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HRM Chapter 11
Vocabulary
| Term | Definition |
|---|---|
| Agency theory | An economic theory that uses differences in the interests of principals (owners) and agents (employees) to describe reactions to compensation. |
| Broadbanding | The practice of reducing the number of pay categories so that each pay grade contains a large set of different jobs. |
| Contingency | A reinforcement principle requiring that desirable consequents only be given after the occurrence of a desirable behavior. |
| Distributive justice | Perceptions of fairness based on the outcomes (such as pay) received from an organization. |
| Employee compensation | The human resource practice of rewarding employees for their contributions. |
| Equity theory | A justice perspective suggesting that people determine the fairness of their pay by comparing what they give to and receive from the organization with what others give and receive. |
| Exempt employees | Workers, such as executives, administrators, professionals, and sales representatives, who are not covered by the FLSA. |
| Expectancy | An individual's belief that he or she can do what is necessary to achieve high performance. |
| Expectancy theory | A psychological theory suggesting that people are motivated by a combination of three beliefs: valence, instrumentality, and expectancy. |
| External equity | Employee perceptions of fairness based on how much they are paid relative to people working in other organizations. |
| Fair Labor Standards Act (FLSA) | Federal legislation that governs compensation practices and helps ensure fair treatment of employees. |
| Goal setting theory | A psychological theory suggesting that an individual's conscious choices explain motivation. |
| Instrumentality | The belief in the likelihood that the reward will actually be given contingent on high performance. |
| Internal equity | Employee perceptions of fairness based on how much they are paid relative to others working in the same organization. |
| Job based pay | A determination of how much to pay an employee that is based on assessments about the duties performed. |
| Justice theory | A psychological theory suggesting that motivation is driven by beliefs about fairness. |
| Lag the market strategy | A compensation decision to pay employees an amount below what they might earn working for another organization. |
| Lead the market strategy | A compensation decision to pay employees an amount above what they might earn working for another organization. |
| Market based pay | A compensation approach that determines how much to pay employees by assessing how much they could make working for other organizations. |
| Meet the market strategy | A compensation decision to pay employees an amount similar to what they can make working for other organizations. |
| Minimum wage | A compensation rule requiring organizations to pay employees at least a certain amount for each hour they work. |
| Motivation | The sum of forces that cause an individual to engage in certain behaviors rather than alternative actions. |
| Nonexempt employees | All employees who are not explicitly exempt from the FLSA, sometimes referred to as hourly workers. |
| Overtime | A compensation rule requiring organizations to pay a higher hourly rate for each hour that a nonexempt employee works beyond 40 hours in a one week period. |
| Pay for performance | Compensation practices that use differences in employee performance to determine differences in pay. |
| Pay level | The compensation decision concerning how much to pay employees relative to what they could earn doing the same job elsewhere. |
| Pay survey | Gathering information to learn how much employees are being paid by other organizations. |
| Point system | A process of assigning numerical values to each job in order to compare the value of contributions within and across organizations. |
| Procedural justice | Perceptions of fairness based on the processes used to allocate outcomes such as pay. |
| Reinforcement theory | A psychological theory suggesting that people are motivated by antecedents (environmental cues) and consequents (rewards and punishments). |
| Relational commitment | A sense of loyalty to an organization that is based not only on financial incentives but also on social ties. |
| Salary compression | A situation created when new employees receive higher pay than employees who have been with the organization for a long time even though they perform the same job. |
| Skill based pay | A determination of how much to pay an employee that is based on skills, even if those skills are not currently used to perform duties. |
| Transactional commitment | A sense of obligation to an organization that is created primarily by financial incentives. |
| Uniform rewards | A reward system that minimizes differences among workers and offers similar compensation to all employees. |
| Valence | The value that an individual places on a reward being offered. |
| Variable rewards | A reward system that pays some employees substantially more than others in order to emphasize difference between high and low performers. |
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LJones8376
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