Q12. Describe the impact of legislation on the field of compensation management.

Minimum wage and overtime laws restrict the minimum amount employers can offer to workers; anti-discrimination legislation mandates that employees are compensated without regards to their racial, ethnic, gender, or disabled status.

Q13. Identify the impact of incentives such as bonuses to a compensation program.

For some professions, such as sales and investment banking, bonuses derive the bulk of the individual's expected salary. Bonuses can also be a means of distinguishing social status between employees. Bonuses can also simply be used to encourage higher levels of performance, based upon short-term outcomes.

Q14. Explain how the global market affects U.S.-based companies' compensation.

In a global marketplace, high-quality employees are more 'portable,' but because of the ability to outsource labor, employees may also find their salaries kept artificially low through the availability of lower-cost foreign workers.

Q15. Describe salary/market surveys.

Salary market surveys, much like a market survey for how much consumers are willing to pay for a good or service, give prospective employees an idea of the average salary in a specific area in the nation for employees fulfilling a specific job, with certain specified qualifications and experience.

Q 1. Why is it necessary for an organization to appraise performance formally?

Without formal appraisals, subjective factors would likely be too influential in determining employee compensation.

Q2. Identify and describe the different reasons for implementing a short-term bonus.

Short-term bonuses can boost morale, ease change resistance regarding long-term changes in the company, and also provide an incentive for workers to work hard through a difficult or busy period at the company.

Q3. Define the differences between skill, knowledge and competencies.

Skill, such as the ability to cut hair, is a basic requirement of many jobs -- a hair dresser must know how to give a competent cut, an administrative professional must be fluent in MS Word. Knowledge is harder to define, like a teacher's knowledge of American history, although...

Competencies, such as the ability to work well on a team, are often established through previous high-level performance in similar duties.
4. Describe the difference between trait-oriented and results oriented performance appraisal instruments.

Trait-orientated compensation focuses on characteristics or the impression the individual gives for being suitable for the job, such as a sales associate being friendly and personable. Results-oriented performance is focused on what quantitative benchmarks the employee has met, such as his or her sales figures.

Q5. What are the principal differences between defined benefits plans and defined contribution plans?

A defined benefit plan is like a pension plan, when an employee receives a guaranteed proportion of his or her salary after retirement until his or her death or the death of his or her spouse, sometimes with cost-of-living increases. A defined contribution plan, like a 401(k) is when employees contribute to an investment fund that is sensitive to market fluctuations and can be depleted before the employee's death. However, unlike a pension, it is portable and can increase with market conditions.

Q6. What is reverse discrimination and how does it influence the design of an executive compensation plan?

Reverse discrimination is discriminating against individuals of traditionally overrepresented groups, such as white males, to promote the interests of historically underrepresented groups. An organization might wish to keep the pay scale relatively equitable, so there are not great discrepancies between lower and upper-level management, if whites are disproportionately represented at the organizations' upper levels. This can cause individuals to complain about reverse discrimination.

Q7. Describe opportunities available for an organization to relate pay to job worth, seniority, merit, cost-of-living adjustments and geographic differentials.

As well as traditional reasons for compensation level and promotion, the cost-of-living in an area may be calculated when setting the base pay for a position. To lure individuals to an undesirable location, however, the company may use a general company-wide scale, however.