components of compensation
Total Rewards
Monetary and non-monetary rewards provided by companies to attract, motivate, and retain employees.
Entitlement philosophy
Assumes that individuals who have worked another year with the company are entitled to pay increases with little regard for performance differences.
Extrinsic and Intrinsic Rewards
Extrinsic Rewards: Rewards that are external to the individual.
Intrinsic Rewards: Rewards that are internal to the individual.
Flexible Benefits Plan and Adverse selection
Flexible Benefits Plan: A program that allows employees to select benefits they prefer from options established by the employer.
Adverse Selection: Situation in which only higher risk employees select and use certain benefits.
Three-Legged Stool Method of Saving
A model showing the 3 sources of income to fund an employees retirement.
Tangible and Intangible Rewards
Tangible: Elements of compensation that can be quantitatively measured and compared between different organizations.
Intangible: Elements of compensation that cannot be as easily measured of quantified.
Pay-for-Performance Philosophy
Assumes that compensation decisions reflect performance differences.
Line of Sight
The idea that employees can clearly see how their actions and decisions lead to desired outcomes.
Open Enrollment
A time when employees can change their participation level in various benefit plans and switch between benefit options.
Vesting and Portability
Vesting: A benefit that cannot be taken away.
Portability: A retirement plan feature that allows employees to move their retirement benefits from one employer to another.
Base pay and Variable Pay
Base Pay: Basic Compensation that an employee receives.
Variable Pay: Compensation that is tied to an individual, team, or to organizational performance.
Expectancy Theory and Equity Theory
Expectancy Theory: States that an employee's motivation is based on the probability that his or her efforts will lead to an expected level of performance that is linked to a valued reward.
Equity Theory: Establishing and enacting policies to ensure fair distribution of resources and takes into consideration the historical disadvantages experienced by some groups.
Commission
A percentage of the revenue generated by sales that is given to an agent or salesperson.
Workers Compensation and No-Fault Insurance
Workers Compensation: Security benefits provided to workers who are injured on the job.
No-Fault Insurance: An injured worker received benefits even if the accident was the employees' fault.
Health Spending Account and Consumer-Driven Health Plan
Health Spending Account: A tax favored savings plan to provide funda for paying for medical expenses.
Consumer-Driven Health (CDH) Plan: health plan that provides employer financial contributions to help employees cover their health-related expenses.
Wages and Salary
Wages: Payments calculated directly on the basis of time worked by employees.
Salary: Consistent payments made each period regardless of number of hours worked.
Competency Based Pay
Rewards individuals for the capabilities they demonstrate and acquire.
Gainsharing and Profit Sharing
Gainsharing: A system of sharing with employees greater than expected gains in profits and/or productivity.
Profit Sharing: A system to distribute a portion of an organizations profits to an employees.
Self Service vs Third-Party Administrators
Self Service: Technology that allows employees to change their beenfit choices, track their benefit balances and submit questions to HR staff members and external benefit providers.
Third Party Administrators (TPA's): Vendor that provide enrollment, record-keeping, and other administrative services to organizations.
Stock Purchase Plans
Plans where employees may buy shares in the company at a discount, or the company pays the brokerage fees.
Benefits
Tangible, indirects rewards provided to an employee or group of employees for organizational membership; also, an indirect reward given to an employee or group of employees as part of membership in the organization, regardless of performance.
Job evaluation and Compensable Factors
Job Evaluation: Formal, systematic means to determine the relative worth of jobs within and organization.
Compensable Factors: Job dimension commonly present throughout a group of jobs within Nd organization that can be rated for each job.
Critical Success Factors and Key Performance Indicators (KPI's)
Critical Success Factors: Variables that have strong influence on the results of the organization.
Key Performance Indicators (KPI's): Scorecard measures that tell managers how well the organization is performing relative to sritical success factors.
Exclusive Remedy
Workers' compensation benefits are the only benefits injured workers may receive from the employer to compensate for work-related injuries.
Paid-Time-Off (PTO) Plan
Plans that combine all sick leave, vacation time, and holidays into a total number of hours or days that employees can take off with pay.