TEST BANK FOR COMPENSATION, 14TH EDITION BY
BARRY GERHART
Compensation - (ANSWER)All forms of financial returns and tangible services and benefits that
employees receive as part of an employment relationship
relational returns - (ANSWER)psychological returns employees believe they receive in the
workplace
total rewards - (ANSWER)All rewards received by employees, including cash compensation,
benefits, and relational returns
wage - (ANSWER)pay calculated at an hourly rate
salary - (ANSWER)pay calculated at an annual or monthly rate
merit increases - (ANSWER)increment to base pay in recognition of past work behavior
cost-of-living adjustment - (ANSWER)percentage increment to base pay provided to all
employees regardless of performance
incentives (variable pay) - (ANSWER)one-time payments for meeting previously established
performance objectives
(Total Returns) (Total Compensation) Cash Compensation - (ANSWER)Direct - Base, Merit/cost
of living, short term incentives
(Total Returns) (Total Compensation) Benefits - (ANSWER)Indirect - Life, Health & Disabilty
Insurance , Work/Life Programs, Allowances
,(Total Returns) Relational Returns - (ANSWER)Non-Financial - Recognition & Status,
Employment Security, Challenging Work, Learning Opportunities
Work/Life Programs - (ANSWER)Programs that help employees better integrate their work and
life responsibilities
Allowances - (ANSWER)Compensation to provide for items that are in short supply
Employee Engagement - (ANSWER)A level of connection employees feel to their employer that
results in them giving full discretionary effort on a sustained basis above and beyond specific job
requirements
Procedural Fairness - (ANSWER)Fairness of the process used to make a decision
The Pay Model - (ANSWER)Strategic Policies ( Alignment- Internal Structure, Competiveness -
Pay Structure, Contributors - Incentive Programs, Management - Evaluation) -> Techniques ->
Strategic Objextives (Efficiency, Fairness, Compliance)
Internal Alignment - (ANSWER)Pay comparisons between jobs or skill levels inside a single
organization
External Competiveness - (ANSWER)Comparison of compensation with that of one's
competitors
Developing a Total Compensation Strategy (4 Steps) - (ANSWER)Step 1: Assess Total
Compensation Implications
-Competitive Dynamics - Understand the Business
- Culture/Values
- Social and Political Context
- Employee Preferences
- Choice is good
, - Union Preferences
Prominence of Pay in Overall HR Strategy
Step 2: Decide on a Total Compensation Strategy
Step 3 and 4: Implement and Reassess
Source of Competitive Advantage: Three Tests - (ANSWER)1) Does the pay strategy align
- alignment with business strategy
- alignment externally with the economic and socio political conditions
- alignment internally with overall HR system
2) Does the pay strategy differentiate?
3) Does the pay strategy add value?
Internal Alignment (internal equity) - (ANSWER)the pay relationships between relationships
between the jobs/skills/competencies within a single organization
Pay Structure - (ANSWER)The array of pay rates for different work or skills within a single
organization; the number of levels, and the criteria used to determine these differences create the
structure
workflow - (ANSWER)process by which goods and services are delivered to the customer
line of sight - (ANSWER)link between an individual employee's work and the achievement of
organizational objectives
differentials - (ANSWER)pay difference between job levels
Internal pay structure is defined by: - (ANSWER)1) the number of levels of work
2) pay differentials between the levels
3) criteria used to determine those levels and differentials
BARRY GERHART
Compensation - (ANSWER)All forms of financial returns and tangible services and benefits that
employees receive as part of an employment relationship
relational returns - (ANSWER)psychological returns employees believe they receive in the
workplace
total rewards - (ANSWER)All rewards received by employees, including cash compensation,
benefits, and relational returns
wage - (ANSWER)pay calculated at an hourly rate
salary - (ANSWER)pay calculated at an annual or monthly rate
merit increases - (ANSWER)increment to base pay in recognition of past work behavior
cost-of-living adjustment - (ANSWER)percentage increment to base pay provided to all
employees regardless of performance
incentives (variable pay) - (ANSWER)one-time payments for meeting previously established
performance objectives
(Total Returns) (Total Compensation) Cash Compensation - (ANSWER)Direct - Base, Merit/cost
of living, short term incentives
(Total Returns) (Total Compensation) Benefits - (ANSWER)Indirect - Life, Health & Disabilty
Insurance , Work/Life Programs, Allowances
,(Total Returns) Relational Returns - (ANSWER)Non-Financial - Recognition & Status,
Employment Security, Challenging Work, Learning Opportunities
Work/Life Programs - (ANSWER)Programs that help employees better integrate their work and
life responsibilities
Allowances - (ANSWER)Compensation to provide for items that are in short supply
Employee Engagement - (ANSWER)A level of connection employees feel to their employer that
results in them giving full discretionary effort on a sustained basis above and beyond specific job
requirements
Procedural Fairness - (ANSWER)Fairness of the process used to make a decision
The Pay Model - (ANSWER)Strategic Policies ( Alignment- Internal Structure, Competiveness -
Pay Structure, Contributors - Incentive Programs, Management - Evaluation) -> Techniques ->
Strategic Objextives (Efficiency, Fairness, Compliance)
Internal Alignment - (ANSWER)Pay comparisons between jobs or skill levels inside a single
organization
External Competiveness - (ANSWER)Comparison of compensation with that of one's
competitors
Developing a Total Compensation Strategy (4 Steps) - (ANSWER)Step 1: Assess Total
Compensation Implications
-Competitive Dynamics - Understand the Business
- Culture/Values
- Social and Political Context
- Employee Preferences
- Choice is good
, - Union Preferences
Prominence of Pay in Overall HR Strategy
Step 2: Decide on a Total Compensation Strategy
Step 3 and 4: Implement and Reassess
Source of Competitive Advantage: Three Tests - (ANSWER)1) Does the pay strategy align
- alignment with business strategy
- alignment externally with the economic and socio political conditions
- alignment internally with overall HR system
2) Does the pay strategy differentiate?
3) Does the pay strategy add value?
Internal Alignment (internal equity) - (ANSWER)the pay relationships between relationships
between the jobs/skills/competencies within a single organization
Pay Structure - (ANSWER)The array of pay rates for different work or skills within a single
organization; the number of levels, and the criteria used to determine these differences create the
structure
workflow - (ANSWER)process by which goods and services are delivered to the customer
line of sight - (ANSWER)link between an individual employee's work and the achievement of
organizational objectives
differentials - (ANSWER)pay difference between job levels
Internal pay structure is defined by: - (ANSWER)1) the number of levels of work
2) pay differentials between the levels
3) criteria used to determine those levels and differentials
