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Human Resource Mgmt 11th Ed. Chapter 12


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Balance-sheet approach
Compensation plan that equalizes cost differences between identical international and home-country assignments.
Base pay
Basic compensation that an employee receives, usually as a wage or a salary.
Benchmark jobs
Jobs found in many organizations.
Indirect reward given to an employee or a group of employees for organizational membership.
Practice of using fewer pay grades with much broader ranges than in traditional compensation systems.
Pay level divided by the midpoint of the pay range.
Compensable factor
Factor that identifies a job value commonly present throughout a group of jobs.
Compensatory time off
Hours given to an employee in lieu of payment for extra time worked.
Competency-based pay
Rewards individuals for the capabilities they demonstrate and acquire.
Distributive justice
Perceived fairness in the distribution of outcomes.
Entitlement philosophy
Assumes that individuals who have worked another year are entitled to pay increases, with little regard for performance differences.
Perceived fairness between what a person does and what the person receives.
Exempt employees
Employees to whom employers are not required to pay overtime under the Fair Labor Standards Act.
A court action in which a portion of an employee’s wages is set aside to pay a debt owed a creditor.
Global market approach
Compensation plan that attempts to be more comprehensive in providing base pay, incentives, benefits, and relocation expenses regardless of the country to which the employee is assigned.
Green-circled employee
Incumbent who is paid below the range set for the job.
Job evaluation
Formal, systematic means to identify the relative worth of jobs within an organization.
Job family
Group of jobs having common organizational characteristics.
Living wage
One that is supposed to meet the basic needs of a worker’s family.
Lump-sum increase (LSI)
One-time payment of all or part of a yearly pay increase.
Market banding
Grouping jobs into pay grades based on similar market survey amounts.
Market line
Graph line that shows the relationship between job value as determined by job evaluation points and job value as determined by pay survey rates.
Market pricing
Use of pay survey data to identify the relative value of jobs based on what other employers pay for similar jobs.
Non-exempt employees
Employees who must be paid overtime under the Fair Labor Standards Act.
Pay compression
Occurs when the pay differences among individuals with different levels of experience and performance become small.
Pay equity
Similarity in pay for all jobs requiring comparable knowledge, skills, and abilities, even if actual duties and market rates differ significantly.
Pay grades
Groupings of individual jobs having approximately the same job worth.
Pay survey
Collection of data on compensation rates for workers performing similar jobs in other organizations.
Pay-for-performance philosophy
Requires that compensation changes reflect individual performance differences.
Procedural justice
Perceived fairness of the process and procedures used to make decisions about employees.
Red-circled employee
Incumbent who is paid above the range set for the job.
Consistent payments made each period regardless of the number of hours worked.
Time spent in the organization or on a particular job.
Tax equalization plan
Compensation plan used to protect expatriates from negative tax consequences.
Variable pay
Compensation linked directly to individual, team, or organizational performance.
Payments directly calculated on the amount of time worked.

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