8) CHRA Set I Drills. Compensation Administration by Zarate. Chapter I. HREAP Reviewer. HR terms.
Summary
TLDRThis script discusses various aspects of employee compensation, including direct and indirect rewards, base and variable pay, and the objectives of compensation. It differentiates between wages and salaries and explains the importance of job analysis, description, and evaluation. The script also covers economic theories on wages, such as the subsistence theory, and the factors influencing pay rates, emphasizing the dynamic nature of the labor market.
Takeaways
- đŒ Compensation refers to the monetary value given for work performed, which includes salary, wage, benefits, and other forms of payment.
- đ Variable pay is linked to performance accomplishments, such as bonuses or incentives, and is distinct from base pay which is fixed.
- đ Benefits are indirect rewards, either mandated by the government or provided voluntarily by employers, and include things like insurance and vacation leaves.
- đŻ The objectives of compensation are to retain high-performing employees, achieve high productivity, satisfy legal pay requirements, and reduce turnover.
- đ There are two main classifications of compensation: direct (monetary value like salary and bonuses) and indirect (non-monetary like benefits).
- đ Job evaluation is the process of determining a job's worth, which is crucial for establishing fair and competitive pay structures within an organization.
- đ External competitiveness ensures that an organization's compensation is in line with industry standards to prevent employees from seeking opportunities elsewhere.
- đ The subsistence theory suggests that if wages fall below a certain level, it can lead to a decrease in population and labor supply, which may eventually increase wages.
- đïž The iron law of wages indicates a tendency for wages to remain at a subsistence level, as coined by Ferdinand Lasalle, emphasizing the minimum necessary for survival.
- đ€ Bargaining Theory, developed by John Davidson, highlights the importance of workers' bargaining power in determining wage levels, suggesting that stronger worker negotiation leads to higher wages.
- đ Educational attainment is a key factor in determining pay rates, often considered more important than experience and skills, and serves as a baseline for qualifications in the labor market.
Q & A
What is the term used to describe the monetary value given for work performed by an employee?
-Compensation is the term used to describe the monetary value given for work performed by an employee.
Which type of pay is not considered one of the three basic types of compensation?
-Invariable pay is not considered one of the three basic types of compensation.
What is the term for pay given to an employee for the actual work rendered, usually in the form of salary or wage?
-Base pay is the term for pay given to an employee for the actual work rendered, usually in the form of salary or wage.
What is variable pay and how is it linked to performance?
-Variable pay is linked to actual accomplishments in performance such as bonuses or incentives based on a target sales quota or target productivity.
What are benefits in the context of employee compensation?
-Benefits are indirect rewards which may either be government-mandated or voluntarily given by the employer.
What are the objectives of compensation, according to the script?
-The objectives of compensation include retaining high-performing employees, achieving high productivity, satisfying pay requirements in accordance with the law, and reducing employee turnover.
What are the two classifications of compensation mentioned in the script?
-The two classifications of compensation mentioned in the script are direct compensation and indirect compensation.
What is the definition of direct compensation?
-Direct compensation is defined as an actual monetary value paid to an employee, which can be in the form of salary, wage, bonuses, incentives, commissions, and other performance-based pay.
What is indirect compensation and what does it include?
-Indirect compensation refers to non-monetary aspects of compensation, including benefits packages such as hospitalization and life insurance plans, sickness and vacation leaves, car plans, and educational grants.
Which policy affects compensation that is not mentioned in the script?
-Social and political issues are not mentioned as policies that affect compensation in the script.
What is internal alignment in the context of compensation policies?
-Internal alignment is a policy that addresses possible pay comparison among employees with related or similar tasks, ensuring that employees are paid according to their contribution to the organization.
How does external competitiveness affect compensation packages?
-External competitiveness ensures that the organization's compensation package is at par with those of their competitors, preventing employees from transferring to competing organizations.
What is job analysis in the context of compensation?
-Job analysis is defined as the process of determining all the information specific to a particular job.
What is the subsistence theory and its implication on wages?
-The subsistence theory implies that if actual wages fall below the subsistence level, the population will decrease, leading to a lower labor supply and an increase in wages, which can result in famine, starvation, and disease.
What is the iron law of wages and its relation to the minimum wage?
-The iron law of wages is the tendency of wages to remain fixed at a subsistence or minimum level. It suggests that wages cannot fall below the minimum because workers will not be able to work.
Who is David Ricardo and how is he related to the iron law of wages?
-David Ricardo is a British Economist who used terms natural price and market price of Labor to explain the iron law of wages.
What is the difference between wages and salary according to the script?
-Wages and salary have differences in how often they are paid, how they are computed, and in general who receives them.
How are salaries and wages typically paid according to the script?
-Salaries are typically paid semi-monthly or on a fixed period, while wages are paid daily, weekly, or more often than semi-monthly. However, both can be paid once a month.
Is the labor market static or dynamic, as mentioned in the script?
-The labor market is dynamic, meaning employees can freely move from one employer to another and employers can hire, fire, or rehire as they choose.
Outlines
đŒ Compensation and Pay Structures
This paragraph discusses various aspects of employee compensation. It starts by defining compensation as any monetary value given for work performed, with the correct answer being 'compensation' itself. It then differentiates between base pay, variable pay, and benefits, highlighting that 'invariable pay' is not a type of compensation. The paragraph continues to explain that base pay is given for actual work, variable pay is linked to performance, and benefits are indirect rewards. It outlines objectives of compensation, such as retaining high-performing employees, achieving high productivity, and satisfying legal pay requirements, with the correct answer being 'all of the above'. The classifications of compensation are also discussed, with direct and indirect compensation being the correct classifications. The paragraph concludes with a discussion on policies affecting compensation, emphasizing that social and political issues are not factors that affect compensation.
đ Job Analysis and Economic Theories of Wages
Paragraph 2 delves into job analysis, description, and evaluation, explaining their roles in determining job specifics and worth. It introduces the concept of pay structures and their use in standardizing pay through grades or levels. The economic theory of wages is explored, with a focus on the subsistence theory, which posits that wages tend to remain at a subsistence level. The paragraph also discusses the iron law of wages, which suggests that wages cannot fall below a minimum level due to workers' necessity to live. It mentions David Ricardo's contribution to the understanding of wages through the concept of natural and market prices of labor. The just price theory is also briefly touched upon, emphasizing the importance of equity in employee compensation. Additionally, the standard of living theory is introduced, which considers the quality of life a worker enjoys in a particular area.
đ Wage Determination and Labor Market Dynamics
Paragraph 3 focuses on wage determination and the dynamics of the labor market. It begins with a discussion on bargaining power in wage negotiations, suggesting that wages are influenced by the strength of workers relative to employers. The differences between wages and salaries are highlighted, noting that they are not interchangeable due to variations in payment frequency, computation, and recipients. The paragraph clarifies that salaries and wages can be paid on various schedules, including semi-monthly, daily, weekly, or monthly. It concludes with a statement about the labor market being dynamic, allowing for the free movement of employees between employers and the flexibility of employers to hire, fire, or rehire as they see fit. The importance of education as a baseline for qualifications and pay rates is also emphasized.
Mindmap
Keywords
đĄCompensation
đĄBase Pay
đĄVariable Pay
đĄBenefits
đĄJob Analysis
đĄJob Description
đĄJob Evaluation
đĄPay Structures
đĄSubsistence Theory
đĄIron Law of Wages
đĄBargaining Theory
Highlights
Compensation is the monetary value given for work performed, with 'compensation' being the correct term.
The three basic types of compensation are base pay, variable pay, and benefits, excluding 'invariable pay'.
Base pay is the pay given for actual work, typically in the form of salary or wage.
Variable pay is linked to accomplishments such as bonuses or incentives based on performance metrics.
Benefits are indirect rewards, which can be mandated by government or voluntarily provided by employers.
Compensation objectives include retaining high performers, achieving high productivity, and satisfying legal pay requirements.
Classifications of compensation are direct and indirect, with direct compensation including salary, wage, bonuses, and commissions.
Indirect compensation refers to non-monetary aspects like benefits packages, insurance, leaves, and educational grants.
Policies affecting compensation do not include social and political issues, focusing instead on internal alignment and external competitiveness.
Internal alignment ensures pay comparison among employees with related tasks, aiming for equitable compensation based on contribution.
External competitiveness ensures the organization's compensation is on par with competitors to prevent employee turnover.
Job analysis is the process of determining all information specific to a particular job.
A job description is a written summary of the duties and responsibilities of a job position.
Job evaluation is the process of determining the worth of a job.
Pay structures use grades or levels to standardize pay across an organization.
The subsistence theory is the most popular economic theory on wages, suggesting that wages tend to remain at a subsistence level.
If actual wages fall below the subsistence level, it can lead to a decrease in population, lower labor supply, and eventually higher wages.
The iron law of wages indicates that wages cannot fall below the minimum because workers need to sustain themselves.
The just price theory emphasizes the importance of equity between employees' inputs and outputs in determining wages.
The wage fund theory suggests that wages are paid from a predetermined fund, and any increase in wages is contingent on increased productivity.
The standard of living theory posits that wages should reflect the level or quality of life a worker is accustomed to in their location.
Bargaining theory highlights the importance of workers' bargaining power in negotiating their wages, suggesting higher wages if workers are stronger in negotiations.
Wage and salary are not interchangeable terms; they differ in payment frequency, computation, and recipients.
Salaries and wages can be paid on various schedules, including semi-monthly, daily, weekly, or monthly.
The labor market is dynamic, allowing employees and employers flexibility in employment and hiring decisions.
Educational attainment is a key factor in determining pay rates, often more important than experience and skills.
Transcripts
one the means of giving a monetary value
equivalent to any work performed by an
employee a
salary B
wage c
benefits D
compensation the answer is D
compensation two the following are the
three basic types of compensation except
a base pay B variable pay C invariable
pay D
benefits the answer is C invariable pay
three it is the pay given to the
employee for the actual work rendered
usually in the form of salary or wage a
base pay B variable pay c
benefits the answer is a basee pay four
it is the pay linked to actual
accomplishments in performance such as
bonuses or incentives based on a Target
sales quota or Target
productivity a base pay B variable pay c
benefits the answer is B variable
pay five the indirect rewards which may
either be government-mandated
or voluntarily given by the
employer a base pay B variable pay c
benefits the answer is c
benefits six the following are
objectives of compensation except a to
retain High performing employees B to
achieve High
productivity C to satisfy pay
requirements in accordance with the law
all D to reduce employee
turnover e all of the above the answer
is e all of the above seven what are two
classifications of compensation a direct
compensation B indirect
compensation C variable
compensation D invariable
compensation e a and b f c and d g none
of the
above the answer is E A and B eight
classification of compensation defined
as an actual monetary value paid to an
employee it can be in the form of salary
or
wage it also includes bonuses incentives
commissions and other performance-based
pay a direct
compensation B indirect compensation
C variable
compensation the answer is a direct
compensation
nine this refers to non-monetary aspects
of
compensation this includes benefits
packages such as hospitalization and
life insurance plan sickness and
vacation leaves car plans and
educational grants a indirect
compensation B direct compensation
C variable
compensation the answer is a indirect
compensation 10 the following are
policies that affect compensation except
a internal
alignment B external
competitiveness C employee
contribution D management of the pay
system e social and political issues
the answer is e social and political
issues
11 this policy addresses possible pay
comparison among employees with related
or similar
tasks the goal is to ensure that
employees are paid according to their
contribution to the
organization a management of pay system
B employee
contribution C external
competitiveness D internal
alignment the answer is D internal
alignment
12 this policy ensures that the
organization's compensation package is
at par with those of their
competitors this prevents employees from
transferring to competing
organization a management of pay system
B employee
contribution C external
competitiveness d D internal
alignment the answer is C external
competitiveness
13 it is defined as the process of
determining all the information specific
to a particular job a job
analysis B job
description C job
evaluation the answer is a job
analysis 14
the written summary of all the duties
and responsibilities of a particular job
position a job
analysis B job
description C job
evaluation the answer is B job
description 15 it is the process of
determining the worth of a job a job
analysis B job
description C job
evaluation the answer is C job
evaluation
16 the use of grades or levels to
standardize pay a policies and
regulations B salary
surveys C pay
structures the answer is C pay
structures 17 the most popular economic
theory on
wages the basis for the minimum wage
concept according to this Theory an
increase in wages will only lead to an
increase in population at a faster rate
a iron law of
wages B subsistance Theory C just price
Theory the answer is B subsistance
Theory 18 according to the subsistence
theory if actual wages fall below the
subsistance level the population will
decrease which will eventually lead to a
lower labor Supply and an increase in
wages this leads to famine starvation
and
disease a true B false wages falling
below subsistence level will actually
lead to an increase in
population the answer is a true 19 it is
the tendency of w is to remain fixed at
a subsistence or minimum level it is
coined by Ferdinand
Lal according to this wages cannot fall
below the minimum because workers will
not be able to work a iron law of
wages B subsistence Theory C just price
Theory the answer is a iron law of
wages 20 a British Economist who use
terms natural price and market price of
Labor to explain the iron law of
wages a Thomas
malus B David
Ricardo C John Stewart Mill the answer
is B David
Ricardo 21 this Theory emphasizes that
employees would like to maintain Equity
between inputs and
outputs employees with high positions
have high wages
a iron law of
wages B subsistence Theory C just price
Theory the answer is C just price
Theory 22 Adam Smith developed this
Theory to mean that workers are paid
based on a fund that is already there in
the first place this fund is also called
the wage fund a residual claimant Theory
B standard of living
Theory C wage fund
Theory the answer is C wage fund Theory
23 it suggests that residual claims will
only increase if productivity will
increase wages are called residuals
because there are other factors of
production such as land capital and
entrepreneur are paid
first a residual claiming Theory B
standard of living
Theory C wage fund Theory the answer is
a residual claimant Theory 24 the level
or quality of life a particular worker
enjoys in a particular location or area
it includes basic necessities of life
education and Recreation which he has
become accustomed with a residual
claimant B standard of living C just
price the answer B standard of living 25
John Davidson developed this Theory to
highlight the bargaining power of
workers in negotiating their
wages wages are high if they are
stronger than the
employer a residual claimant Theory B
standard of living
Theory C bargaining Theory the the
answer is C bargaining Theory 26 is it
correct to use the terms wage and salary
interchangeably a yes they mean the same
thing B no they have fundamental
differences the answer is B no wage and
salary have differences in how often
they are paid how they are computed and
in general who receives them 27 seven
when are salaries and wages paid a
salaries are paid semi-monthly or on a
fixed period such as 15th and 30th B
wages are paid daily weekly or more
often than semi-monthly
C both are paid once a month D both A
and B are correct the answer is D both A
and B are correct 28 the labor market is
static a true B false it is
dynamic the answer is B false it is
dynamic employees can freely move from
one employer to another employers can
hire fire or rehire as they
choose 29 employers use this as the
Baseline for all other
qualifications it is a key factor in
determin learning pay rates more
important than experience and
skills a educational
attainment b
parentage c racial
background D political
leanings the answer is a
education
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