| Total Compensation - Q | Total Compensation - A |
| Book value plans | They are a form of stock option plan where the purchase price of the option is the book value of the company. Under these schemes employees can purchase stock at an agreed book value & sell them at market value |
| Broad banding | A type of pay scheme that has a reduced number of pay grades with wider ranges |
| Cafeteria plans | They allow employees to select the type of benefits they will receive up to a certain cost level |
| Cliff | The date when employee can begin to exercise options |
| Commuted value | The amount that is transferred or paid out to the terminating employee from his/her pension plan |
| Compa-ratio (compensation ratio) | The position of an actual wage, shown as a percentage, compared to the control point for the range. The percentage can be greater or less than 100 depending upon whether the actual salary is above or below the control point |
| Compensable factors | Includes items such as: scope, responsibility, task complexity & skill requirement |
| Deferred Profit Sharing Plans | They are not paid out as cash but are held in trust for employees, thereby having certain tax advantages. Payout comes at retirement or when the employee leaves the organization |
| Defined benefit pension | The payout comes in the form of a monthly amount based on a formula - usually between I & 2 percent of monthly salary at retirement for each year the employee was a member of the plan |
| Equity Theory | Suggests that employees strive for equity with others both inside & outside the organization & that if they “input” at the same level as others, they should receive the same level of “output”. |
| Expectancy Theory | Suggests that employee motivation is dependent on an employee’s assessment of: their own ability to perform successfully, 2) the likelihood of their performance being recognized 3) the value of the reward they will receive. |
| Extrinsic rewards | They come from outside the work or are external to the job |
| Factor comparison system | A quantitative “compensable factor” method that is an extension of the job ranking method whereby each job is ranked on every factor & plotted on a matrix against the wage rate assigned for each factor |
| Fleishman job analysis | A system for identifying employee characteristics that influence job performance; assumes that job tasks differ with respect to the abilities required to perform them successfully |
| Green circle | A corrective measure designed to advance or accelerate an actual wage that is below the range minimum or control point |
| Maslow’s Hierarchy of Needs Theory | Posits that humans are motivated to satisfy their needs, & that these needs are arranged in a hierarchy of five levels; for the most part, individuals strive to satisfy lower level needs before progressing to satisfying higher level needs |
| Intrinsic rewards | They come from one’s enjoyment & satisfaction with the “nature” of the work |
| Job analysis | Involves the collection of all the information pertaining to a job in order to determine its duties, tasks & activities & results in the creation of a job description |
| Job design | Process of assigning tasks, duties, responsibilities & authority inherent in a job to achieve the desired results. Also has an impact on the determination of job worth in that “enriched” or “enlarged” jobs have more worth from a compensation perspective. |
| Job description | Normally includes: the job purpose, job context, types of duties & responsibilities, knowledge,, skills & abilities(KSAs) required to perform the job & job performance standards |
| Job evaluation | The process used to establish the internal worth of jobs |
| Job ranking system | A non-quantitative 'whole job' method with a number of variations including: simple ranking (highest to lowest worth), alternate ranking. (highest & lowest 1st, then next highest & next lowest, etc.) or paired comparison (every job compared to every other |
| Job rate/control point | The target wage rate when the job is being performed in a fully satisfactory manner. it is usually the midpoint or at the top of the range |
| Job worth | Fundamental to the development of a total compensation program is its determination; which in turn leads to the amount of compensation provided to the incumbent |
| Line of sight | A term that describes the degree to which employees can see the connection between their performance & the rewards they receive |
| LTD | lt usually provides from 50% to 70% of income with a waiting period (typically 120 days during which employees are covered by a combination of STD & El) |
| Maturity curve | A graphical representation showing the relationship between wage rate & number of years of service for identified occupational groups in the organization such as engineers or research scientists |
| Market wage curves | They are graphical representation of salaries in the labour market. On the graph, the vertical axis represents salary levels & the horizontal axis lists the benchmark jobs or salary grades with survey information being posted on the graph |
| Motivation-hygiene theory | Workers’ needs into 2 major categories. 1. achievement,interesting work, responsibility, learning, growth & recognition=job satisfaction & motivation. 2. Good working conditions, decent/equitable pay/benefits, don't=increased job satisfaction & motivation |
| Pay at risk | It applies when a portion of pay is subject to organization performance & is another way of describing variable pay |
| Perquisites | Aterm that applies to a plethora of employee (usually executives) benefits. Eg: company cars, club memberships, tax counseling, etc. |
| Piecework | It provides compensation based on the number of units created or processed in a given time period |
| Phantom stock | Employees are assigned an amount of these shares in the organization at a current price. Their bonus is determined by the increase in the value of those shares as measured by the performance of actual shares |
| Point factor system | A quantitative method where compensable factors are defined in “degrees” or levels; points are assigned to each degree level, & job worth is reflected in the total number of points awarded to the job |
| Range overlap | The degree to which the maximum rate of a lower grade overlaps the minimum rate of the next highest grade |
| Range spread/depth | The percentage difference between the grade minimum & maximum |
| Red circle | A term applied to a corrective measure that freezes an actual wage that is above a range maximum or a control point. |
| Reinforcement theory | Suggests that people will repeat performance/actions if positively reinforced for doing so, & avoid performance/actions that result in punishment |
| Salary compression | It occurs when salaries paid to inexperienced employees bump up against those paid to experience employees. It most often occurs in tight labour markets & unionized situations |
| Salary Surveys | They play an important role in that the information contained in them is used to determine external equity |
| Scanlon plan | An early version of gain sharing which uses suggestions, participative committees & where profit sharing awards are calculated using payroll costs & revenue results |
| STD | It provides part or all of an employee’s earnings while away on sick leave. Plans can be insured, administered through a third party (called administrative services only — ASO) or self-funded |
| Split award | It occurs when an individual’s bonus is determined by individual, team &/or organization performance |
| Structured job analysis questionnaires | Workers & other subject-matter experts respond to written questions about the activities & tasks, tools & equipment, & working conditions involve in their jobs |
| Stop-loss | Provisions that limit the organization’s benefits liability exposure through the purchase of insurance specifically to cover catastrophic situations |
| Supplemental unemployment benefits (SUB) | They can be provided by employers, enabling employees to receive benefit “top ups”. These are most often found for maternity leave & sometimes in industries where heavy layoffs occur (e.g. manufacturing) |
| 2-tiered pay | A cost-cutting/containment measure, whereby the salary range for new employees is lower than that of existing employees in the same job |
| Vesting | It means that the employee has the right to the employer’s contributions & their own contribution once they have been members of the plan for a specified period of time — usually 2 years. All contributions are considered to be locked-in |
| Wage ranges | They are established for benchmark positions - minimum, maximum & control points (e.g. 25, 50 & 75 percentile) are created. The traditional depth is midpoint + 20% & midpoint — 20% |
| Work profiling system (WPS) | A structured questionnaire that measures ability & personality attributes required for effective performance |