials, 4. circumstances that could result in a loss of benefits, and 5. the participants' rights under ERISA.
What is: SPD - Summary Plan Document
Program designed as a forced savings plan in which employees save money during their working years to provide a pension after they retire.
What is: Social Security
A pay system in which an employee's pay is partially determined by the employee's skills as a means of motivating employees to acquire greater skills.
What is: Skill based pay
A plan intended to appeal to small employers because it is not subject to the so-called "top heavy" rules under Section 416 of the IRS.
What is: SIMPLE - Savings Incentive Match Plans for Employees.
A program that provides employees with the continuation of their regular pay when they are unable to work because of illness.
What is: Sick leave
Provides financial security when employees are terminated and have to look for new jobs.
What is: Severance Pay
Permitted an employer to contribute to an employee's IRA provided this done for reach eligible employee. Te Small Business Job Protection Act of 1996 repealed SEPs, although existing plans may continue.
What is: SEP - Simplified employees pensions
A company wide incentive plan that combines profit sharing with a suggestion system.
What is: Scanlon plan
A law passed in 1996 that raised the minimum wage and made significant changes to the pension plans.
What is: SBJPA - Small Business Job Protection Act
A company wide incentive plan in which compensation is based on a ratio of income to value added by the employees in the production process.
What is: Rucker - Share of Production plan
An individual retirement arrangement that is funded by after tax contributions. Although the contributions do not reduce a person's taxable income, the advantage is that the contributions plus the investment income they earn are tax fee when they are withdrawn.
What is: Roth IRA
The practice of producing less than is possible. The restriction occurs when peer group norms establish an arbitrarily low standard of performance.
What is: Restriction of ouput
Consists of seven consecutive periods of 24 hour days.
What is: Regular work week
Includes the basic hourly rate of pay plus any non-discretionary bonuses, shift differentials, production bonuses, and commissions earned.
What is: Regular Rate of pay
Jobs that are either overpaid or underpaid relative to the amount the wage curve indicates ought to be paid for them. Sometimes underpaid jobs are called blue circle or green circle rates.
What are: Red circle jobs
A vehicle for holding assets aside to support an employer's unfunded deferred compensation obligations.
What is: Rabbi trust
An event that triggers the beginning of COBRA coverage.
What is: Qualifying event
A retirement or stock option plan that has been approved by the IRS for special tax treatment.
What are: Qualified plans
An individual who is eligible for continuation of benefits coverage under COBRA, which could be an employee, and
What is Qualified beneficiary
A court issued order that instructs a plan administrator how to pay all or a portion of a pension plan benefit to a divorced spouse or to a child.
What is: QDRO - Qualified Domestic Relations Order
A program that allows employees to share in the profits of a company based upon the profitability of the company and an allocation formula determining each employee's share.
What is: Profit sharing
A plan that allows medical plan participants to pay the required plan premium with pretax dollars.
What is: Premium conversion plans
Health care plans that consist of contractual arrangements between health care providers and an employer or insurance company to provide fee for service health care, usually at a discount.
What is: PPO - preferred provider organizations
The ability to transfer pension monies from one pension fund to another when a employee changes employers.
What is: Portability
Health care plans that are similar to PPOs except for the presence of a gatekeeper who monitors the services rendered.
What is: Point of service
The most popular job evaluation method for developing a wage curve. The compensable factors of key jobs are used to develop the wage curve. Points are assigned to each factor, and the total points are associated with a specific pay level.
What is: Point method
A top down budgeting strategy that involves centralized decision making by top managers who determine the overall percentage increase in average pay for the plan year.
What is: Planned pay level rise
The amount of money that an employee receives for performing a particular unit of work.
What are: Piece rates
Paid leave that can be used for illness, vacation, or accumulated for early retirement.
What is: Personal time
Non-financial rewards or benefits
What are: Perqs - Perquisites
A procedure used for adjusting the pay levels in which the pay for every job is increased by a fixed percentage amount.
What is: Percentage increase
A method of calculating the costs of employee benefits by expressing the cost as a percentage of the total payroll costs.
What is: Percent of payroll
The income that an employee receives after retirement.
What is: Pension
A policy that restricts employees from discussing their pay and limits the amount of information about pay that can be made public.
What is: Pay secrecy
The range of pay associated with each pay grade, which indicates how much individual incentive is associated with the job.
What is: Pay range
A cluster of jobs along the hierarchy of job worth that are all paid the same rate of pay.
What is: Pay grade
A pay system that ties pay to performance levels.
What is: Pay for performance
A program under which employees are paid according to the skills or knowledge they have demonstrated.
What is: Pay for knowledge programs
Benefits that employees choose to provide that are not required by law, such as health and accident insurance, pensions, and pay for time not worked.
What are: Optional benefits
Employees who are covered by the minimum wage and overtime pay provisions of the FLSA (Fair Labor Standard Act).
What is: Nonexempt employees
A plan in which contributions are made solely by them employer.
What is: Noncontributory pension plans
Stock purchase plans that involve no compensation expense because the employees' purchase price is not set lower than the price of the stock that is offered to all shareholders for the purpose of raising capital.
What is: Noncompensatory plans
Guidelines provided by the HR department recommending appropriate pay increases for different performance levels.
What are: Merit increase grids
Increases in an employee's basic wage level based upon performance levels.
What is: Merit pay
A Social Security benefit that pays medical expenses of employees over the age of 65 and permanent disability payments for individuals under the age of 65.
What is: Medicare
A theory of motivation built around the need for achievement and its influence on behavior. The characteristics of high need achievers are 1. personal responsibility, 2. moderate risk taking, and 3. a desire for immediate feedback. Money and incentives are a form of feedback.
What is: McClelland's achievement need.
A theory of motivation based on a hierarchy of five needs; physiological, safety, social, esteem, and self actualization. Money is viewed as something that primarily satisfies lower level needs.
What is: Maslow's need hierarchy
Benefits that each employer is required to provide: unemployment compensation, workers comp, and social security.
What are: Mandatory benefits
A health plan that focuses on reducing health care costs, often through negotiated cost reductions; also called managed competition.
What is: Managed health care
Insurance that provides disabled employees with long term security.
What is: LTD - Long Term Disability
Jobs that are considered equitably paid and are used in the point method to develop a wage structure. The pay levels for other jobs are determined from the wage curve that was developed using the key jobs. Sometimes called benchmark jobs.
What are: Key jobs
The amount of money required to make a significant difference in the perception. For an individual at a low pay level, a small amount of money would constitute a just noticeable difference, but for a highly paid executive, only a large sum of money would be perceived as a significant incentive.
What is: Just noticeable difference
A procedure for developing a wage structure that involves ranking the various jobs in a hierarchy of job worth and then assigning monetary values to them.
What is: Job ranking method
The process of deciding how much each job should be paid by determining which labor grade the job falls within the pay range for that labor grade.
What is: Job pricing
A procedure for developing a wage structure that is based on an evaluation of the job. The four job evaluation methods are the job ranking method, the classification method, the point method, and the factor comparison method.
What is: Job evaluation
A personal retirement investment program in which an employee can put a percentage of his or her income. The money in the account is not taxed until it is withdrawn.
What is: IRA
Health care plans that consist of groups of physicians in private practice who provide some services to HMO subscribers, but most of their patients are not subscribers.
What are: Individual practice associations
One of the major decisions that must be considered in the development of a compensation system. This decision considers the issue of whether individuals performing the same job should all receive the same rate of pay or whether individuals who have more seniority, experience, or higher productivity should receive higher pay.
What is: Individual wage decision
Workers who supervise themselves, pay their own taxes, and are not employees. They also set their own hours, get paid by the job, furnish their own tools and equipment, determine the work sequence, advertise their services, work for more than one employer, and have the opportunity for both profits and losses.
What are: Independent contractors
Reimbursements or expenses paid by an employer that are treated as taxable income to the employee, such as excessive moving expenses or domestic partner health benefits.
What is: Imputed income
A pay for performance plan whose name comes from improved productivity through sharing. Individual incentives are increased as workers accomplish more work in less time.
What is: ImProShare
All hours that an employee is permitted to work, plus time when the employee is required to be on the employer's premises, on duty, or at a designated work station.
What is: Hours worked
Provides health care services emphasizing preventive medicine at a fixed monthly rate.
What is: HMO - Health Maintenance Organization
Someone who owns more than five percent of the company or earns over a specified amount. Employee benefits cannot discriminate in favor of these employees.
What is: Highly compensated employee
A motivation theory that identifies two types of needs: Motivators are associated with the content of the job and contribute to individual motivation. Hygiene factors cause dissatisfaction when they are deficient but do not create motivation when they are present. Money is a hygiene
What is: Herzberg's hygiene/ motivator theory
Employer provided reimbursement for medical expenses that are excluded from taxable income, but subject to maximum dollar limits for a coverage period. Unused funds at the end of the period can be carried forward to subsequent periods.
What is: Health reimbursement arrangment
Health care plans that contract with health care providers to purchase services at a discounted rate.
What are: Health plan purchasing cooperatives
An evaluation method that uses three compensable factors; know how, problem solving, and accountability, to determine how many points should be assigned to different jobs. (aka The Guide Chart Profile method).
What is: Hay method
An incentive plan where the workers receive a guaranteed hourly wage plus a percentage of the wage for any time saved.
What is: Halsey Premium plan
An evaluation method that uses 3 compensable factors: know how, problem solving, and accountability, to determine how many points should be assigned to different jobs. (aka The Hay method)
What is: The Guide Chart Profile method
A special kind of HMO consisting of a collection of physicians, hospitals, and clinics that combine to provide health care services for members. The members pay a capitated monthly fee and the staff members are paid a fixed salary rather than an amount based on a number of patients they see in a day.
What is: Group health cooperatives
An employee becomes partially vested in a retirement plan after an initial period of time, then becomes vested in an additional percentage each year until fully vested.
What is: Graded vesting
Money taken from an employee's paycheck as a result of a court judgement brought against that employee by a creditor.
What is: Garnishment
A pay for performance plan such as a Scanlon plan, a Rucker plan, or an improshare plan. Most gain sharing plans involve greater employee participation in their design.
What is: Gain sharing
Unpaid leave that is available when a new child is born to the employee; a new child is placed with the employee for adoption or foster care; the employee is needed to care for a seriously ill spouse, child, or parent (but not a parent-in-law); or the employee has a serious health condition.
What is: FMLA "LEAVE" - Family and Medical Leave Act
A law that gives employees greater flexibility in responding to family needs and medical emergencies with out fear of losing their jobs. It entitles eligible employees to take up to 12 weeks of unpaid leave each year for specified family and medical reasons.
What is: FMLA
A savings plan that enables participants to pay health care and dependent care expenses with pretax dollars deducted from an employee's income by the employer rather than after tax dollars.
What is: FSA-Flexible Spending Account
Employee choose the benefits they desire, subject to certain limitations and total cost constraints.
What is: Flexible benefits (cafeteria benefits)
A procedure for adjusting the wage curve in which a fixed sum of money is added to every job in the hierarchy.
What is: Fixed rate increase
Adjusting the incentive and base pay components in a compensation package to achieve a balance between security and motivation, such as increasing or decreasing individual incentives, group incentives, or company wide incentives.
What is: Fine tuning compensation
Responsibilities of the person who manages a pension fund.
What are: Fiduciary responsibilities
Health care insurance plans that allow employees to decide what services they want and health care providers charge a fee for the services they render. These charges are paid by the employee and/ or the employee's benefit plan.
What are: Fee for service plans
A method for developing a wage structure in which benchmark jobs are compared with other jobs, factor by factor, to determine how much money should be paid for each factor.
What is: Factor comparison
A rating computed for each employer that is based on the number of accidents or the number of employees laid off. This rating is used to adjust the unemployment compensation and worker's compensation tax rates for each employer.
What is: Experience rating
A process theory of motivation in which people decide what to do by subjectively estimating the probability of being able to preform an activity and whether that activity will be rewarding. The three components include expectancy, instrumentality, and valence.
What is: Expectancy theory
The additional income and benefits provided for employees who are transferred to a foreign country.
What is: Expatriate allowances
Employees who are exempt from the overtime requirements of the FLSA (Fair Labor Standards Act), such as outside salespeople and executives who have administrative or managerial responsibilities.
What is: Exempt employess
A financial vehicle that allows employees to own company stock.
What is: E.S.O.T (Employee Stock Ownership Trust)
An arrangement whereby employees can own shares in the company, the same as if they were ordinary shareholders in a joint stock company.
What is: ESOP (Employee Stock Ownership Plan)
This legislation was designed to ensure that employees covered under private pension plans and employee welfare benefit plans would receive the benefits promised. If an employer chooses to have a pension plan, it must comply with strict requirements.
What is: ERISA (Employee Retirement Income Security Act)
A theory of job satisfaction suggesting that people compare their inputs and outputs with the inputs and outputs of others. Inputs include such things as knowledge, skill, education, training, and effort. Outputs include such things as compensation, benefits, and intrinsic satisfaction.
What is: Equity theory
A benefit program that provides counseling to employees with such problems as marital conflict, indebtedness, alcoholism, and drug abuse.
What is: Employee assistance program
A notification by employers to employees with 14 days after a qualifying event that describes the COBRA coverage and the premiums.
What is: Election notice
Employer provided health benefits for an employee's domestic partner and the children of the domestic partner.
What is: Domestic Partner benefits
A piece rate incentive plan that provides a low piece rate of individuals who produce less than the standard and a high piece rate for individuals who meet or exceed the standard.
What is: Differential piece rate plan
An individual pension fund created for each employee into which the company and usually the employee invest a specified amount of money each year until the individual retires. The amount of money available to the retiree is determined by how much was contributed and how successfully the money was invested.
What is: Defined contribution plan
A pension plan that provides a retirement income to retirees base on a formula that usually combines the retiree's years of service and average annual income for the last five years.
What is: Defined benefit plan
A profit sharing plan in which an employee's share is held until a later period, usually retirement.
What is: Deferred profit sharing plan
The initial amount of a covered expense that must be paid by the insured person before the benefit becomes payable by the insurer.
What is: Deductible
A procedure for adjusting the wage curve in which higher level jobs are increased by successively smaller amounts.
What is: Decreasing rate increase
A well accepted measure of the rate of inflation
What is: CPI (Consumer Price Index)
A benefit costing method that is computed by dividing the total annual cost of each benefit by the number of employees receiving the benefit.
What is: Cost per employee per year
A plan in which both the employees and the employer make contributions to the pension plan.
What is: Contributory pension plans
Workers who do not have an ongoing expectation of full time employment, such as part time workers, independent contractors, temporaries, consultants, "life of the project" workers, leased employees, and subcontractors.
What is: Contingent workers
Stock purchase plans that are designed to compensate employees.
What are: Compensatory plans
The factors associated with the different jobs that justify paying one job more than another. Responsibility, education, and skill are usually considered the most important ............. factors.
What are: Compensable factors
A controversy that centers on the issue of whether organizations should be required to establish a common set of criteria for evaluating the worth of jobs and to provide equal pay for jobs of comparable worth.
What is: Comparable worth controversy
A number that compares a person's pay rate with the midpoint of the pay range. A ......... ratio is pay divided by the midpoint of the labor grade x's 100
What is: Compa-ratio
A form on incentive pay offered to sales representatives whereby they receive a fixed percentage of the merchandise they sell.
What is: Commission sales
A procedure that provides for automatic increases in the level of pay based on the rate of inflation-usually indexed to the CPI (Consumer Price Index)
What is: COLA (Cost of Living Adjustment)
A law that requires employers of 20 or more employees to extend health insurance group benefits to terminated employees, employees with reduced hours, and their family members.
What is: COBRA
An employee becomes fully vested in a retirement plan after a specified period of time.
What is Cliff vesting
A procedure used to develop a wage structure in which the job descriptions for each job are compared with a classification scheme that ranks the jobs in a hierarchy of job worth.
What is: Classification method
A method of calculating the cost of employee benefits by dividing the total annual cost by the number of employee hours.
What is: Cents per hour
Allows employees covered by such plans to receive their normal daily earnings or some other amount for each unused vacation day up to a certain number of vacation days per year. Any unused vacation days above the cash in limit are lost.
What is: Cash in provisions
A profit sharing plan in which payments are made to employees at the end of each period.
What is: Cash profit sharing plan
Plans that allow employees to decide how their funds will be invested and that are more portable when employees want to move from company to company.
What is: Cash balance plans
Allows employees to move a certain number of unused vacation days into the next leave year. Any unused vacation days above the carryover limit are lost.
What is: Carryover provision
Employees choose the benefits they desire, subject to certain limitations and total cost constraints.
What is: Cafeteria benefits plans
Creating wide labor grades so that there are fewer labor grades with more jobs in each other.
What is: Broadbanding
The incentive pay that individuals may receive for outstanding performance; it is not part of their base pay.
What is: Bonus
Jobs that are considered equitably paid and are used in the point method to develop a wage structure. The pay levels for other jobs are determined from the wage curve that was developed using the benchmark jobs. Often called key jobs.
What is: Benchmark jobs
A method of computing the costs of benefits by calculating the total annual costs of each benefit.
What is: Annual cost method
The formula used in profit sharing plans what determines how the profit is allocated to individuals; it is normally based on a seniority and performance.
What is: Allocation formula