compensation
all forms of financial returns and tangible services and benefits that employees receive as part of an employment relationship
relational returns
psychological returns employees believe they receive in the workplace
total rewards
all rewards received by all rewards received by compensation, benefits, and relational returns
wage
pay expressed at an hourly rate
salary
pay expressed at an annual or monthly rate `
merit increase
increment to base pay in recognition of past work behaviour
cost-of-living adjustment
percentage increment to base pay provided to all employees regardless of performance
incentives (variable pay)
one-time payments for meet� ing preestablished perfoir mance objectives in a future time period `
work/life programs
programs that help employees better integrate their work and life responsibilities
allowances
compensation to provide for items that are in short supply
The Pay Model
Serves as both a framework for examining current pay systems. Three basic building blocks: (1) the strategic compensation objectives, (2) the strategic policies that form the foundation of the compensation system, and (3) the techniques of compensation.
strategic Compensation Objectives
The basic objectives, include efficiency, fairness, and compliance with laws and regulations. E
. Efficiency can be stated more specifically: (I) improving performance, increasing quality, delighting customers and stockholders; and (2) controlling labour
Four Policy Choices
1) internal alignment, (2) external competitiveness, (3) employee contributions, and (4) management of the pay system,
internal Alignment
� refers to pay comparisons between jobs or skill levels inside a single organization
External competitivenesj
refers to compensation relationships external to the organization (i.e., compared with competitors).
Employee Contribution!
This refers to the relative emphasis placed on performance.
Management
rly. Proper management of the pay system ensures that the objectives muw.,.-t,^- l-.operiy, I'ropcr management ol the pay system ensure