a plan in which contributions are made solely by the employer. unit 4: compensation & benefits...
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A plan in which contributions are made solely by the employer.
Unit 4: Compensation & Benefits
Noncontributory pension plans
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.
Unit 4: Compensation & Benefits
McClelland’s achievement need
A health plan that focuses on reducing health care costs, often through negotiated
cost reductions.
Unit 4: Compensation & Benefits
Managed health care
A procedure for developing a wage structure that involves placing the various jobs in a hierarchy of job worth and then
assigning monetary values to them.
Unit 4: Compensation & Benefits
Job-ranking method
The process of deciding how much each job should be paid by determining which labor grade the job falls within and the pay range
for that labor grade.
Unit 4: Compensation & Benefits
Job pricing
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.
Unit 4: Compensation & Benefits
Individual wage decision
A pay-for-performance plan of improved productivity through sharing. Individual
incentives are increased as workers accomplish more work in less time.
Unit 4: Compensation & Benefits
Improshare
The line on a wage structure graph that shows higher levels of pay associated with
higher-level jobs.
Unit 4: Compensation & Benefits
Wage curve
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.
Unit 4: Compensation & Benefits
Flexible spending account (FSA)
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.
Unit 4: Compensation & Benefits
Maslow’s need hierarchy
The most popular job-evaluation method for developing a wage curve. The
compensable factors of key jobs are added up and used to develop the wage curve.
Unit 4: Compensation & Benefits
Point method
Responsibilities of the person who manages a pension fund.
Unit 4: Compensation & Benefits
Fiduciary responsibilities
A method for developing a wage structure in which benchmark jobs are broken down and compared item by item. It determines how much money should be paid for each
item.
Unit 4: Compensation & Benefits
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 workers’ compensation
tax rates for each employer.
Unit 4: Compensation & Benefits
Experience rating
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.
Unit 4: Compensation & Benefits
Profit sharing
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.
Unit 4: Compensation & Benefits
Qualified Domestic Relations Order (QDRO)
A cluster of jobs along the hierarchy of job worth that are all paid the same rate of
pay.
Unit 4: Compensation & Benefits
Pay grade
A plan in which both the employees and the employer make contributions to the
pension fund.
Unit 4: Compensation & Benefits
Contributory pension plans
Employer-provided reimbursements 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.
Unit 4: Compensation & Benefits
Health reimbursement arrangement
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 similar worth.
Unit 4: Compensation & Benefits
Comparable-worth controversy
A process theory of motivation in which people decide what to do by subjectively estimating the probability of being able to
perform an activity and whether that activity will be rewarding.
Unit 4: Compensation & Benefits
Expectancy theory
An arrangement whereby employees can own shares in the company, the same as if they were ordinary shareholders in a joint-
stock company.
Unit 4: Compensation & Benefits
Employee Stock Ownership Plan (ESOP)
The aspects associated with the different jobs that justify paying one job more than
another. Responsibility, education, and skill are usually considered the most important.
Unit 4: Compensation & Benefits
Compensable factors
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.
Unit 4: Compensation & Benefits
Employee Retirement Income Security Act (ERISA)
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,
skills, education, training, and effort. Outputs include such things as
compensation, benefits, and intrinsic satisfaction.
Unit 4: Compensation & Benefits
Equity theory
A profit-sharing plan in which an employee’s share is held until a later
period, usually retirement.
Unit 4: Compensation & Benefits
Deferred profit-sharing plan
A piece-rate incentive plan that provides a low piece rate for individuals who produce
less than the standard and a high piece rate for individuals who meet or exceed the
standard.
Unit 4: Compensation & Benefits
Differential piece-rate plan
A procedure used to develop a wage structure in which the job description for
each job are compared with a sorting scheme that ranks the jobs in a hierarchy
of job worth.
Unit 4: Compensation & Benefits
Classification method
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.
Unit 4: Compensation & Benefits
Zero-based budgeting
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.
Unit 4: Compensation & Benefits
Defined contribution plan
A analysis of the wages, salaries, and benefits offered by different organizations.
Unit 4: Compensation & Benefits
Wage surveys
A major decision in the design of a compensation system that examines how
much money is paid for different jobs within the same organization.
Unit 4: Compensation & Benefits
Wage-structure decision
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.
Unit 4: Compensation & Benefits
Wage compression
The employer’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.
Unit 4: Compensation & Benefits
Vesting
Three components of the expectancy theory of motivation.
Unit 4: Compensation & Benefits
ExpectancyInstrumentality
Valence
An individual incentive plan that provides a fixed rate of incentive pay for each item
produced.
Unit 4: Compensation & Benefits
Straight piecework
A legal document required by ERISA for each welfare benefit plan offered by an
employer that describes the plan’s eligibility requirements, a summary of the
benefits provided, the procedures for claiming benefits and appealing claim
denials, circumstances that could result in a loss of benefits, and the participant’s
rights under ERISA.
Unit 4: Compensation & Benefits
Summary Plan Document (SPD)
A company-wide incentive plan that combines profit sharing with a suggestion
system.
Unit 4: Compensation & Benefits
Scanlon plan
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.
Unit 4: Compensation & Benefits
Wage-level decision
A company-wide incentive plan which compensation is based on a ratio of income
to value added by the employees in the production process.
Unit 4: Compensation & Benefits
Rucker Share-of-Production plan
The practice of producing less than is possible. This occurs when peer-group
norms establish an arbitrarily low standard of performance.
Unit 4: Compensation & Benefits
Restriction of output
Jobs that are overpaid relative to the amount the wage curve indicates ought to
be paid for them.
Unit 4: Compensation & Benefits
Red-circle jobs
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.
Unit 4: Compensation & Benefits
Graded vesting
A special kind of HMO consisting of a collection of physicians, hospitals, and
clinics that combine to provide health care services for member. The members pay a
capitated monthly fee and the staff members are paid a fixed salary rather
than an amount based on the number of patients they see in a day.
Unit 4: Compensation & Benefits
Group health cooperatives
A widely-used job evaluation method that uses three compensable factors - knowledge, problem solving, and
accountability - to determine how many points should be assigned to different job.
Unit 4: Compensation & Benefits
Guide Chart-Profile method/ Hay method
An incentive plan where the workers receive a guaranteed hourly wage plus a
percentage of the wage for any time saved.
Unit 4: Compensation & Benefits
Halsey Premium plan
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 these jobs.
Unit 4: Compensation & Benefits
Benchmark jobs/ Key jobs
Creating wide labor grades so that there are fewer labor grades with more jobs in
each one.
Unit 4: Compensation & Benefits
Broadbanding
An employee becomes fully vested in a retirement plan after a specified period of
time.
Unit 4: Compensation & Benefits
Cliff vesting
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.
Unit 4: Compensation & Benefits
Standard hour plan
Health-care plans that are similar to PPOs except for the presence of a gatekeeper
who monitors the services rendered.
Unit 4: Compensation & Benefits
Point of service (POS)
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.
Unit 4: Compensation & Benefits
Herzberg’s hygiene/motivator theory
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.
Unit 4: Compensation & Benefits
Highly-compensated employees
The ability to transfer pension monies from one pension fund to another when an
employee changes employers.
Unit 4: Compensation & Benefits
Portability
Provides health care services emphasizing preventive medicine at a fixed monthly
rate.
Unit 4: Compensation & Benefits
Health maintenance organization (HMO)
A pension plan that provides a retirement income to retirees based on a formula that
usually combines the retiree’s years of service and average annual income for the
last five years.
Unit 4: Compensation & Benefits
Defined benefits plan
A number that compares a person’s pay rate with the midpoint of the pay range. It is determined by taking their pay divided by the midpoint of the labor grade times
100.
Unit 4: Compensation & Benefits
Compa-ratio
Health-care plans that contract with health-care providers to purchase services at a
discounted rate.
Unit 4: Compensation & Benefits
Health plan purchasing cooperatives
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.
Unit 4: Compensation & Benefits
Contingent workers
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.
Unit 4: Compensation & Benefits
Preferred provider organizations (PPO)