Ebook Strategic compensation A human resource management approach (8th edition) Part 2

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Ebook Strategic compensation  A human resource management approach (8th edition) Part 2

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(BQ) Part 2 book Strategic compensation A human resource management approach has contents: Discretionary benefits, legally required benefits, compensating executives, compensating the flexible workforce, compensating expatriates, pay and benefits outside the united states,....and other contents.

www.downloadslide.com Pa rt IV Employee Benefits Where We Are Now: Part III, Designing Compensation Systems, explained the concepts and methods to build compensation systems that meet important goals of compensation professionals, including internal In Part IV, we will cover Discretionary Benefits Chapter 10 Employer-Sponsored Retirement Chapter   Plans and Health Insurance consistency, market competitiveness, and recognition Programs of employee contributions Our focus was on base pay We know (Chapter 1) that employee Chapter 11 Legally Required Benefits benefits represent an important component of total compensation Now we turn to the myriad employee benefits, including discretionary benefits from which employers may choose to offer, among them retirement and health insurance programs and legally required benefits We also give attention to designing and planning the benefits program M09_MART8863_08_GE_C09.indd 221 24/11/14 6:59 AM www.downloadslide.com Discretionary Benefits MyManagementLab® Improve Your Grade! When you see this icon, visit www.mymanagementlab.com for activities that are ­applied, personalized, and offer immediate feedback Learning Objectives When you finish studying this chapter, you should be able to: Give an overview of discretionary benefits List the three broad components of discretionary benefits Identify and define one example of income protection programs, paid time off, and services Explain the benefits and costs of discretionary benefits T oday, discretionary benefits represent a significant fiscal cost to companies As of March 2012, companies spent an average exceeding $13,000 per employee annually to provide discretionary benefits.1 For the same period, discretionary benefits accounted for as much as 21.5 percent of employers’ total payroll costs (i.e., the sum of core compensation and all employee benefits costs) As the term implies, “discretionary benefits” are offered at the will of company management Unlike in well-designed pay-for-performance systems, employees view such discretionary benefits as paid vacation and holidays as an entitlement much like any of the legally required benefits that we will discuss in Chapter 11 Employers have reinforced an entitlement mentality toward benefits because they usually award discretionary benefits regardless of employee performance An Overview of Discretionary Benefits 222 M09_MART8863_08_GE_C09.indd 222 Discretionary benefits fall into three broad categories: protection programs, paid time off, and services Protection programs provide family benefits, promote health, and guard against income loss caused by such catastrophic factors as unemployment, disability, or serious illnesses Paid time off, not surprisingly, provides employees time off with pay for such events as vacation Services provide such enhancements as tuition reimbursement and day care assistance to employees and their families In the past several decades, firms have offered a tremendous number of both legally required and discretionary benefits In Chapter 11, we will discuss how the growth in legally required benefits from a select body of federal and state legislation developed out of social welfare 24/11/14 6:59 AM www.downloadslide.com Chapter 9  •  Discretionary Benefits     223  philosophies Quite different from these reasons are several factors that have contributed to the rise in discretionary benefits Discretionary benefits originated in the 1940s and 1950s During both World War II and the Korean War, the federal government mandated that companies not increase employees’ core compensation, but it did not place restrictions on companies’ employee benefits expenditures Companies invested in expanding their offerings of discretionary benefits as an alternate to pay hikes as a motivational tool As a result, many companies began to offer welfare practices Welfare practices were “anything for the comfort and improvement, intellectual or social, of the employees, over and above wages paid, which is not a necessity of the industry nor required by law.”2 Moreover, companies offered employees welfare benefits to promote good management and to enhance worker productivity The opportunities to employees through welfare practices varied For example, some employers offered libraries and recreational areas, and others provided financial assistance for education, home purchases, and home improvements In addition, employers’ sponsorships of medical insurance coverage became common Quite apart from the benevolence of employers, employee unions also directly contributed to the increase in employee welfare practices through the National Labor Relations Act of 1935 (NLRA), which legitimized bargaining for employee benefits Union workers tend to participate more in benefits plans than nonunion employees (92 percent versus 72 percent).3 Table 9-1 illustrates some of the differences in benefits between major occupational groups, full- and parttime employees, and nonunion and union employees Unions also indirectly contributed to the rise in benefits offerings As we discussed in Chapter 2, nonunion companies often fashion their employment practices after union companies as a tactic to minimize the chance that their employees will seek union representation4 and may offer their employees benefits that are comparable to the benefits received by employees in union shops Employees came to view both legally required benefits and discretionary benefits as entitlements Anecdotal evidence suggests that most employees still feel this way: From their perspective, company membership entitles them to employee benefits Until recently, companies have also treated virtually all elements of employee benefits as entitlements They have not questioned their role as social welfare mediators; however, both rising benefit costs and increased foreign Table 9-1  Percentage of Workers with Access to Selected Employee Benefits in Private Industry: March 2012 Worker Characteristics Total Management occupations Production, ­transportation, and material-moving occupations Service occupations Full-time Part-time Union Nonunion Vacation and Holidays Vacation and Sick Leave Vacation and Personal Leave Employee- On-site and Assistance Off-site Child Wellness Flexible Plans Care Programs Workplace 72 85 79 59 81 51 35 52 28 48 66 47 18 34 51 33 14 46 87 26 88 70 37 73 18 71 57 28 43 12 44 34 30 53 34 71 46 11 13 19 39 22 44 33 31 Source: U.S Bureau of Labor Statistics (2012) National Compensation Survey: Employee Benefits in the United States, March 2012 (Bulletin 2773) Available: www.bls.gov, accessed March 3, 2013 M09_MART8863_08_GE_C09.indd 223 24/11/14 6:59 AM www.downloadslide.com 224    part IV  • Employee Benefits competition have led companies to question this entitlement ethic A more recent phenomenon that gives rise to discretionary benefits is the federal government’s institution of tax laws that allow companies to lower their tax liability based on the amount of money they allocate to providing employees with particular discretionary benefits These tax laws permit companies to deduct from their pretaxable income the cost of certain benefits, thereby lowering companies’ tax liabilities Components of Discretionary Benefits Several benefits practices fall into the category of discretionary employee benefits We can explore these practices by recognizing the three broad goals employers hope to achieve when offering discretionary benefits: protection, paid time off, and services to enhance work and life experiences Protection Programs Income Protection Programs  Disability Insurance  Disability insurance replaces income for employees who become unable to work because of sicknesses or accidents Employees unfortunately need this kind of protection At all working ages, the probability of being disabled for at least 90 consecutive days is much greater than the chance of dying while working; one of every three employees will have a disability that lasts at least 90 days.5 Employer-sponsored or group disability insurance typically takes two forms The first, short-term disability insurance, provides benefits for a limited time, usually less than months The second, long-term disability insurance, provides benefits for extended periods between 6 months and life Disability criteria differ between short- and long-term plans Short-term plans usually consider disability as an inability to perform any and every duty of the disabled person’s occupation Long-term plans use a more stringent definition, specifying disability as an inability to engage in any occupation for which the individual is qualified by reason of training, education, or experience Short-term disability plans classify short-term disability as an inability to perform the duties of one’s regular job Manifestations of short-term disability include the following ­temporary (short-term) conditions: • • • • Recovery from injuries Recovery from surgery Treatment of an illness requiring any hospitalization Pregnancy—the Pregnancy Discrimination Act of 1978 mandates that employers treat pregnancy and childbirth the same way they treat other causes of disability (Chapter 2) Most short-term disability plans pay employees 50–66.67 percent of their pretax salary on a monthly or weekly basis; however, some pay as much as 100 percent Short-term disability plans pay benefits for a limited period, usually no more than months (26 weeks) Many companies set a monthly maximum benefit amount Three additional features of short-term disability plans include the preexisting condition clause, two waiting periods, and exclusions of particular health conditions Similar to health insurance plans, a preexisting condition is a mental or physical disability for which medical advice, diagnosis, care, or treatment was received during a designated period preceding the beginning of disability insurance coverage The designated period is usually any time prior to employment and enrollment in a company’s disability insurance plan Insurance companies impose preexisting conditions to limit their liabilities for disabilities that predate an individual’s coverage Two waiting periods include the preeligibility period and an elimination period The preeligibility period spans from the initial date of hire to the time of eligibility for coverage in a disability insurance program Once the preeligibility period has expired, an elimination period M09_MART8863_08_GE_C09.indd 224 24/11/14 6:59 AM www.downloadslide.com  Chapter 9  •  Discretionary Benefits     225 refers to the minimum amount of time an employee must wait after becoming disabled before disability insurance payments begin Elimination periods exclude insignificant illnesses or injuries that limit a person’s ability to work for just a few days Short-term disability plans often contain exclusion provisions Exclusion provisions list the particular health conditions that are ineligible for coverage Disabilities that result from selfinflicted injuries are almost always excluded Short-term disability plans often exclude most mental illnesses or disabilities due to chemical dependencies (e.g., addictions to alcohol or illegal drugs) Employers support addicted workers through employee assistance programs, which we will discuss shortly in this chapter Long-term disability insurance provides a monthly benefit to employees who, due to ­illness or injury, are unable to work for an extended period of time Payments of long-term disability benefits usually begin after 3–6 months of disability and continue until retirement or for a specified number of months Payments generally equal a fixed percentage of pre-disability earnings Long-term disability insurance companies rely on a two-stage definition for long-term disability Long-term disability initially refers to illnesses or accidents that prevent an employee from performing his or her “own occupation” over a designated period The term own occupation applies to employees based on education, training, or experience After the designated period elapses, the definition becomes more inclusive by adding the phrase “inability to perform any occupation or to engage in any paid employment.” The second-stage definition is consistent with the concept of total disability in workers’ compensation programs (Chapter 11) Long-term disability plans traditionally covered only total disabilities Many long-term disability insurance carriers have more recently also added partial disabilities for the following reason Including partial disabilities results in cost savings because, in most cases, totally disabled individuals avoid paid employment because they would forfeit future disability benefits With the partial disabilities inclusion, long-term carriers provide supplemental benefits to cover a portion of income loss associated with part-time employment For example, long-term disability plans become effective when part-time employment falls below a designated level expressed as a percentage of income (adjusted for cost-of-living increases) prior to the qualifying event (e.g., below 75 or 80 percent) Full benefits usually equal 50–70 percent of monthly pretax salary, subject to a maximum dollar amount As for short-term plans, the monthly maximum may be as high as $5,000 Longterm benefits are generally subject to a waiting period of anywhere from months to year and usually become active only after an employee’s sick leave and short-term disability benefits have been exhausted Long-term disability plans also include preexisting condition and exclusion clauses These are similar to the provisions in short-term disability plans Long-term plans impose two waiting periods: preeligibility period and elimination period The preeligibility periods for short- and long-term plans are usually identical When companies offer both plans, the elimination period expires upon the exhaustion of short-term benefits As discussed earlier, long-term plans become effective immediately following the end of short-term benefit payments, making the elimination period virtually nonexistent When companies offer long-term plans only, the elimination period runs between and months following a disability Both short- and long-term disability plans may duplicate disability benefits mandated by the Social Security Act and state workers’ compensation laws (discussed in Chapter 11) These employer-sponsored plans generally supplement legally required benefits established by the Employee Retirement Income Security Act of 1974 (ERISA) Employer-sponsored plans not replace disability benefits mandated by law Life Insurance Employer-provided life insurance protects employees’ families by paying a specified amount to an employee’s beneficiaries upon the employee’s death Most policies pay some multiple of the employee’s salary (e.g., twice the employee’s annual salary) Employersponsored life insurance plans also frequently include accidental death and dismemberment M09_MART8863_08_GE_C09.indd 225 24/11/14 6:59 AM www.downloadslide.com 226    part IV  • Employee Benefits claims, which pay additional benefits if death was the result of an accident or if the insured incurs accidental loss of a limb There are three kinds of life insurance: term life insurance, whole life insurance, and universal life insurance Term life insurance, the most common type offered by companies, provides protection to employees’ beneficiaries only during a limited period based on a specified number of years (e.g., years) subject to a maximum age (e.g., 65 or 70) After that, the insurance automatically expires Neither the employee nor his or her beneficiaries receives any benefit upon expiration In order to continue coverage under a term life plan, an employee must renew the policy and make premium payments as long as he or she is younger than the maximum allowed age for coverage Whole life insurance pays an amount to the designated beneficiaries of the deceased employee, but unlike term policies, whole life plans not terminate until payment is made to beneficiaries As a result, whole life insurance policies are substantially more expensive than are term life policies, making the whole life insurance approach an uncommon feature of employersponsored insurance programs From the employee’s or his or her beneficiary’s perspective, whole life insurance policies combine insurance protection with a savings (or cash accumulation plan) because a portion of the money paid to meet the policy’s premium will be available in the future with a low fixed annual interest rate of usually no more than or percent Universal life insurance provides protection to employees’ beneficiaries based on the insurance feature of term life insurance and a more flexible savings or cash accumulation plan than found in whole life insurance plans Individuals can subscribe to life insurance on an individual basis by purchasing policies from independent insurance agents or representatives of insurance companies On the other hand, they can subscribe to group life insurance through their employers, which has clear benefits First, group plans allow all participants covered by the policy to benefit from coverage, and employers assume the burden of financing the plan either partly or entirely Second, group policies permit a larger set of individuals to participate in a plan at a lower cost per person than if each person had to purchase life insurance on an individual basis Retirement Programs  Retirement programs, which are often referred to as pension plans, provide income to employees and their beneficiaries during some or all of their retirement Individuals may participate in more than one pension program simultaneously It is not uncommon for employees to participate in pension plans sponsored by their companies [e.g., 401(k) plans] as well as in pension plans that they establish themselves [e.g., the individual retirement account (IRA)] Pension program design and implementation are quite complex, largely because of the many laws that govern their operations, particularly the Employee Retirement Income Security Act of 1974 (ERISA) We will take up a detailed treatment of retirement plan design and current issues at the forefront of a company’s decision whether to offer a retirement plan and, if so, in what form in Chapter 10 Health Protection Programs  Health protection has captured both employees’ and employers’ attention for several years From the employees’ perspective, health coverage is valuable, particularly as the costs of health care have increased dramatically Total health care expenditures rose by more than 5,000 percent from $26.9 billion in 1960 From the employers’ perspective, providing health care coverage is like a two-edged sword On one hand, the costs to extend health insurance coverage to employees are rising quickly, thereby representing a substantial cost burden On the other hand, companies recognize that offering comprehensive health insurance protection helps recruit and retain the best-qualified individuals, and employees stand to be more productive when they can afford to (and actually do) take care of health problems that could interfere with job performance There have been many innovations in approaches to offering health care coverage to employees We will discuss these innovations and key issues in Chapter 10 M09_MART8863_08_GE_C09.indd 226 24/11/14 6:59 AM www.downloadslide.com Chapter 9  •  Discretionary Benefits     227  Paid Time Off The second type of discretionary benefit is paid time off This category is relatively straightforward As the name implies, paid time off policies compensate employees when they are not performing their primary work duties The major types of paid time off are: • • • • • • • • • • • • • Holidays Vacation Sick leave Personal leave Jury duty Funeral leave Military leave Clean-up, preparation, or travel time Rest period “break” Lunch period Integrated paid time off policies Sabbatical leave Volunteerism Companies offer most paid time off as a matter of custom, particularly paid holidays, vacations, and sick leave In unionized settings, the particulars about paid time off are in the collective bargaining agreement The paid time off practices that are most typically found in unionized settings are jury duty, funeral leave, military leave, clean-up, preparation, travel time, rest period, and lunch period For employees and employers, paid time off benefits are significant These benefits provide employees the opportunity to balance work and nonwork interests and demands Companies stand to gain from sponsoring these benefits Employees may legitimately take time off from scheduled work without incurring loss of pay and benefits, which should help reduce unapproved absenteeism from work By keeping absenteeism in check, overall productivity and product or service quality should be higher These benefits also contribute toward positive employee attitudes and commitment to the company, particularly for employees with longer lengths of service As we will discuss shortly, the length of such paid time off as vacation can increase substantially with length of service As previously shown in Table 9-1, the majority of workers received paid time off in 2012 There have been three developments in paid time off offerings: integrated paid time off policies, sabbatical leave, and volunteerism We will discuss each of these practices in turn, highlighting the benefits of such paid time off practices to employers Integrated paid time off policies or paid time off banks combine holiday, vacation, sick leave, and personal leave policies into a single paid time off policy Such policies not distinguish among reasons for absence as specific policies The idea is to provide individuals the freedom to schedule time off without justifying the reasons This freedom should presumably substantially reduce the incidence of unscheduled absences that can be disruptive to the workplace because these policies require advance notice unless sudden illness is the cause (e.g., you went to sleep one evening feeling fine and then wake up the next morning on a scheduled work day with a stomach virus) Integrated paid time off policies have become an increasingly popular alternative to separate holiday, vacation, sick leave, and personal leave plans because they are more effective in controlling unscheduled absenteeism than other types of absence control policies.6 Integrated policies also relieve the administrative burden of managing separate plans and the necessity to process medical certifications in the case of sick leave policies Paid time off banks not incorporate all types of time off with pay Bereavement and funeral leave are stand-alone policies because the death of a friend or relative is typically an unanticipated event beyond an employee’s control Integrating funeral leave into paid time off banks would also likely create dissatisfaction among workers because it would signal that M09_MART8863_08_GE_C09.indd 227 24/11/14 6:59 AM www.downloadslide.com 228    part IV  • Employee Benefits grieving for a deceased friend or relative is equivalent to a casual day off Jury duty and witness leave, military leave, and nonproduction time are influenced by law, and nonproduction time is negotiated as part of a collective bargaining agreement Sabbatical leaves are also not included in paid time off banks because these are extended leaves provided as a reward to valued, long-service employees Sabbatical leaves are paid time off for such professional activities as a research project or curriculum development These practices are common in college and university settings and apply most often to faculty members Most universities grant sabbatical leaves to faculty members who meet minimum service requirements (e.g., years of full-time service) with partial or full pay for up to an entire academic year The service requirement is applied each time, which limits the number of leaves taken per faculty member Outside academia, sabbatical leaves are usually limited to professional and managerial employees who stand to benefit from intensive training opportunities outside the company’s sponsorship Sabbatical leaves are most suitable for such employees as computer engineers whose standards of knowledge or practice are rapidly evolving Companies establish guidelines regarding qualification, length of leave, and level of pay An important guideline pertains to minimum length of employment following completion of a sabbatical For example, companies require employees to remain employed for a minimum of year following the sabbatical or repay part or all of one’s salary received during the sabbatical This provision is necessary to protect a c­ ompany’s investment and to limit moves to competitors Volunteerism refers to giving of one’s time to support a meaningful cause More and more companies are providing employees with paid time off to contribute to causes of their choice From a company’s standpoint, a meaningful cause is associated with the work of notfor-profit organizations such as the United Way to help improve the well-being of people There are a multitude of meaningful causes throughout the world including improving literacy, providing comfort to terminally ill patients, serving food at shelters for individuals who cannot afford to feed themselves, serving as a mentor to children who not have one or more parents, and spending time with elderly or disabled residents of nursing homes who may no longer have living friends or family Companies generally not dictate the causes for which employees would receive paid time off, except they exclude political campaign and political action groups for eligibility because of possible conflicts of interest with company shareholders and management Companies favor providing paid time off for volunteer work for three reasons First, volunteer opportunities allow employees to balance work and life demands Second, giving employees the opportunity to contribute to charitable causes on company time represents positive corporate social responsibility, enhancing the company’s overall image in the public eye Third, paid time off to volunteer is believed to help promote retention Employees are likely to feel that the employer shares similar values, possibly boosting commitment to the company The amount of time off ultimately varies considerably from company to company, ranging anywhere between 1 hour per week and, in limited cases for long-service employees, several weeks Services Employee Assistance Programs  Employee assistance programs (EAPs) help employees cope with such personal problems that may impair their job performance as alcohol or drug abuse, domestic violence, the emotional impact of AIDS and other diseases, clinical depression, and eating disorders EAPs are widely used Companies offer EAPs because many employees are likely to experience difficulties that interfere with job performance Although EAP costs are substantial, the benefits seem to ­outweigh the costs For example, the annual cost per employee of an EAP is approximately $50– $60 Anecdotal evidence, however, indicates that employers’ gains outweigh their out-of-pocket expenses for EAPs: savings from reduced employee turnover, absenteeism, medical costs, unemployment insurance rates, workers’ compensation rates, accident costs, and disability insurance M09_MART8863_08_GE_C09.indd 228 24/11/14 6:59 AM www.downloadslide.com  Chapter 9  •  Discretionary Benefits     229 costs Most important, the majority of employees who take advantage of EAP resources benefit; unfortunately, large-scale evaluation studies are virtually nonexistent Depending on the employer, EAPs provide a range of services and are organized in various ways In some companies, EAPs are informal programs developed and run on-site by in-house staff Other employers contract with outside firms to administer their EAPs, or they rely on a combination of their own resources and help from an outside firm Family Assistance Programs  Family assistance programs help employees provide elder care and child care Elder care programs provide physical, emotional, or financial assistance for aging parents, spouses, or other relatives who are not fully self-sufficient because they are too frail or disabled Child care programs focus on supervising preschool-age dependent children whose parents work outside the home Many employees now rely on elder care programs because of their parents’ increasing longevity and the growing numbers of dual-income families Child care needs arise from the growing number of single parents and dual-career households with children A variety of employer programs and benefits can help employees cope with their family responsibilities The programs range from making referrals to on-site child care or elder care centers to company-sponsored day care programs, and they vary in the amount of financial and human resources needed to administer them The least expensive and least labor-intensive programs are generally referral services Referral services are designed to help workers identify and take advantage of available community resources, conveyed through such media as educational workshops, videos, employee newsletters and magazines, and EAPs Flexible scheduling and leave allows employees the leeway to take time off during work hours to care for relatives or react to emergencies Flexible scheduling, which includes compressed work weeks (e.g., 10-hour days or 12-hour days), flextime, and job sharing, helps employees balance the demands of work and family In addition to flexible work scheduling, some companies allow employees to extend their legally mandated leave sanctioned by the Family and Medical Leave Act (see Chapter 11) Under extended leave, employers typically continue to provide such employee benefits as insurance and promise to secure individuals comparable jobs upon their return Day care is another possible benefit Some companies subsidize child or elder day care in community-based centers Elder care programs usually provide self-help, meals, and entertainment activities for the participants Child care programs typically offer supervision, preschool preparation, and meals Facilities must usually maintain state or local licenses Tuition Reimbursement  Companies offer tuition reimbursement programs to promote their employees’ education Under a tuition reimbursement program, an employer fully or partially reimburses an employee for expenses incurred for education or training There is substantial variability in the percentage of tuition an employer reimburses Some companies vary the percentage of tuition reimbursed according to the relevance of the course to the companies’ goals or the grades employees earn Tuition reimbursement programs are not synonymous with pay-for-knowledge programs (Chapter 5) Instead, they fall under the category of employee benefits Under these programs, employees choose the courses they wish to take when they want to take them In addition, employees may enroll in courses that are not directly related to their work As we discussed in Chapter 5, pay-for-knowledge is one kind of core compensation Companies establish set curricula that employees take, and they generally award pay increases to employees who successfully complete courses within the curricula Pay increases are not directly associated with tuition reimbursement programs Transportation Services  Some employers sponsor transportation services programs that help bring employees to the workplace and back home again by using more energy-efficient forms of transportation They may sponsor public transportation or vanpools: employer-sponsored vans or buses that transport employees between their homes and the workplace M09_MART8863_08_GE_C09.indd 229 24/11/14 6:59 AM www.downloadslide.com 230    part IV  • Employee Benefits Employers provide transit subsidies to employees working in metropolitan and suburban areas served by mass transportation (e.g., buses, subways, and trains) Companies may offer transit passes, tokens, or vouchers Practices vary from partial subsidy to full subsidy Many employers must offer transportation services to comply with the law Local and state governments increasingly request that companies reduce the number of single-passenger automobiles commuting to their workplace each day because of government mandates for cleaner air The Clean Air Act Amendments of 1990 require employers in such large metropolitan areas as Los Angeles to comply with state and local commuter-trip reduction laws Employers may also offer transportation services to recruit individuals who not care to drive in rush-hour traffic Furthermore, transportation services enable companies to offset deficits in parking space availability, particularly in congested metropolitan areas Employees obviously stand to benefit from these transportation services For example, using public transportation or joining a vanpool often saves money by eliminating such commuting costs as gas, insurance, car maintenance and repairs, and parking fees Moreover, commuting time can be quite lengthy for some employees By leaving the driving to others, employees can use the time more productively by reading, completing paperwork, or “unwinding.” Outplacement Assistance  Some companies provide technical and emotional support through outplacement assistance to employees who are being laid off or terminated They so with a variety of career and personal programs designed to develop employees’ job-hunting skills and strategies and to boost employees’ self-confidence A variety of factors leads to employee termination Those best suited to outplacement assistance programs include: • • • • • • Layoffs due to economic hardship Mergers and acquisitions Company reorganizations Changes in management Plant closings or relocation Elimination of specific positions, often the result of changes in technology Outplacement assistance provides such services as personal counseling, career assessments and evaluations, training in job search techniques, resume and cover letter preparation, interviewing techniques, and training in the use of such basic workplace technology as computers Although beneficial to employees, outplacement assistance programs hold possible benefits for companies as well They can promote a positive image of the company among those being terminated, as well as their families and friends, by helping these employees prepare for employment opportunities Wellness Programs   In the 1980s, employers began sponsoring wellness programs to promote and maintain employees’ physical and psychological health Wellness programs vary in scope They may emphasize weight loss only, or they may emphasize a range of activities such as weight loss, smoking cessation, and cardiovascular fitness Programs may be offered on- or off-site Although some companies invest in staffing professionals for wellness programs, others contract with such external vendors as community health agencies or private health clubs Although wellness programs are relatively new, some evidence already indicates that these innovations can save companies money and reduce employees’ needs for health care Smoking cessation, stress reduction, nutrition and weight loss, exercise and fitness activities, and health-screening programs are the most common workplace wellness programs Smoking cessation plans range from simple campaigns that stress the negative aspects of smoking to intensive programs directed at helping individuals to stop smoking Many employers offer courses and treatment to help and encourage smokers to quit Other options include offering nicotine replacement therapy (e.g., nicotine gum and patches) and self-help services Many companies sponsor M09_MART8863_08_GE_C09.indd 230 24/11/14 6:59 AM www.downloadslide.com 394    Glossary Public Company Accounting Oversight Board (PCAOB) See Sarbanes-Oxley Act of 2002 Repatriation  is the process of making the transition from the distribution of data, usually annual base pay amount, based on four groupings an international assignment and living abroad to a domestic assignment and living in the home country Restricted stock,  a type of executive deferred compensation, requires that executives not have any ownership control over the disposition of the stock for a predetermined period, often to 10 years Retirement programs  provide income to individuals and beneficiaries throughout their retirement Also called pension plans Right to control test  helps companies determine whether their workers are employees or independent contractors Rucker plan  is a particular type of gain sharing program that emphasizes employee involvement Gain sharing awards are based on the ratio between value added (less the costs of materials, supplies, and services rendered) and the total cost of employment Range spread  is the difference between the maximum Sabbatical leaves  are paid time off for professional devel- Qualified plans  are welfare and pension plans that meet various requirements set forth by the Employee Retirement Income Security Act of 1974; these plans entitle employees and employers to favorable tax treatment by deducting the contributions from taxable income Qualified plans not disproportionately favor highly compensated employees Quarters allowance  is the U.S Department of State term for housing and utilities allowances Quarters of coverage  refers to each 3-month period of employment during which an employee contributes to the retirement income program under the Social Security Act of 1935 Quartiles  allow compensation professionals to describe and the minimum pay rates of a given pay grade Rating errors  in performance appraisals reflect differences opment activities such as professional certification, conducting research, and curriculum development between human judgment processes versus objective, accurate assessments uncolored by bias, prejudice, or other subjective, extraneous influences Safe harbors  refer to compliance guidelines in a law or Real hourly compensation measures the purchasing performing their jobs, regardless of the actual number of hours worked Companies generally measure salary on an annual basis power of a dollar Recertification  ensures that employees periodically dem- onstrate mastery of all the jobs they have learned Recoverable draws  act as company loans to employees that are carried forward indefinitely until employees sell enough (i.e., earn a sufficient amount in commissions) to repay their draws Red circle rates  represent pay rates that are higher than the designated pay range maximums Referral plans  are individual incentive pay plans that reward employees for referring new customers or recruiting successful job applicants Regression analysis  describes the linear relationship between two variables (i.e., simple regression) or between the linear composite of multiple variables and one other variable (i.e., multiple regression) Rehabilitation Act  mandates that federal government agencies take affirmative action in providing jobs for individuals with disabilities (401 FEP Manual 325) Relevant labor markets  represent the fields of potentially qualified candidates for particular jobs Reliable job analysis  yields consistent results under simi- lar conditions Relocation assistance payments  cover expatriates’ expenses to relocate to foreign posts Z01_MART8863_08_GE_GLOS.indd 394 regulation Salary  is one type of base pay Employees earn salaries for Salary-only plans  are specific types of sales compensa- tion plans Sales professionals receive fixed-base compensation, which does not vary with the level of units sold, increase in market share, or any other indicator of sales performance Salary-plus-bonus plans  are specific types of sales com- pensation plans Sales professionals receive fixed base compensation, coupled with a bonus Bonuses are usually single payments that reward employees for achievement of specific, exceptional goals Salary-plus-commission plans  are particular types of sales compensation plans Sales professionals receive fixed base compensation and commission Sales value of production (SVOP)  is the sum of sales rev- enue plus the value of goods in inventory This is part of the equation to determine payout amounts in Scanlon gain sharing plans Sarbanes-Oxley Act of 2002 mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures, and combat corporate and accounting fraud in response to corporate accounting scandals in Enron, Tyco, and other large U.S corporations The act established Public Company Accounting Oversight Board (PCAOB) to oversee the activities of the auditing profession 15/11/14 5:39 PM www.downloadslide.com Glossary    395  Say on pay  gives company shareholders the right to vote yes or no on executive compensation proposals, including current and deferred components, including golden parachute agreements, at least once every years Although the say on pay provision guarantees shareholders the right to vote on executive compensation proposals, the vote is nonbinding Scanlon plan  is a specific type of gain sharing program that emphasizes employee involvement Gain sharing awards are based on the ratio between labor costs and sales value of production Scientific management practices   promote labor cost control by replacing inefficient production methods with efficient production methods Second surgical opinion  is a feature of many health insurance plans, reducing unnecessary surgical procedures and costs by encouraging an individual to seek an independent opinion from another doctor Section 401(k) plans  are qualified retirement plans named after the section of the IRC that created them These plans permit employees to defer part of their compensation to the trust of a qualified defined contribution plan Only private sector or tax-exempt employers are eligible to sponsor 401(k) plans Securities and Exchange Commission (SEC)  is a nonpartisan, quasi-judicial federal government agency with responsibility for administering federal securities laws Securities Exchange Act of 1934  applies to the disclosure of executive compensation Self-Employment Contributions Act (SECA)  requires self-employed individuals to contribute to the OASDI and Medicare programs but at a higher tax rate than required for non-self-employed individuals Self-funded plans  are similar to commercial insurance plans with one key difference: Companies typically draw from their own assets to fund claims when self-funded Self-funding  refers to health insurance plans that pay benefits directly from an employer’s assets Seniority pay  systems reward employees with permanent additions to base pay periodically, according to employees’ length of service performing their jobs Services  represent discretionary employee benefits that provide enhancements to employees and their families (e.g., tuition reimbursement and day care assistance) Severance pay  usually includes several months of pay following involuntary termination and, in some cases, continued coverage under the employer’s medical insurance plan Employees often rely on severance pay to meet financial obligations while searching for employment Z01_MART8863_08_GE_GLOS.indd 395 Short-term disability  refers to an inability to perform the duties of one’s regular job usually for fewer than months Short-term disability insurance  provides income benefits for limited periods of time, usually less than months Similar-to-me effect  refers to the tendency on the part of raters (e.g., supervisors) to judge employees favorably who they perceive as similar to themselves Simple ranking plan,  a specific method of job evaluation, orders all jobs from lowest to highest according to a single criterion (e.g., job complexity or the centrality of the job to the company’s competitive strategy) Single coverage  extends health insurance benefits only to the covered employee Six-year graduated schedule  allows workers to become 20 percent vested after years and to vest at a rate of 20 percent each year thereafter until they are 100 percent vested after years of service Skill,  based on Equal Employment Opportunity Commission guidelines, refers to an observable competence to perform a learned psychomotor act Skill-based pay,  used mostly for employees who phys- ical work, increases these workers’ pay as they master new skills Skill blocks model,  a kind of pay-for-knowledge program, applies to jobs from within the same job ­family Just as in the stair-step model, employees progress to increasingly complex jobs; however, skills not necessarily build on each other in a skill blocks program Skill (knowledge) blocks  are sets of skills (knowledge) necessary to perform a specific job (e.g., typing skills versus analytical reasoning) or group of similar jobs (e.g., junior accounting clerk, intermediate accounting clerk, and senior accounting clerk) Smoking cessation plans  are particular types of wellness programs that stress the negative aspects of smoking and can include intensive programs directed at helping individuals to stop smoking Social comparison theory  provides an explanation for executive compensation determination based on the tendency for the board of directors to offer executive compensation packages that are similar to those in peer companies Social Security Act of 1935 (Title IX)  established three main types of legally required benefits: unemployment insurance, retirement income and benefits for dependents, and medical insurance (Medicare) Sorting effect  addresses an employee’s choice to stay versus leave his or her employer for another job, presumably one without an incentive pay contingency 15/11/14 5:39 PM www.downloadslide.com 396    Glossary Spillover effect  refers to nonunion companies’ offer of similar compensation as offered by union companies to their employees The goal is to reduce the likelihood that nonunion workforces will seek union representation Staff employees  support the functions performed by line employees Human resources and accounting are examples of staff functions Stair-step model,  a type of pay-for-knowledge pro- gram, resembles a flight of stairs The steps represent jobs from a particular job family that differ in terms of complexity Skills at higher levels build upon previous lower-level skills Supplemental life insurance  protection represents additional life insurance offered exclusively to executives Companies design executives’ supplemental life i­nsurance protection to increase the value of executives’ estates, bequeathed to designated beneficiaries (usually family members) upon their death, and to provide greater benefits than standard plans usually allow Supplemental retirement plans,  offered to executives, are designed to restore benefits restricted under qualified plans Tactical decisions  support competitive strategy Standard deviation  refers to the mean distance of each Target plan bonuses,  awarded to executives, are based State governments  enact and enforce laws that pertain Tax equalization  is one of two approaches (the other is s­ alary figure from the mean (i.e., how larger observations fluctuate above the mean and how small observations fluctuate below the mean) exclusively to their respective regions (e.g., Illinois and Michigan) Stock appreciation rights,  a type of executive deferred compensation, provide executives income at the end of a designated period, much like restricted stock options; however, executives never have to exercise their stock rights to receive income The company simply awards payment to executives based on the difference in stock price between the time the company granted the stock rights at fair market value to the end of the designated period, permitting the executives to keep the stock Stock compensation plans  are companywide incentive plans that grant employees the right to purchase shares of company stock Stock options  describe an employee’s right to purchase company stock Straight commission  is based on a fixed percentage of the sales price of the produce or service Strategic analysis  entails an examination of a company’s external market context and internal factors Examples of external market factors include industry profile, information about competitors, and long-term growth prospects Internal factors encompass financial condition and functional capabilities (e.g., marketing and human resources) Strategic decisions  support business objectives Strategic management  entails a series of judgments, under uncertainty, that companies direct toward achieving specific goals Stress management  is a specific kind of wellness pro- gram designed to help employees cope with many factors inside and outside their work that contribute to stress Strictness errors  occur when raters (e.g., supervisors) judge employee performance to be less than what it is when compared against objective criteria Z01_MART8863_08_GE_GLOS.indd 396 on executives’ performance Executives not receive bonuses unless their performance exceeds minimally acceptable standards tax protection) to provide expatriates tax allowances Employers take the responsibility for paying income taxes to the U.S and foreign governments on behalf of the expatriates Tax protection  is one of two approaches (the other is tax equalization) to provide expatriates tax allowances Employers reimburse expatriates for the difference between the actual income tax amount and the hypothetical tax when the actual income tax amount—based on tax returns filed with the Internal Revenue Service— is greater Taxable wage base  limits the amount of annual wages or payroll cost per employee subject to taxation to fund OASDI programs Team-based  or small-group incentive plans a small group of employees shares a financial reward when a specific objective is met Telecommuting  represents alternative work arrangements in which employees perform work at home or some other location besides the office Temporary employment agencies  place individuals in client companies as employees on a temporary basis Term life insurance  is the most common type of life insur- ance offered by companies; provides protection to an employee’s beneficiaries only during a limited period based on a specified number of years or maximum age After that, insurance automatically expires Third country nationals (TCNs)  are foreign national citi- zens who work in U.S companies’ branch offices or manufacturing plants in foreign countries—excluding the United States and their home countries Time-and-motion studies  analyzed the time it took employees to complete their jobs Factory owners used time-and-motion studies and job analysis to meet this objective 15/11/14 5:39 PM www.downloadslide.com Glossary    397  Title I of the Americans with Disabilities Act of 1990 (ADA)  requires that employers provide “reasonable accommodation” to disabled employees Reasonable accommodation may include such efforts as making existing facilities readily accessible, job restructuring, and modifying work schedules Title VII of the Civil Rights Act of 1964  indicates that it shall be an unlawful employment practice for an employer to discriminate against any individual with respect to compensation, terms, conditions, or privileges of employment because of such individual’s race, color, religion, sex, or national origin Torts  are laws offering remedies to individuals harmed by the unreasonable actions of others Tort claims usually involve state law and are based on the legal premise that individuals are liable for the consequences of their conduct if it results in injury to others Tort laws involve civil suits, which are actions brought to protect an individual’s private rights Tournament theory  provides an explanation for execu- tive compensation determination based on substantially greater competition for high-ranking jobs Lucrative chief executive compensation packages represent the prize to those who win the competition by becoming chief executives Trait system,  a type of performance-appraisal method, requires raters (e.g., supervisors or customers) to evaluate each employee’s traits or characteristics (e.g., quality of work, quantity of work, appearance, dependability, cooperation, initiative, judgment, leadership responsibility, decision-making ability, and creativity) Transportation services  represent energy-efficient ways to transport employees to and from the workplace Employers cover part or all of the transportation costs Troubled Assets Relief Program (TARP) See Emergency Economic Stabilization Act of 2008 (EESA) Tuition reimbursement programs  promote employees’ education Under a tuition reimbursement program, an employer fully or partially reimburses an employee for expenses incurred for education or training Two-tier pay structures  reward newly hired employees less than established employees on either a temporary or permanent basis Underemployment  refers to employees who wish to work full-time but are forced to work part-time for economic reasons, such as poor business conditions or inability to find a job, both of which are common problems during economic recessions Universal compensable factors,  based on the Equal Pay Act of 1963, include skill, effort, responsibility, and working conditions Universal life insurance  provides protection to employees’ beneficiaries based on the insurance feature of term life Z01_MART8863_08_GE_GLOS.indd 397 insurance and a more flexible savings or cash accumulation plan than is found in whole life insurance plans Value-added formula  is the difference between the value of the sales price of a product and the value of materials purchased to make the product This is part of the equation to determine payout amounts in Rucker gain sharing plans Variable pay See incentive pay Variation  represents the amount of spread or dispersion in a set of data Vertical knowledge  refers to knowledge traditionally associated with supervisory activities (e.g., performance appraisal and grievance review procedures) Vertical skills  are those skills traditionally considered supervisory skills (e.g., scheduling, coordinating, training, and leading others) Vesting  refers to employees’ acquisition of nonforfeitable rights to pension benefits Vietnam Era Veterans Readjustment Assistance Act  applies the principles of the Rehabilitation Act to veterans with disabilities and veterans of the Vietnam War (401 FEP Manual 379) Violations of an affirmative duty  are violations taking place when an employer fails to reveal the exposure of one or more workers to harmful substances or when the employer does not disclose a medical condition typically caused by exposure Voluntary part-time employees  choose to work fewer than 35 hours per regularly scheduled workweek Volunteerism  refers to giving of one’s time to support a meaningful cause More and more companies are providing employees with paid time off to contribute to causes of their choice Wage See hourly pay Wall Street Reform and Consumer Protection Act of 2010  enhances the transparency of executive com- pensation practices Also commonly referred to as the Dodd-Frank Act Walling v A H Belo Corp  requires employers to guaran- tee fixed weekly pay for employees whose work hours vary from week to week when certain conditions are met Walsh–Healey Public Contracts Act of 1936 mandates that contractors with federal contracts meet guidelines regarding wages and hours, child labor, convict labor, and hazardous working conditions Contractors must observe the minimum wage and overtime provisions of the FLSA In addition, this act prohibits the employment of individuals younger than 16 and convicted criminals Furthermore, it prohibits contractors from exposing workers to any conditions that violate the Occupational Safety and Health Act 15/11/14 5:39 PM www.downloadslide.com 398    Glossary Weight control and nutrition programs,  a particu- lar type of wellness program, are designed to educate employees about proper nutrition and weight loss, both of which are critical to good health Welfare practices  were generous endeavors undertaken by some employers, motivated to minimize employees’ desire to seek union representation, to promote good management, and to enhance worker productivity Wellness programs  promote employees’ physical and psychological health Whole life insurance   is a type of life insurance that provides protection to employees’ beneficiaries during employees’ employment and into the retirement years Work context  information describes physical and social factors that influence the nature of work Work styles  are personal characteristics that describe important interpersonal and work style requirements in jobs and occupations Worker characteristics  refer to ability, interests, and work styles Z01_MART8863_08_GE_GLOS.indd 398 Worker requirements  represent the minimum qualifica- tions and skills that people must have to perform a particular job Such requirements usually include education, experience, licenses, permits, and specific abilities such as typing, drafting, or editing Worker specifications,  a section in job descriptions, lists the education, skills, abilities, knowledge, and other qualifications individuals must possess to perform the job adequately Workers’ compensation  refers to state-run insurance pro- grams that are designed to cover medical, rehabilitation, and disability income expenses resulting from employees’ work-related accidents Workforce characteristics  refer to variables that define and describe the general characteristics of occupations that may influence occupational requirements Working condition fringe benefits  refer to the work equipment (e.g., computer) and services (e.g., an additional telephone line) employers purchase for telecommuters’ use at home Working conditions  are the social context or physical environment where work will be performed 15/11/14 5:39 PM www.downloadslide.com Author Index Note: The letters “f” and “t” following the locators refers to figure and table cited in the text Aaron v City of Wichita, Kansas, 45, 67 (2) Age Discrimination in Employment Act of 1967 (ADEA), 51–52, 203, 212, 315 Aguinis, H., 161 (1) American Society for Training and Development, 134 (9), 210, 220 (18, 20) American Taxpayers Relief Act of 2012, 260 American with Disabilities Act (ADA) Amendments Act of 2008, 144, 144t Americans with Disabilities Act of 1990 (ADA), 53–54, 144, 144t, 315, 319 Andres v DuBois, 46, 67 (3) Atonio v Wards Cove Packing Co., 52, 68 (10) Baker, L C., 280 (23) Balanced Budget Act of 1997, 264 Balkin, D B., 219 (9) Balkin, D R., 116 (2) Barber, A E., 280 (24) Baron, J N., 39 (4) Barrett, G V., 94 (23) Bean, Leon Leonwood, 78 Beatty, R W., 93 (14), 94 (19, 26) Becker, G., 39 (2), 93 (2) Belcher, J G., Jr., 117 (15) Bennett Amendment, 50 Bennett-Alexander, D D., 67 (1) Bernardin, H J., 93 (14), 94 (19, 26) Blanchflower, D G., 68 (17) Blum, M L., 94 (25) Boureslan v Aramco, 52, 68 (12) Brady, T E F., 364 (6, 8) Brito v Zia Company, 83, 94 (22) Bullock, R J., 117 (21) Bureau of National Affairs, 68 (13), 134 (2), 219 (1), 343, 349 (3) Butler, R J., 220 (27) Cameron, M., 117 (12) Canavan, J., 134 (7) Cardy, R L., 94 (30) Carey, J F., 220 (14) Carnevale, A P., 40 (9), 134 (12) Carrell, M R., 134 (16) Cascio, W F., 161 (1) Caudron, S., 134 (18) Cayer, N J., 93 (1, 4) Civil Rights Act of 1964, 47, 49–53 Civil Rights Act of 1991, 37, 52–53 Clean Air Act Amendments of 1990, 230 Cleveland, J N., 94 (31) Coe v Cascade Wood Components, 94 (21) Cohen, S G., 94 (32), 117 (25) Colletti-Fiss, J A., 220 (16) Colletti-Fiss, M S., 220 (16) Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 57–58, 57t, 271, 316, 318 Crystal, G S., 305 (16), 306 (19, 24) Cummings, L L., 117 (10) Darby, T J., 364 (6, 15, 33), 365 (41, 45, 52) Davis–Bacon Act of 1931, 54, 194 de Buen Lozano, N., 364 (15, 17, 23) de Buen Unna, C., 364 (15, 17, 23) Defense of Marriage Act, 378–379 Deficit Reduction Act of 1984, 57 Dewey, B J., 220 (21) Dichter, M S., 365 (45) Dobbin, F., 39 (4) Dobbins, G H., 94 (30) Doeringer, P B., 134 (10) Doty, D H., 134 (4), 220 (25) Dougherty, E., 220 (26) Doyle, R J., 117 (16) Drucker, P., 116 (8) Dubofsky, M., 116 (5), 279 (10) Dulles, F R., 116 (5), 279 (10) Dunham, R B., 280 (24) Dutton, J E., 40 (11) Economic Growth and Tax Relief Reconciliation Act of 2001, 57, 239–240, 242 EEOC v Chrysler, 51, 67 (8) EEOC v Madison Community Unit School District No 30, 48, 67 (5) Eilbirt, H., 40 (7) Eisenhardt, K M., 305 (19) Elbert, N F., 134 (16) Emergency Economic Stabilization Act of 2008 (EESA), 286 Employee Retirement Income Security Act of 1974 (ERISA), 55–57, 225, 226, 237, 239, 240–241, 242, 245, 315, 318, 319, 379 Equal Pay Act of 1963, 22, 36, 47–50, 83, 143, 203 Erickson, C L., 219 (13) Evered, R D., 94 (28) Fair Labor Standards Act of 1938 (FLSA), 22, 34, 34t, 44–47, 45t, 143, 194, 310, 315, 317, 319, 323 Family and Medical Leave Act of 1993 (FMLA), 25, 53, 54, 61t, 229, 269–270, 291, 319, 340, 379 Federal Employees’ Compensation Act, 266 Federal Insurance Contributions Act (FICA), 55, 258, 264–265, 269 Federal Unemployment Tax Act (FUTA), 55, 261, 269, 344 Fein, Mitchell, 108 Festinger, L., 306 (22) Filipowski, D., 134 (20) Fivars, G., 93 (15) Floudas, D A., 364 (3) Foley, Donald, 290 Formisano, R., 280 (24) Freeman, R B., 68 (17) Garcia, F L., 349 (2) Geare, A J., 117 (23) Gerhart, B., 134 (6) Ghiselli, E E., 94 (29) Giancola, F., 134 (5), 220 (29) Gomes, L C M., 364 (33) Gómez-Mejía, L R., 116 (2), 219 (9), 305 (19) Goodman, P S., 306 (19) Goodridge v Mass Department of Public Health, 380 (14) Gordon, M E., 94 (29) Government Employee Rights Act of 1991, 61t Graham-Moore, B., 117 (19) Green, L B., 257 (23) Greene, R J., 117 (14) Gupta, N., 134 (4), 134 (17, 20), 220 (23, 25) Hackman, J R., 134 (15) Haire, M., 94 (29) Hannah, Jay, 31 Hardin, T., 305 (1) Hartman, L P., 67 (1) Hatfield, R D., 134 (16) Health Insurance Portability and Accountability Act of 1996 (HIPAA), 58 Health Maintenance Organization Act of 1973 (HMO Act), 245 Heenan, R L., 364 (6, 8) Heneman, R L., 93 (9), 219 (5, 7, 10) Horn, M E., 349 (4) Ichino, A C., 219 (13) Immelt, Jeffrey, 122–123 Internal Revenue Code (IRC), 55, 68 (14), 239–240, 254, 257, 305 (3, 5, 7, 8, 10, 11, 13, 14), 319, 344, 349 (5) Irvine, D., 380 (11) Jackson, S E., 40 (11), 116 (9) James, K C., 93 (5) Jenkins, G D., Jr., 134 (4), 134 (17, 20), 220 (23, 25) Jennings, P D., 39 (4) Jensen, M., 305 (19) Jensen, M C., 306 (20) Johnston, J W., 40 (9), 134 (12) Kahneman, D., 306 (23) Kanin-Lovers, J., 117 (12) Kanter, R M., 117 (10) Katz, H C., 68 (18), 93 (3) Keenan, W., Jr., 220 (17) Keller, W L., 364 (6, 15, 33), 365 (41, 45, 52) Kendall, L M., 94 (16) Kenner, J., 365 (41) Kernan, M C., 94 (23) Kernel, R C., 93 (6) Khatiwada, I., 380 (3) Klein, A L., 219 (4) Kochan, T R., 68 (18), 93 (3) 399 Z02_MART8863_08_GE_AIDX.indd 399 15/11/14 5:52 PM www.downloadslide.com 400    Author Index Krefting, L A., 93 (12), 219 (6, 9) Krueger, A B., 68 (19), 280 (23) Krzystofiak, F., 219 (9) Kuhlman, D C., 220 (15) Lang, K., 68 (19) Latham, G P., 93 (11), 94 (17, 18, 24) Latta, Geoffrey W., 334 Lauffs, A W., 365 (60, 62) Lawler, E E., III, 94 (32), 117 (21, 25), 134 (14, 15), 161 (5) Lazear, E P., 116 (7), 306 (19, 21) Ledbetter v Goodyear Tire & Rubber Co., 49–50, 67 (6) Ledford, G E., Jr., 134 (1, 3, 4), 220 (25) Lengnick-Hall, C A., 40 (10) Lengnick-Hall, M L., 40 (10) Leonard, B., 40 (15) Leonard, J S., 68 (19) Lesiur, F G., 117 (20) Lilly Ledbetter Fair Pay Act of 2009, 50 Longshore and Harborworkers’ Compensation Act, 266 Lorance v AT&T Technologies, 52, 68 (11) Lutringer, R., 365 (45) Mahoney, T A., 93 (12), 219 (6) Main, B G., 306 (19, 24) Manoli, R., 219 (3) Manz, C C., 134 (11) Markowich, M M., 235 (6) Martocchio, J J., 235 (5), 280 (21, 25, 27), 305 (12), 380 (10) McKersie, R B., 68 (18), 93 (3) McMillan, A., 219 (4) Meckling, W H., 305 (19), 306 (20) Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 254, 264 Mental Health Parity Act and Addiction Equity Act of 2008, 253 Milkovich, G T., 117 (18), 183 (2) Moorage, K S., 93 (6) Munn, G G., 349 (2) Murphy, K R., 94 (31) Murray, B., 134 (6) Myers, D W., 117 (24) Nackley, J V., 280 (19) Nadler, D A., 134 (15) National Labor Relations Act of 1935 (NLRA), 61–62, 71, 223, 319 National Labor Relations Board (NLRB), 62 National Pride at Work, Inc v Governor of Michigan and City of Kalamazoo, 380 (16) Naylor, J C., 94 (25) Newman, J M., 117 (18), 183 (2), 219 (9) Noe, R A., 220 (24) Z02_MART8863_08_GE_AIDX.indd 400 Occupational Safety and Health Act of 1970, 55 Old Age, Survivor, and Disability Insurance (OASDI), 55, 236, 261, 265 Older Workers Benefit Protection Act (OWBPA), 51–52 O’Reilly, C A., III, 306 (19, 24) Osburn, J., 68 (19) Patient Protection and Affordable Care Act of 2010 (PPACA), 59–60, 264, 375–376 Paycheck Fairness Act proposals, 50 Peck, C., 93 (7), 116 (1, 6), 117 (17) Pension Protection Act of 2006, 58–59, 238, 240, 258 Person, H S., 40 (5) Pfeffer, J., 40 (8) Pinto, J N., 219 (8) Pires, P R F., 364 (33) Portal-to-Portal Act of 1947, 46 Pregnancy Discrimination Act of 1978 (PDA), 53, 224 Pulliam Phillips, P., 220 (19) Rambo, W W., 219 (8) Reddy, S., 134 (13) Rehabilitation Act of 1973, 61t Reiter, G., 219 (4) Rejda, G E., 280 (11) Revenue Act of 1921, 237 Risher, H H., 220 (27) Rojas, L G., 364 (3) Rosen, S., 306 (19, 21) Rosow, J., 220 (22) Ross, T., 117 (19) Rucker, Allan W., 106 Sarbanes-Oxley Act of 2002, 290–291 Scanlon, Joseph, 105 Schay, B W., 220 (28) Schick, J., 305 (1) Schilder, J., 134 (19) Schulman v Attorney General, 380 (15) Schuster, J R., 116 (4), 117 (13), 134 (8) Schweizer, T P., 134 (17) Scott, D., 117 (14) Securities Exchange Act of 1934, 296, 296t Self-Employment Contributions Act (SECA), 265 Selman, J C., 94 (28) Sidhu, Jay S., 290 Simpson, J A., 117 (11) Sims, H P., Jr., 134 (11) Singhania, R., 365 (52, 55) Smith, B T., 117 (22) Smith, P., 94 (16) Social Security Act of 1935 (Title IX), 25, 43–44, 225, 244–245, 259–266, 340, 379 Society for Human Resource Management, 214 Solnick, L., 68 (16), 235 (4) Staw, B M., 117 (10) Sum, A., 380 (3) Summers, L H., 68 (19) Tax Equity and Fiscal Responsibility Act of 1982, 57 Tax Reform Act of 1986, 57 Title I, Americans with Disabilities Act, 53–54 Title VII, Civil Rights Act of 1964, 49–53, 83, 203, 212, 315, 319 Tompkins, N C., 280 (22) Toossi, M., 380 (9) Tosi, H L., Jr., 305 (19) Tsui, A S., 40 (18) Tversky, A., 306 (23) Ulrich, L., 219 (2) Unemployment Compensation Act of 2008, 260 U.S Bureau of Census, 279 (4) U.S Bureau of Labor Statistics (BLS), 39 (1), 40 (6), 68 (15), 140, 165–166, 176, 177t, 183 (1), 219 (11, 12), 235 (1, 2), 237, 257 (25), 280 (26), 305 (2), 306 (27, 30), 308, 318, 351, 370–372, 380 (1, 2, 6) U.S Census Bureau, 51 U.S Chamber of Commerce, 280 (12) U.S Commerce Department, 67 (7) U.S Congressional Budget Office, 375 U.S Health and Human Services Department, 257 (30) U.S Labor Department, 39 (3), 44, 48t, 145–149, 146–150t, 161 (2, 3, 4), 241, 257 (3, 5, 6, 22, 26), 279 (1), 316, 364 (16), 380 (13) U.S Office of Management and Budget, 140 U.S State Department, 339, 342, 343 U.S Surgeon General, 257 (29) U.S Treasury Department, 261, 285 Vietnam Era Veterans Readjustment Assistance Act, 61t Wall Street Reform and Consumer Protection Act of 2010, 299–300, 374 Walling v A H Belo Corp., 323 Walsh–Healey Act of 1936, 55 Walsh–Healey Public Contracts Act of 1936, 54 Walters, B., 305 (1) Werner, J M., 93 (9) Wexley, K N., 93 (11), 94 (17, 18, 24) Woelfel, C J., 349 (2) Wood, W., 117 (11) Worchel, S., 117 (11) WorldatWork, 93 (8), 165, 184–192, 349 (1) Zager, R., 220 (22) Zingheim, P K., 116 (4), 117 (13), 134 (8) 15/11/14 5:52 PM www.downloadslide.com Subject Index Note: The letters “f” and “t” following the locators refers to figure and table cited in the text Aaron v City of Wichita, Kansas, 45, 381 Ability/abilities, 143, 148, 149t, 381 Absenteeism, 33, 101, 120–121, 227, 231, 246, 272, 314, 321 Accrual rules, 239, 381 ADA See Americans with Disabilities Act of 1990 (ADA) ADEA See Age Discrimination in Employment Act of 1967 (ADEA) Adjunct faculty members, 313 Affirmative action, 50, 381 Age Discrimination in Employment Act of 1967 (ADEA), 51–52, 203, 212, 315, 381 Agency problem, 295, 381 Agency theory, 294–295, 381 Alternation ranking, 156, 381 Americans with Disabilities Act of 1990 (ADA), 53–54, 144, 144t, 315, 319, 381 American Taxpayers Relief Act of 2012, 260 American with Disabilities Act (ADA) Amendments Act of 2008, 144, 144t AmeriSteel, 105 Andean Community of Nations, 355 Andres v DuBois, 46 Anheuser-Busch, 290 Annual addition, 242, 381 Annuities, 240, 242, 381 Antonio v Wards Cove Packing Co., 381 Appraisals See Performance appraisals Apprenticeships, 49, 122, 123, 145 ARAMARK Food Services, 312–313 Asia-Europe Economic Meeting, 358 Asia-Pacific Economic Cooperation, 358 Association of Southeast Asian Nations, 358 AT&T, 122 Atonio v Wards Cove Packing Co., 52 Baby boom generation, 51, 73, 376, 381 Balanced Budget Act of 1997, 264 Balance sheet approach, 342–345, 381 Banking hours, 321, 381 BARS See Behaviorally anchored rating scales (BARS) Base pay, 22, 22t, 381 compensable factors, 22 executive compensation, 285–286 expatriate employees, 336–338 hourly pay/wage/salary, 22 Base period, 260, 381 Basic skills, 149, 150t, 381 Behavioral encouragement plans, 100–101, 101t, 381 Behaviorally anchored rating scales (BARS), 81, 82t, 381 Behavioral observation scale (BOS), 81–82, 381 Behavioral systems, 80–82, 81–82t Bell Sports, 120–121 Benchmark jobs, 153, 168–169, 169t, 382 Benefit program design, 271–276 communication with employees, 274–276 core plus option plans, 272, 274, 274t cost containment, 274 degree of employee choice, 272 determining who receives coverage, 271–272 financing, 272 menu of employee benefit options, 276t retirees, 271–272 sample personal statement of benefits, 275t Benefits See Employee benefits Bennett Amendment, Title VII, 50, 382 Bereavement and funeral leave, 227–228 BHP, 335 Bias errors, 86, 382 BLS See U.S Bureau of Labor Statistics (BLS) Blue Cross and Blue Shield plans, 245 Board of directors, 294, 382 Boeing, 103 Bonuses, 32, 208, 243, 286 BOS See Behavioral observation scale (BOS) Boureslan v Aramco, 52, 382 Brazil, 353t, 355–356 Brito v Zia Company, 83, 382 Broadbanding, 214–215, 215f, 382 Buck Consultants, 165 Budgets for compensation See Compensation budgets Building Strategic Compensation Systems, 211 Bureau of National Affairs, 343 Bush, George W., 54, 258, 290 Buy-back provision, 108, 382 Cafeteria plans See Flexible benefits plan Canada, 351–354, 353t Capital gains, 288, 382 Capital intensity, 64 Career development, 33 Carve-out plans, 251–253, 382 Cascade Wood Components Company, 83 Case study Appraising Performance at Precision, 92 Benefits for Part-Time Workers, 278–279 CEO Pay in the News, 304–305 Competitive Strategy at Sportsman Shoes, 39 Exempt or Nonexempt? 66–67 Health Savings Account at Frontline PR, 256–257 Individual or Team Reward? 116 Internal Consistency at Customers First, 160 Jenkins Goes Abroad, 348 A New Sales Representative, 218–219 North American Expansion for Threads Apparel, 363 Nutriment’s New Hires, 183 Person-Focused Pay at Mitron Computers, 133–134 Telecommuting at MedEx, 328 Time Off at Superior Software Services, 234 Cash balance plans, 244, 382 Cash or deferred arrangement (CODA), 242–243 Central tendency, 171–174, 382 Certification, 214, 382 Child care programs, 229 Child labor laws, 47 China See People’s Republic of China (PRC) Chrysler, 369 CIT See Critical incident technique (CIT) CitiBank, 335 Civil Rights Act of 1964, 47, 49–53, 382 Civil Rights Act of 1991, 37, 52–53, 382 Classification plans, 157, 382 Clawback provisions, 290, 382 Clean Air Act Amendments of 1990, 230 Cliff vesting, 239, 382 COBRA See Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) Coca-Cola, 333 CODA See Cash or deferred arrangement (CODA) Coinsurance, 247, 251, 252–253 COLA See Cost-of-living adjustments (COLAs) Collective bargaining agreements, 33, 62–63, 71, 157 Colleges and universities, 313 Commission, 208–209, 382 Commission-only plans, 208–209, 382 Commission-plus-draw plans, 208, 382 Common review dates, 202, 382 Common review periods, 202, 382 Company stock, 111, 243, 288, 382 Company stock shares, 111, 288, 382 Companywide incentive plans, 98, 98t, 109–112 Compa-ratios, 200–201, 383 Comparison systems performance appraisals, 79–80, 80t, 383 Compensable factors, 22, 48, 48t, 150–151, 153–156, 383 Compensable work activities, 46–47t Compensation budgets, 184–192, 202, 204–207, 383 Compensation committees, 294, 383 Compensation–productivity gap, 372–373, 373–374f Compensation strategies, 29, 383 Compensation surveys, 35, 163–176, 383 characteristics of, 169–170 choosing benchmark jobs, 168–169, 169t core or employee benefits, 164 cost trends, 166–167 custom development of, 164 definition of, 163 employee benefits, 167 examples of, 170–171t, 171f, 173–176t occupational wages, 166 published survey data, 164–166 purpose of, 163–164 relevant labor markets, 167–168 updating survey data, 174–176, 176t 401 Z03_MART8863_08_GE_SIDX.indd 401 15/11/14 5:56 PM www.downloadslide.com 402    Subject Index Compensation systems, overview, 20–40, 21f compensation, types of, 21–25 compensation functions, 31–35 corporate hierarchy and human resource professionals, 30–31 historical perspective on, 20–21, 23, 25–27 human resource departments, 31–36 internal consistency, 35 legislative impacts on, 34, 34t market competitiveness, 35 recognizing individual contributions, 35–36 stakeholders of system, 36–37 strategic vs tactical decisions, 27–30, 28f Competency-based pay, 118–119, 120, 383 Competitive advantage, 26–27, 29–30, 232, 333–334 Competitive strategy, 28, 383 See also Market-competitive pay systems contingent employees, 325–326 employee roles, 30 executive compensation, 283 flexible work schedules, 325–326 internally consistent compensation systems, 157–158 sales incentive plan design, 209 seniority pay, 74–75 Compressed workweek schedules, 321, 383 Concessionary bargaining, 63, 383 Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 57–58, 57t, 271, 316, 318, 383 Consultants See Independent contractors Consumer-driven health care, 253–254, 383 Consumer Price Index (CPI), 176, 177t, 383 Content Model, 145–149, 146–150t, 146f, 383 Contingent workers, 307–319, 383 competitive strategies, 325–326 increased reliance on, 313–315 labor unions and, 324–325 number of, 308t pay and benefits, 315–319 questions chart, to determine worker ­expectations, 309f types of, 308–313 Contrast errors, 86, 383 Contributory financing, 272, 383 Copayments, 249, 250, 383 Core compensation, 21–23, 22t, 383 See also specific types base pay, 22 cost-of-living adjustments, 22 incentive pay, 23 merit pay, 23 pay-for-knowledge plans, 23 seniority pay, 22–23 skill-based pay, 23 Core competencies, 120 Core employees, 308, 383 Core hours, 321, 383 Core plus option plans, 272, 274, 274t, 383 Cost leadership strategy, 29 Cost-of-living adjustments (COLAs), 22, 62, 383 Cost of living and pay structure design, 194, 202 Coverage requirements, 239, 383 Z03_MART8863_08_GE_SIDX.indd 402 CPI See Consumer Price Index (CPI) Critical incident technique (CIT), 80–81, 81t, 383 Cross-cultural training, 333–334 Cross-departmental models, 127, 384 Cross-functional skills, 149, 150t, 384 Cultural values, 333–334 Currency stabilization, 337 Current profit sharing, 110, 287, 384 Customer Satisfaction Survey, 85t Danger pay, 338–339, 339t Davis–Bacon Act of 1931, 54, 194, 384 Day care, 23, 229, 384 Deductible, 247, 248t, 251, 253, 384 Defense of Marriage Act, 378–379 Deferred compensation, 112, 287–288, 384 Deferred core executive compensation, 287–291 Deferred profit sharing, 110, 384 Deficit Reduction Act of 1984, 57 Defined benefit plans, 58–59, 240–241, 241t, 243t, 384 Defined contribution plans, 58–59, 241–243, 243t, 384 Deliberate and knowing torts, 267, 384 Delta Airlines, 33, 63 Dental insurance, 274t, 384 Depth of knowledge, 119–120, 384 Depth of skills, 119–120, 384 Diagnostic and Statistical Manual of Mental Disorders (DSM-5), 252 The Dictionary of Occupational Titles, 140 Differentiation strategies, 29–30, 384 Direct hire arrangements, 312, 384 Disability, use of term, 54 Disability benefits, 262 Disability insurance, 224–225 Discharge, 33 Discount stock option plans, 289, 384 Discretionary benefits, 222–235 costs of, 311t disability insurance, 224–225 employee assistance programs, 228–229 for executives, 291–292 explanation, 23, 24t, 222–224, 223t, 384 family assistance programs, 229 health protection programs, 226 life insurance, 225–226 outplacement assistance, 230 paid time off, 227–228 protection programs, 224–226 retirement programs, 226 services, 228–231 transportation services, 229–230 tuition reimbursement, 229 Discretionary bonuses, 286, 384 Discretionary income, 344, 344t, 384 Disparate impact, 49, 52, 384 Disparate treatment, 49, 384 Distribution, 240, 384 Dodd-Frank Act See Wall Street Reform and Consumer Protection Act of 2010 Domestic partner benefits, 377–379 Draw, 208, 384 Dual capacity, 268, 384 Dual employer common law doctrine, 318, 384–385 EAPs See Employee assistance programs (EAPs) Early retirement programs, 33, 385 ECEC See Employer Costs for Employee Compensation (ECEC) ECI See Employment Cost Index (ECI) Economic Growth and Tax Relief Reconciliation Act of 2001, 57, 239–240, 242, 385 Economic reality test, 319, 319t, 385 Economic recession, 313, 369, 385 Education, 142, 231, 385 EEOC See Equal Employment Opportunity Commission (EEOC) EEOC v Chrysler, 51, 385 EEOC v Madison Community Unit School District No 12, 48, 385 EESA See Emergency Economic Stabilization Act of 2008 (EESA) Elder care programs, 229 Eli Lilly, 28–29 Elimination period, 224–225 Emergency Economic Stabilization Act of 2008 (EESA), 286, 385 Emergency Unemployment Insurance (EUC) Program (2008), 260 Employee assistance programs (EAPs), 228–229, 252, 385 Employee benefits, 21, 25, 385 See also Discretionary benefits; Legally required benefits; Pay and benefits, international; specific types of benefits in compensation surveys, 164, 167 contingent workforce, 315–319 costs of, 24t, 311t, 314–315 domestic partner benefits, 377–379 employment laws, 55–60 expatriate employees, 339–342 flexible employees, 322–324 labor force diversity and, 376–377 motivational aspect of, 377 O*NET, 148t private sector survey (2012), 223t Employee-financed benefits, 272, 385 Employee Retirement Income Security Act of 1974 (ERISA), 55–57, 225, 226, 237, 239, 240–241, 242, 245, 315, 318, 319, 379, 385 Employees, as stakeholders, 36 Employee’s anniversary date, 202, 385 Employee stock option plans, 111–112, 385 Employee stock ownership plans (ESOPs), 111–112, 231, 243, 385 Employer Costs for Employee Compensation (ECEC), 166–167 Employment at will, 357 Employment Cost Index (ECI), 166 Employment laws, 42–61 See also specific legislation child labor laws, 47 civil rights, 49–54 compensable work activities, 46–47t constitutional basis of, 42–43 employee benefits, 55–60 impacts on compensation, 26, 34–35, 34t income continuity, 43–44 minimum wage, 44 overtime pay, 44–46 pay discrimination, 47–49 15/11/14 5:56 PM www.downloadslide.com Subject Index    403  prevailing wage laws, 35, 54–55 safety, 44 work hours, 44 Employment termination, 33 Empowerment of employees, 87–88 Enron, 290 Equal benefit/equal cost principle, 52, 385 Equal Employment Opportunity Commission (EEOC), 48, 50, 53, 143, 144t, 385 Equal Pay Act of 1963, 22, 36, 47–50, 83, 143, 203, 385 Equity theory, 202, 385 ERISA See Employee Retirement Income Security Act of 1974 (ERISA) Errors of central tendency, 86, 385 ESOPs See Employee stock ownership plans (ESOPs) Essential job functions, 144, 144t EUC See Emergency Unemployment Insurance (EUC) Program (2008) Eukanuba, 29–30 European Union (EU), 356–357, 374 Exchange rates, 337, 344, 385 Exclusion provisions, 225, 385 Executive branch, 43, 385 Executive compensation, 282–306 additional other compensation, 298–299, 299t agency theory, 294–295 clawback provisions, 290 competitive strategies, 283 corporate performance measures, 300, 301t current core compensation, 285–287 deferred core compensation, 287–291 disclosure rules, 296–298 discretionary benefits, 291–292 ethical considerations, 300–302, 302t executive status, definition of, 283–285 international competitiveness, 302 participant roles in setting of, 293–294 shareholder say on pay, 299–300, 374 short-term incentives, 287 social comparison theory, 296 tournament theory, 295, 295f Executive compensation consultants, 293–294, 385 Executive Orders, 43, 386 11141, 52 11246, 50, 386 11478, 61t, 386 11935, 61t, 386 Executives, 27, 37 Exempt, 45–46, 45t, 194, 386 Expatriate compensation, 27, 332–349 balance sheet approach, 342–345 base pay, 336–338 benefits, 339–342 competitive advantage, 333–334 components of, 336, 336t equity for, 335, 337 host country nationals distinguished from, 334 incentive compensation, 338–339 purchasing power and, 337–338 repatriation pay issues, 345–346 staff mobility, 335 tax obligations, 344–345 term of international assignment, 335 third country nationals distinguished from, 335 Z03_MART8863_08_GE_SIDX.indd 403 Expatriates, 335, 386 Experience and training, 145, 146f, 146t, 386 Experience rating system, 261, 386 Extrinsic compensation, 21, 386 ExxonMobil, 83 Fair Labor Standards Act of 1938 (FLSA), 22, 34, 34t, 44–47, 45t, 143, 194, 310, 315, 317, 319, 323, 386 FairPay Rules (2004), 46, 386 Family and Medical Leave Act of 1993 (FMLA), 25, 53, 54, 61t, 229, 269–270, 291, 319, 340, 379, 386 Family assistance programs, 229, 386 Family coverage, 246, 254, 386 Federal constitution, 42–43, 378, 386 Federal employees, 60–61, 61t, 73, 74t, 261 Federal Employees’ Compensation Act, 266, 386 Federal Express, 125, 131 Federal government, 37, 43, 60–61, 214, 386 See also specific government agencies Federal Insurance Contributions Act (FICA), 55, 258, 264–265, 269, 386 Federal laws See Employment laws; specific legislation Federal Reserve Bank, 166, 370 Federal Unemployment Tax Act (FUTA), 55, 261, 269, 344, 386 Federal Unemployment Trust Fund, 261 Fee-for-service health insurance plans, 246–249, 248t, 264, 386 See also Medicare Female labor force, 48–50, 83, 314, 354, 357, 376 FICA See Federal Insurance Contributions Act (FICA) Fidelity, 242 Fiduciaries, 242, 386 Fifth Amendment, 43 Financial education programs, 231 First Amendment, 42 First-impression effect, 86, 386 Flexible benefits plan, 272, 386 Flexible employees, 322–324 Flexible scheduling and leave, 229, 386 Flexible spending accounts (FSAs), 253–254, 273–274t, 386 Flexible work schedules, 314, 319–326 Flextime schedules, 321, 386 FLSA See Fair Labor Standards Act of 1938 (FLSA) FMLA See Family and Medical Leave Act of 1993 (FMLA) Forced distribution, 79–80, 79t, 386 Ford Motor Company, 63, 216 Foreign service premiums, 338, 386 Forfeitures, 242, 386 401(k) plans See Section 401(k) plans Fourteenth Amendment, 43 Frederic W Cook & Company, 165 Freelancers See Independent contractors Free-rider effect, 109, 386–387 FSA See Flexible spending accounts (FSAs) Fully insured, 261–262, 387 FUTA See Federal Unemployment Tax Act (FUTA) Gain sharing, 104–108, 287, 387 GDP See Gross domestic product (GDP) General Electric (GE), 120, 122–123, 297–299t, 334 Generalized work activities, 147, 147t, 387 General Motors, 63, 333, 335, 369 General Schedule (GS), 73, 74t, 157, 387 Geography and pay structure design, 194 Germany, 353t, 357–358 Global competition, 26, 122–123, 302, 313, 333–334 See also Pay and benefits, international Glossary, 381–398 Golden parachutes, 289–290, 387 Goods and services allowances, 344, 387 Goodyear Tire & Rubber Co., 49–50 Government contractors, 50, 54–55 Government Employee Rights Act of 1991, 61t, 387 Graduated commissions, 208 Great American Smoke-Out, 230–231 Great Depression, 43, 71, 244, 387 Great Recession (2007-2009), 369–373 Green circle rates, 200, 387 Gross domestic product (GDP), 351, 353t, 370f Group incentive programs, 98, 98t, 102–109, 106–108t, 112, 387 Groupthink, 326, 387 Hardship allowance, 338–339, 339t, 342, 387 The Hay Associates, 165 HCN See Host country nationals (HCNs) Headquarters-based method, 337, 387 Health care See Patient Protection and Affordable Care Act of 2010 (PPACA) Health Care and Education Reconciliation Act of 2010, 375 Health insurance, 244, 387 Health Insurance Portability and Accountability Act of 1996 (HIPAA), 58 Health insurance programs, 244–254 consumer-driven health care, 253–254 costs of employer-sponsored plans, 314–315 coverage and costs of, 245–246, 246t fee-for-service plans, 246–249 history of, 244–245 international comparisons, 354, 355, 356, 358, 360, 361 managed care plans, 249–250 point-of-service plans, 251 preferred provider organizations, 251 specialized insurance benefits, 241–253 Health Maintenance Organization Act of 1973 (HMO Act), 245, 387 Health maintenance organizations (HMOs), 249–250, 250t, 387 Health protection programs, 226 Health reimbursement accounts (HRAs), 253, 387 Health savings accounts (HSAs), 254, 387 Hewitt Associates, 165 High-deductible health insurance plans, 254, 387 Highly compensated employees/individuals, 56, 283–285, 284f, 387 HIPAA See Health Insurance Portability and Accountability Act of 1996 (HIPAA) 15/11/14 5:56 PM www.downloadslide.com 404    Subject Index Hispanic labor force, 376 H Lee Moffitt Cancer Center and Research Institute, 96 HMO Act See Health Maintenance Organization Act of 1973 (HMO Act) Home country–based pay method, 336–337, 387 Home leave benefits, 342, 387 Horizontal knowledge, 119, 387 Horizontal skills, 119, 387 Hospital insurance tax (HI), 265, 387 Host country–based method, 337, 387 Host country nationals (HCNs), 334–335, 388 Hourly pay, 22, 388 Housing and utilities allowances, 343–344, 343t, 388 HRA See Health reimbursement accounts (HRAs) HSA See Health savings accounts (HSAs) Human capital, 22–23, 70–71, 388 Human capital theory, 22–23, 70–71, 388 Human development index (HDI), 355 Human resource professionals career development, 33 certification of, 214 challenges for, 368–380 corporate hierarchy and, 30–31 employment laws and compensation, 34–35, 34t employment termination, 33 globalization impacts on, 333–334 labor–management relations, 33 performance appraisals, 32 recruitment and selection, 31–32 training programs, 33 Human resource strategies, 28, 388 Hybrid plans, 244, 388 Hypothetical tax, 345, 388 Iams, 29–30 IBM, 70, 210, 294 Illegal discriminatory bias, 86, 388 Improshare plans, 108, 108t, 388 InBev, 290 Incentive effect, 100, 388 Incentive pay, 23, 95–117, 388 companywide incentive plans, 98, 98t, 109–112 comparison to traditional pay, 96–98, 97t expatriate employees, 338–339 group incentive pay plans, 98, 98t, 102–109, 106–108t, 112 individual incentive pay plans, 98–102, 98t, 100–101t, 112 performance criteria, 113 program designs, 112–114 Incentive stock options, 288, 388 Income annuities, 240, 388 Income disparities, 301, 302t Indemnity plans, 247, 388 Independent contractors, 165, 293–294, 313, 388 Indexes of living costs abroad, 344, 388 India, 64, 353t, 358–360 Individual incentive plans, 98–102, 98t, 100t, 112, 388 Individual retirement accounts (IRAs), 236 Industrial Revolution, 25 Inflation, 75–76, 337–338, 338t, 388 Z03_MART8863_08_GE_SIDX.indd 404 Insurance policy, 244, 388 Integrated paid time off policies, 227, 388 Interests, 148, 388 Interindustry wage/compensation differentials, 63–64, 64t, 388 Internally consistent compensation systems, 136–161 competitive strategies, 157–158 explanation, 35, 136–138, 388 job analysis, 87, 137–150 job evaluation process, 138, 150–157, 155t structure of, 137f Internal Revenue Code (IRC), 55, 239–240, 254, 319, 344, 388 Internal Revenue Service (IRS), 55, 110, 241, 244, 283, 285, 286, 291, 324, 344–345 International Brotherhood of Electrical Workers, 203 International Monetary Fund, 355 Intrinsic compensation, 21, 389 Involuntary part-time employees, 309–310, 389 IRA See Individual retirement accounts (IRAs) IRC See Internal Revenue Code (IRC) Ireland, 122 IRS See Internal Revenue Service (IRS) Japan, 26, 62–63, 75, 337 Job analysis, 25, 35, 84, 137–138, 389 choosing programs for, 139 data collection, 141–142 legal issues, 143–144 O*NET Content Model, 145–149, 146–150t reliability and validity of, 141–142 resources for analysts, 140–141 selecting and training analysts, 139–140 units of, 139t worker requirements, 138 working conditions, 138 writing job descriptions during, 142–143 Job-based pay, 127, 127–128t, 389 Job characteristics theory, 129 Job content, 137–138, 389 Job-content evaluation, 152, 389 Job control unionism, 71, 389 Job descriptions, 76–77t, 128t, 142–143, 143t, 211, 213, 389 Job duties, 142, 389 Job evaluation, 35, 138, 389 Job evaluation process, 150–157, 155t Job family, 139t, 194, 211, 214 Job-point accrual model, 125, 127, 389 Job sharing, 310–311, 311t, 389 Job summary, 142, 389 Job titles, 142, 389 Judicial branch, 43, 389 Just-meaningful pay increase, 76, 201–202, 389 Key employees, 56, 283–285, 284f, 389 Knowledge, 143, 389 Knowledge, skills, and abilities (KSAs), 138, 143 Labor force diversity, 376–377 See also Female labor force Labor hour ratio formula, 108, 389 Labor–management relations, 33 Labor unions collective bargaining agreements, 62–63 concessionary bargaining, 63 contingent workforce and, 324–325 flexible work schedules and, 324–325 in Germany, 357 individual incentive pay plans, 99 influence of, 61–63, 223 job control unionism, 71 as stakeholders, 37 two-tier pay structures, 216 Layoffs, 283, 301, 313, 369, 369t Leadership philosophy, 105 Lease companies, 312–313, 315, 318, 389 Leased employees, 308t, 312–313, 318 Lectures, meetings, and training programs, 46t Ledbetter v Goodyear Tire & Rubber Co., 49–50, 389 Legally required benefits, 258–280 See also specific legislation benefits and costs of, 270–271 designing benefit programs, 271–276 disability benefits, 262 exemptions from, 261 explanation, 23, 24t, 25, 258–259, 389 Family and Medical Leave Act, 269–270 funding for programs, 264–265 Medicare, 262–265, 263f Medicare prescription drug benefit, 264 Medigap insurance, 264 Old Age, Survivor, and Disability Insurance (OASDI), 261, 265 old age benefits, 261–262 Social Security Act of 1935, 259–265 survivor benefits, 262 unemployment insurance, 260–261, 260t, 270–271 workers’ compensation, 265–271 Legislative branch, 43, 389 Leniency errors, 86, 389 Licensing, 145, 389 Life insurance, 225–226, 389 Lilly Ledbetter Fair Pay Act of 2009, 50, 389 Lincoln Electric Company, 96–97 Line employees, 30, 390 Line manager compensation checklist aligning compensation with strategy, 37 assisting employees in benefits decisions, 254–255 building equitable/competitive systems, 158 competitive pay and attracting employees, 181 educating employees about benefits, 232 executive compensation, 302–303 expatriate employees, 346 flexible workforce, 326 global workforce, 362 incentive pay programs, 114 legal issues, 65 legally required benefits, 277 pay structure design, 217 person-focused pay, 131 tying performance to compensation, 91 Line managers, as stakeholders, 36–37 Literacy, 26 L L Bean, 78 Local governments, 43, 390 Longevity pay, 70–73, 390 15/11/14 5:56 PM www.downloadslide.com Subject Index    405  Longshore and Harborworkers’ Compensation Act, 266, 390 Long-term disability, 225, 390 Long-term disability insurance, 224–225, 390 Lorance v AT&T Technologies, 52, 390 Lowest-cost strategy, 29, 30, 232, 334, 390 Lump sum distribution, 240, 390 Mail order prescription drug programs, 252, 390 Major life activities, 54 Major occupational groups, 140, 140t, 390 Malemployment, 371, 390 Managed care plans, 249–250, 250t, 390 Management by objectives (MBO), 82–83, 100, 390 Management incentive plans, 100, 390 Manufacturing decline of, 313–314 hourly compensation, international ­comparison, 351, 352t U.S company relocation to China, 374–375 Market-based evaluation, 152, 390 Market-competitive pay systems, 35, 162–192, 390 compensation surveys, 163–176 internal job structures, 176–179 pay level policies, 179–180 pay mix policies, 180–182, 180f Salary Budget Survey (2009-10), 184–192 Market influences, 63–65, 64t Market lag policy, 179–180, 390 Market lead policy, 179–180, 390 Market match policy, 180, 390 Market pay line, 178, 194, 195f, 390 Market pay rates, 157 Maximum benefit limits, 249, 390 MBO See Management by objectives (MBO) McDonald’s, 333 Mean, 172–174, 390 Median, 172–174, 173t, 390 Median annual earnings, 300, 302t Medicaid, 245 Medical reimbursement plans, 252, 390 Medicare, 245, 262–265, 263f Part A, 263, 263f, 390 Part B, 263f, 264, 390–391 Medicare Advantage, 263, 263f, 264, 390 Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 254, 264, 391 Medicare Select plans, 264, 391 Medicare tax See Hospital insurance tax (HI) Medigap, 264, 391 Mental Health Parity Act and Addiction Equity Act of 2008, 253, 391 Mental health plans, 252–253 Mercedes-Benz, 27–28 Mercer, 334 Mercosur, 355 Merit pay grids, 203–205, 203t Merit pay increase budgets, 204–207, 391 Merit pay programs, 23, 27, 75–77, 391 See also Performance appraisals comparison to incentive pay, 97, 97t elements of, 75 limitations of, 89–91 performance appraisals, 32, 204 for-profit sector, 75 social structures within, 89–90, 90t Z03_MART8863_08_GE_SIDX.indd 405 Merit pay systems design, 201–207 base-pay levels, 203 budgets and increases, 204–207 merit increase amounts, 201–202 merit pay grids, 203–205, 203t performance appraisals, 204 recurring vs nonrecurring increases, 202–203 timing of, 202 Mexico, 351, 353t, 354–355 Midpoint pay value, 197–198, 198t, 391 Minimum wage, 44, 353, 354, 356, 357, 359, 360 Mobility premiums, 339, 391 Motorola, 333, 334 Multiple-tiered commissions, 208–209, 391 NAALC See North American Agreement on Labor Cooperation (NAALC) NAFTA See North American Free Trade Agreement (NAFTA) National Commission on State Workmen’s Compensation Laws, 266 National Compensation Survey (NCS), 166, 167, 391 National Labor Relations Act of 1935 (NLRA), 61–62, 71, 223, 319, 391 National Labor Relations Board (NLRB), 62 NCS See National Compensation Survey (NCS) Negative halo effect, 86, 391 NLRA See National Labor Relations Act of 1935 (NLRA) NLRB See National Labor Relations Board (NLRB) Nominal hourly compensation, 372, 391 Noncontributory financing, 272, 391 Nondiscrimination rules, 55–56, 239, 391 Nonexempt, 45–46, 194, 391 Nonmonetary rewards See Employee benefits Nonqualified plans, 237, 391 Nonrecoverable draws, 208, 391 Nonrecurring merit increases, 202–203, 391 Nonstatutory stock options, 289, 391 North American Agreement on Labor Cooperation (NAALC), 351 North American Free Trade Agreement (NAFTA), 333, 351, 391 O*NET See Occupational Information Network (O*NET) O*NET database, 149 O*NET User’s Guide, 149, 392 OASDI See Old Age, Survivor, and Disability Insurance (OASDI) Obama, Barack, 73, 299, 375 Occupational classification, 167 Occupational Classification System Manual (BLS), 167 Occupational Information Network (O*NET), 145–149, 146–150t, 391 Occupational requirements, 145, 146f, 147–148t, 391 Occupational Safety and Health Act of 1970 (OSHA), 55, 391 Occupation-specific requirements, 148, 392 Officer, use of term, 56, 285 Old Age, Survivor, and Disability Insurance (OASDI), 55, 236, 261–262, 265 Older Workers Benefit Protection Act (OWBPA), 51–52, 392 OmegaCOAT Nutritional Science, 29 On-call arrangements, 308t, 312, 392 On-call time, 46t Organizational context, 147, 147t, 392 Out-of-pocket maximum, 248, 248t, 392 Outplacement assistance, 230, 392 Outsourcing, 64, 245 Overtime pay, 44–46 Overtime state regulations, 324t OWBPA See Older Workers Benefit Protection Act (OWBPA) Paid time off, 23, 227–228, 340–342, 353–354, 357–361, 392 Paid time off banks, 227–228, 392 Paired comparison, 80, 80t, 156, 392 P&G Corporation, 29–30 Partial disabilities inclusion, 225, 392 Partner, use of term, 56 Part-time employees, 308–311, 308t, 310t, 316 Patient Protection and Affordable Care Act of 2010 (PPACA), 59–60, 264, 375–376, 392 Pay and benefits, international, 350–365 Asia, 358, 374–375 Brazil, 353t, 355–356 Canada, 351–354, 353t China, 353t, 360–361 European Union, 356–357 Germany, 353t, 357–358 India, 353t, 358–360 Mexico, 353t, 354–355 North America, 351 South America, 355 Paycheck Fairness Act proposals, 50, 392 Pay compression, 199–200, 392 Pay-for-knowledge plans, 23, 27, 33, 119, 229, 392 Pay-for-performance programs, 63, 87–89 Pay grades, 36, 194, 196–200, 196f, 198–199f, 198t, 392 Pay ranges, 36, 198–199f, 198t, 392 Pay structure design, 193–220 broadbanding, 214–215, 215f calculating pay ranges for grades, 196–200, 198–199f, 198t evaluating results, 200–201 market pay line, 194, 195f merit pay systems, 201–207, 203t number of pay structures, 194 pay grades, 194, 196–200, 196f, 198–199f, 198t person-focused pay plans, 210–214, 211t sales incentive plans, 207–210 two-tier structures, 215–216, 216t Pay structures, 35–36, 193, 392 PBGC See Pension Benefit Guaranty Corporation (PBGC) PCAOB See Public Company Accounting Oversight Board (PCAOB) PDA See Pregnancy Discrimination Act of 1978 (PDA) Pearl Meyer & Partners, 165 Pension Benefit Guaranty Corporation (PBGC), 58, 238, 240 Pension plans, 33, 226, 353–355, 356, 358, 359–360, 361, 392 Pension programs, 33, 392 15/11/14 5:56 PM www.downloadslide.com 406    Subject Index Pension Protection Act of 2006, 58–59, 238, 240, 258, 392 PeopleSoft, 213 People’s Republic of China (PRC), 333, 353t, 360–361, 374–375 Pepsi, 333 Per capita GDP, international comparison, 353t Percentiles, 173–174, 175t, 392 Performance appraisals, 32, 75, 78–87 appeal procedures, 84 behavioral systems, 80–82, 81–82t comparison systems, 79–80, 80t effectiveness of, 87 forced distribution approach, 79–80, 79t goal-oriented systems, 82–83 merit pay programs, 32, 204 nondiscriminatory practices, 83–84 paired comparisons, 80, 80t pay-for-performance linkage, 87–89 planning worksheet, 88f rating errors, 86–87 sources for, 84–85 trait systems, 78–79, 78t Performance-contingent bonuses, 286, 392 Perks See Perquisites Perquisites, 291, 292, 292t, 392 Personal statement of benefits, 275t Person-focused pay plan design, 210–214 job descriptions, 211 skill (knowledge) blocks, 211–212, 211t, 213 training and certification, 213–214 training investment, 210, 212–214 transition from job-based pay to, 212–213 Person-focused pay plans, 118–134, 392 advantages of, 129–130 comparison to job-based pay, 127–128t, 127–129 competencies, 120 continuous process settings, 120–121 cross-departmental model, 127 disadvantages of, 130–132 global competition, 122–123 job-point accrual model, 125, 127 skill blocks model, 125, 126f stair-step model, 123–124f, 123–125 technological innovation, 121–122 types of, 118–120 Phantom stock, 289, 393 Piecework plans, 25, 98, 99–100, 100t, 393 Pizza Hut, 333 Plan termination rules, 240, 393 Platinum parachutes, 290, 393 Point-method valuation technique, 152–156, 154t, 161, 393 Point-of-service plan (POS), 251, 393 Polaroid Corporation, 270 Portal-to-Portal Act of 1947, 46, 393 POS See Point-of-service plan (POS) Positive halo effect, 86, 393 PPACA See Patient Protection and Affordable Care Act of 2010 (PPACA) PPOs See Preferred provider organizations (PPOs) Pratt & Whitney, 76 Preadmission certification, 249, 393 Predetermined allocation bonuses, 286, 393 Preeligibility period, 224, 393 Preexisting condition, 224, 249, 393 Z03_MART8863_08_GE_SIDX.indd 406 Preferred provider organizations (PPOs), 251, 393 Pregnancy Discrimination Act of 1978 (PDA), 53, 224, 393 Premiums, 244, 246, 393 Prepaid medical services, 249–250, 393 Prescription card programs, 252, 393 Prescription drug plans, 252, 393 Prevailing wage laws, 35, 54–55 Primary care physicians, 250, 393 Princess Cruise Lines, 96 Probationary period, 272, 393 Procter & Gamble, 333–334 Profit sharing plans, 110–111, 243, 393 Profit sharing pool, 243, 393 Protection programs, 23, 25, 393 See also specific types of programs Public Company Accounting Oversight Board (PCAOB), 291, 394 Purchasing power, 337–338 Qualified plans, 237, 238–239t, 238–240, 394 Quarters allowances, 343–344, 343t, 394 Quarters of coverage, 261, 262, 394 Quartiles, 172–174, 175t, 204, 394 Range spread, 197–198, 198f, 198t, 394 Rating errors, 86–87, 394 Real hourly compensation, 372–373, 373–374f, 394 Reasonable accommodation, 53–54, 144, 396 Recertification, 214, 394 Recoverable draws, 208, 394 Recruitment incentives, 31, 32 Red circle rates, 200, 394 Referral plans, 101, 394 Regression analysis, 176–179, 179f, 394 Rehabilitation Act of 1973, 61t, 394 Relevant labor markets, 167–168, 394 Reliable job analysis, 141, 394 Relocation assistance payments, 341, 341t, 394 Relocation incentives, 31 Repatriation, 334, 345–346 Rest and meal periods, 46t Rest/relaxation leave and allowances, 342 Restricted stock, 289, 394 Retention incentives, 31–32 Retirees, 33, 271–272 Retirement plans, 236–244 defined benefit plans, 240–241, 241t, 243t defined contribution plans, 241–243, 243t history of, 237 hybrid plans, 244 qualified plans, 237, 238–239t, 238–240 trends, 237–238 Retirement programs, 226, 394 Revenue Act of 1921, 237 Right to control test, 319, 320t, 394 Roosevelt, Franklin D., 71, 245 Roth IRAs, 236 Rubbermaid, 102 Rucker plans, 106–107, 107–108t, 394 Ryanair, 29 Sabbatical leaves, 228, 394 Safe harbor rule, 318, 318t, 394 Salaries, 22, 394 Salary Budget Survey (2009-10), 184–192 Salary-only plans, 207–208, 394 Salary-plus-bonus plans, 208, 394 Salary-plus-commission plans, 208, 394 Sales incentive plan design, 207–210 Sales objectives, 207 Sales value of production (SVOP), 106, 394 Same-sex marriage, 377–379 Sarbanes-Oxley Act of 2002, 290–291, 394 Say on pay, 299–300, 374, 395 Scanlon plans, 105–106, 106t, 108t, 395 Scientific management practices, 25, 395 Seasonal employees, 316, 317 SEC See Securities and Exchange Commission (SEC) SECA See Self-Employment Contributions Act (SECA) Second surgical opinions, 249, 395 Section 401(k) plans, 242–243, 395 Securities and Exchange Commission (SEC), 290–291, 293, 296–298, 395 Securities Exchange Act of 1934, 296, 296t, 395 Self-Employment Contributions Act (SECA), 265, 395 Self-funded plans, 247, 395 Self-funding, 247, 395 Self-insured workers’ compensation, 266 Seniority pay, 22–23, 70–75, 395 Services, 23, 395 Severance pay, 33, 395 Shareholders, 283, 294–295, 299–300, 374 Short-term disability, 224, 395 Short-term disability insurance, 224–225, 395 Short-term incentive compensation, 287 Signing bonuses, 32 Similar-to-me effect, 86, 395 Simple ranking plans, 156, 395 Single coverage, 246, 395 SIOP See Society for Industrial and Organizational Psychology (SIOP) Six-year graduated schedule, 239, 395 Skill, 143, 395 Skill (knowledge) blocks, 211–212, 213, 395 Skill-based pay, 23, 27, 119, 120–121, 395 Skill blocks model, 125, 126f, 395 Sleep time, 46t Small-group incentive plans, 103–104, 396 Smoking cessation programs, 230–231, 395 Social comparison theory, 296, 395 Social Security Act of 1935 (Title IX), 25, 43–44, 225, 244–245, 259–266, 340, 379, 395 Social Security Administration (SSA), 261–262, 265 Social Security Board of Trustees, 265 Society for Human Resource Management, 214 Society for Industrial and Organizational Psychology (SIOP), 165 Sorting effect, 100, 395 South American Community of Nations, 355 South Asian Association for Regional Cooperation, 358 Sovereign Bancorp, 290 Spillover effect, 62, 396 Sportsman Shoes, 39 Staff employees, 30–31, 396 Stair-step model, 123–124f, 123–125, 396 Standard deviation, 172, 174t, 396 15/11/14 5:56 PM www.downloadslide.com Subject Index    407  The Standard Occupational Classification System (SOC), 140, 140t, 141 State governments, 396 authority of, 43 compulsory workers’ compensation laws, 265–269 domestic partner benefits, 377–378 minimum wage laws, 44 overtime regulations, 324t Stock appreciation rights, 289, 396 Stock bonus plans, 243 Stock compensation plans, 112, 287–288, 288t, 396 Stock options, 111, 396 Straight commission, 208, 396 Strategic analysis, 35, 163, 396 Strategic decisions, 27–30, 28f, 396 Strategic management, 27–28, 396 Stress management, 231, 396 Strictness errors, 87, 396 Substance abuse plans, 252–253 Supplemental life insurance, 291, 396 Supplemental retirement plans, 291–292, 396 Supreme Court of Pennsylvania, on dual capacity, 268 Survivor benefits, 262 SVOP See Sales value of production (SVOP) Taco Bell, 97 Tactical decisions, 27–30, 28f, 396 Target plan bonuses, 286, 396 TARP See Troubled Assets Relief Program (TARP) Taxable wage base, 265, 396 Tax equalization, 345, 396 Tax Equity and Fiscal Responsibility Act of 1982, 57 Tax protection, 345, 396 Tax Reform Act of 1986, 57 TCN See Third country nationals (TCNs) Team-based incentives, 102–104, 396 Teamsters, 63 Technical Assistance Training Institute (EEOC), 53 Telecommuting, 321–322, 322t, 323–324, 396 Temporary employees, 311–312 Temporary employment agencies, 308t, 312, 315, 317, 396 Termination See Employment termination Term life insurance, 226, 396 Term of international assignment, 335 Third country nationals (TCNs), 335, 396 360-degree performance appraisals, 85, 381 Time-and-motion studies, 25, 396 Z03_MART8863_08_GE_SIDX.indd 407 Title I, Americans with Disabilities Act, 53–54, 397 Title IX See Social Security Act of 1935 (Title IX) Title VII, Civil Rights Act of 1964, 49–53, 83, 203, 212, 315, 319, 397 Torts, 266, 397 Tournament theory, 295, 295f, 397 Towers Watson, 165, 343 Toyota, 75 Trainee positions, 44, 45t Training programs as compensable work activity, 46t for conducting performance appraisals, 84 cross-cultural training, 333–334 in-house vs outsourcing, 213–214 international comparisons, 122 pay-for-knowledge plans, 33 person-focused pay plans, 123–127, 131–132, 210, 212–214 profitability and, 210 Trait systems, 78–79, 78t, 397 Transportation services, 229–230, 397 Travel reimbursements, 342 Travel time, 47t Troubled Assets Relief Program (TARP), 286, 290, 385, 397 T Rowe Price, 242 Tuition reimbursement programs, 23, 229, 341–342, 397 Two-tier pay structures, 215–216, 216t, 397 Underemployment, 370–373, 371t, 372f, 397 Unemployment Compensation Act of 2008, 260 Unemployment insurance, 260–261, 260t, 270–271 Unions See Labor unions United Auto Workers, 63 United Parcel Service (UPS), 125 Universal compensable factors, 150, 397 Universal life insurance, 226 U.S Bureau of Census, 261–262 U.S Bureau of Labor Statistics (BLS), 176, 177t, 237, 308, 318, 351, 370–372, 376 U.S Census Bureau, 51 U.S Congressional Budget Office, 375 U.S Constitution See Federal constitution U.S Department of State Indexes of Living Costs Abroad, Quarters Allowances, and Hardship Differentials, 343 U.S Education Department, 375 U.S government See Federal government U.S Labor Department, 44, 241, 316 compensable factors, definitions, 48t O*NET, 145–149, 146–150t U.S State Department, 339, 342, 343 U.S Supreme Court, 43, 49, 52, 323, 378–379 U.S Treasury Department, 261, 285 Value-added formula, 107, 397 Vanguard, 242 Variable pay See Incentive pay Variation, 172, 397 Verizon, 122 Vertical knowledge, 119, 397 Vertical skills, 119, 397 Vesting, 56, 239, 397 Vietnam Era Veterans Readjustment Assistance Act, 61t, 397 Violations of an affirmative duty, 267, 397 Volkswagen (VW) of America, 85 Voluntary part-time employees, 308, 397 Volunteerism, 228, 397 Volvo, 103, 129 Wages, 22 See also Hourly pay Waiting time, 46t Walling v A H Belo Corp., 323, 397 Wall Street Reform and Consumer Protection Act of 2010, 299–300, 374, 397 Walsh–Healey Act of 1936, 55 Walsh–Healey Public Contracts Act of 1936, 54, 397 Weight control and nutrition programs, 231, 398 Welfare practices, 26, 223, 245, 398 Wellness programs, 230–231, 398 Whirlpool Corporation, 85 Whole life insurance, 226, 398 William M Mercer, 165 Wilmington Trust Corporation, 290 Work context, 147, 147t, 398 Worker characteristics, 148, 398 Worker requirements, 138, 149, 150t, 398 Workers’ compensation, 43–44, 265–271, 267t, 398 Worker specifications, 142, 398 Workforce characteristics, 148, 398 Work/home balance, 314, 322 Working condition fringe benefits, 323–324, 398 Working conditions, 138, 398 Work styles, 148, 149t, 398 Zia Company, 83 15/11/14 5:56 PM www.downloadslide.com Z03_MART8863_08_GE_SIDX.indd 408 15/11/14 5:56 PM ... insurance  22 6 retirement programs  22 6 pension plans  22 6 integrated paid time off policies  22 7 paid time off banks  22 7 sabbatical leaves  22 8 volunteerism  22 8 employee assistance programs (EAPs) ... (EAPs)  22 8 family assistance programs  22 9 flexible scheduling and leave  22 9 day care  22 9 tuition reimbursement programs  22 9 transportation services  22 9 outplacement assistance  23 0 wellness... Medigap insurance Separate rules apply in these states The Balanced Budget Act of 1997 established Medicare+Choice—renamed to Medicare Advantage in 20 04 as a third Medicare program—as an alternative

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  • Cover

  • Title

  • Copyright

  • Contents

  • Preface

  • Part I Setting the Stage for Strategic Compensation

    • Chapter 1 Strategic Compensation

      • A Component of Human Resource Systems

      • Exploring and Defining the Compensation Context

        • What Is Compensation?

        • Core Compensation

        • Employee Benefits

      • A Historical Perspective on Compensation: The Road Toward Strategic Compensation

      • Strategic Versus Tactical Decisions

        • Competitive Strategy Choices

        • Tactical Decisions that Support the Firm’s Strategy

      • Compensation Professionals’ Goals

        • How HR Professionals Fit into the Corporate Hierarchy

        • How the Compensation Function Fits into HR Departments

        • The Compensation Department’s Main Goals

      • Stakeholders of the Compensation System

        • Employees

        • Line Managers

        • Executives

        • Unions

        • U.S. Government

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Competitive Strategy at Sportsman Shoes

      • Endnotes

    • Chapter 2 Contextual Influences on Compensation Practice

      • Employment Laws that Influence Compensation Tactics

        • Income Continuity, Safety, and Work Hours

        • Pay Discrimination

        • Civil Rights Act of 1964

        • Accommodating Disabilities and Family Needs

        • Prevailing Wage Laws

      • Laws that Guide Discretionary Employee Benefits

        • Internal Revenue Code

        • Employee Retirement Income Security Act of 1974 (ERISA)

        • Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

        • Continuation of Coverage under COBRA

        • Health Insurance Portability and Accountability Act of 1996 (HIPAA)

        • Pension Protection Act of 2006

        • Patient Protection and Affordable Care Act of 2010 (PPACA)

      • Contextual Influences on the Federal Government as an Employer

      • Labor Unions as Contextual Influences

      • Market Influences

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Exempt or Nonexempt?

      • Endnotes

  • Part II Bases for Pay

    • Chapter 3 Traditional Bases for Pay

      • Seniority and Merit

      • Seniority and Longevity Pay

        • Historical Overview

        • Who Participates?

        • Effectiveness of Seniority Pay Systems

        • Design of Seniority Pay and Longevity Pay Plans

        • Advantages of Seniority Pay

        • Fitting Seniority Pay with Competitive Strategies

      • Merit Pay

        • Who Participates?

        • Exploring the Elements of Merit Pay

      • Performance Appraisal

        • Types of Performance Appraisal Plans

        • Exploring the Performance Appraisal Process

      • Strengthening The Pay-For-Performance Link

        • Link Performance Appraisals to Business Goals

        • Analyze Jobs

        • Communicate

        • Establish Effective Appraisals

        • Empower Employees

        • Differentiate among Performers

      • Possible Limitations of Merit Pay Programs

        • Failure to Differentiate among Performers

        • Poor Performance Measures

        • Supervisors’ Biased Ratings of Employee Job Performance

        • Lack of Open Communication between Management and Employees

        • Undesirable Social Structures

        • Factors Other than Merit

        • Undesirable Competition

        • Little Motivational Value

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Appraising Performance at Precision

      • Endnotes

    • Chapter 4 Incentive Pay

      • Exploring Incentive Pay

      • Contrasting Incentive Pay with Traditional Pay

      • Individual Incentives

        • Defining Individual Incentives

        • Types of Individual Incentive Plans

        • Advantages of Individual Incentive Pay Programs

        • Disadvantages of Individual Incentive Pay Programs

      • Group Incentives

        • Defining Group Incentives

        • Types of Group Incentive Plans

        • Advantages of Group Incentives

        • Disadvantages of Group Incentives

      • Companywide Incentives

        • Defining Companywide Incentives

        • Types of Companywide Incentive Plans

      • Designing Incentive Pay Programs

        • Group versus Individual Incentives

        • Level of Risk

        • Complementing or Replacing Base Pay

        • Performance Criteria

        • Time Horizon: Short Term versus Long Term

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Individual or Team Reward?

      • Endnotes

    • Chapter 5 Person-Focused Pay

      • Defining Person-Focused Pay: Competency-Based, Pay-for-Knowledge, and Skill-Based Pay

        • What Is a “Competency”?

      • Usage of Person-Focused Pay Programs

      • Reasons to Adopt Person-Focused Pay Programs

        • Technological Innovation

        • Increased Global Competition

      • Varieties of Person-Focused Pay Programs

      • Contrasting Person-Focused Pay With Job-Based Pay

      • Advantages of Person-focused Pay Programs

        • Advantages to Employees

        • Advantages to Employers

      • Disadvantages of Person-focused Pay Programs

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Person-Focused Pay at Mitron Computers

      • Endnotes

  • Part III Designing Compensation Systems

    • Chapter 6 Building Internally Consistent Compensation Systems

      • Internal Consistency

      • Job Analysis

        • Steps in the Job Analysis Process

        • Legal Considerations for Job Analysis

        • Job Analysis Techniques

        • U.S. Department of Labor’s Occupational Information Network (O*NET)

      • Job Evaluation

        • Compensable Factors

        • The Job Evaluation Process

      • Job Evaluation Techniques

        • The Point Method

        • Alternative Job-Content Evaluation Approaches

        • Alternatives to Job Evaluation

      • Internally Consistent Compensation Systems and Competitive Strategy

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Internal Consistency at Customers First

      • Endnotes

    • Chapter 7 Building Market-Competitive Compensation Systems

      • Market-Competitive Pay Systems: The Basic Building Blocks

      • Compensation Surveys

        • Preliminary Considerations

        • Using Published Compensation Survey Data

        • Compensation Surveys: Strategic Considerations

        • Compensation Survey Data

        • Updating the Survey Data

      • Integrating Internal Job Structures with External Market Pay Rates

      • Compensation Policies and Strategic Mandates

        • Pay Level Policies

        • Pay Mix Policies

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Nutriment’s New Hires

      • Endnotes

    • Chapter 8 Building Pay Structures that Recognize Employee Contributions

      • Constructing a Pay Structure

        • Step 1: Deciding on the Number of Pay Structures

        • Step 2: Determining a Market Pay Line

        • Step 3: Defining Pay Grades

        • Step 4: Calculating Pay Ranges for Each Pay Grade

        • Step 5: Evaluating the Results

      • Designing Merit Pay Systems

        • Merit Increase Amounts

        • Timing

        • Recurring versus Nonrecurring Merit Pay Increases

        • Present Level of Base Pay

        • Rewarding Performance: The Merit Pay Grid

        • Merit Pay Increase Budgets

      • Designing Sales Incentive Compensation Plans

        • Alternative Sales Compensation Plans

        • Sales Compensation Plans and Competitive Strategy

        • Determining Fixed Pay and the Compensation Mix

      • Designing Person-focused Programs

        • Establishing Skill Blocks

        • Transition Matters

        • Training and Certification

      • Pay Structure Variations

        • Broadbanding

        • Two-Tier Pay Structures

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: A New Sales Representative

      • Endnotes

  • Part IV Employee Benefits

    • Chapter 9 Discretionary Benefits

      • An Overview of Discretionary Benefits

      • Components of Discretionary Benefits

        • Protection Programs

        • Paid Time Off

        • Services

      • The benefits and costs of Discretionary Benefits

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Time Off at Superior Software Services

      • Endnotes

    • Chapter 10 Employer-Sponsored Retirement Plans and Health Insurance Programs

      • Exploring Retirement Plans

        • Origins of Employer-Sponsored Retirement Benefits

        • Trends in Retirement Plan Coverage and Costs

      • Qualified Plans

        • Minimum Standards for Qualified Plans

      • Defined Benefit Plans

        • Minimum Funding Standards

        • Benefit Limits and Tax Deductions

      • Defined Contribution Plans

        • Individual Accounts

        • Investments of Contributions

        • Employee Participation in Investments

        • Minimum Funding Standards

        • Contribution Limits and Tax Deductions

      • Types of Defined Contribution Plans

        • Section 401(k) Plans

        • Profit Sharing Plans

        • Stock Bonus Plans

        • Employee Stock Ownership Plans

      • Hybrid Plans: Cash Balance Plans

      • Defining and Exploring Health Insurance Programs

        • Origins of Health Insurance Benefits

        • Health Insurance Coverage and Costs

      • Fee-for-Service Plans

        • Features of Fee-for-Service Plans

      • Managed Care Plans

        • Health Maintenance Organizations

        • Features of Health Maintenance Organizations

      • Preferred Provider Organizations

        • Features of Preferred Provider Organizations

        • Deductibles

        • Coinsurance

      • Point-of-Service Plans

      • Specialized Insurance Benefits

        • Prescription Drug Plans

        • Mental Health and Substance Abuse

        • Features of Mental Health and Substance Abuse Plans

      • Consumer-Driven Health Care

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: A Health Savings Account at Frontline PR

      • Endnotes

    • Chapter 11 Legally Required Benefits

      • An Overview of Legally Required Benefits

      • Components of Legally Required Benefits

        • Social Security Act of 1935

        • State Compulsory Disability Laws (Workers’ Compensation)

        • Family and Medical Leave Act of 1993

      • The benefits and costs of Legally Required Benefits

      • Designing and Planning The Benefits Program

        • Determining Who Receives Coverage

        • Financing

        • Employee Choice

        • Cost Containment

        • Communication

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Benefits for Part-Time Workers

      • Endnotes

  • Part V Contemporary Strategic Compensation Challenges

    • Chapter 12 Compensating Executives

      • Contrasting Executive Pay with Pay for Nonexecutive Employees

      • Defining Executive Status

        • Who Are Executives?

        • key Employees

        • Highly Compensated Employees

      • Executive Compensation Packages

        • Components of Current Core Compensation

        • Short-Term Incentives

        • Components of Deferred Core Compensation

        • Employee Benefits: Enhanced Protection Program Benefits and Perquisites

      • Principles and Processes for Setting Executive Compensation

        • The Key Players in Setting Executive Compensation

        • Theoretical Explanations for Setting Executive Compensation

      • Executive Compensation Disclosure Rules

      • Other Benefits

      • Say on Pay

      • Executive Compensation: Are U.S. Executives Paid Too Much?

        • Comparison between Executive Compensation and Compensation for Other Worker Groups

        • Strategic Questions: Is Pay for Performance?

        • Ethical Considerations: Is Executive Compensation Fair?

        • International Competitiveness

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: CEO Pay in the News

      • Endnotes

    • Chapter 13 Compensating the Flexible Workforce

      • Contingent Employees and Flexible Work Schedules

      • The Contingent Workforce

        • Groups of Contingent Workers

        • Reasons for U.S. Employers’ Increased Reliance on Contingent Workers

      • Pay and Employee Benefits for Contingent Workers

        • Part-Time Employees

        • Temporary Employees

        • Leased Workers

        • Independent Contractors, Freelancers, and Consultants

      • Flexible Work Schedules: Flextime, Compressed Workweeks, and Telecommuting

        • Flextime Schedules

        • Compressed Workweek Schedules

        • Telecommuting

        • Flexible Work Schedules: Balancing the Demands of Work Life and Home Life

      • Pay and Employee Benefits for Flexible Employees

        • Pay

        • Employee Benefits

      • Unions’ Reactions to Contingent Workers and Flexible Work Schedules

      • Strategic Issues and Choices in Using Contingent and Flexible Workers

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Telecommuting at MedEx

      • Endnotes

  • Part VI Compensation Issues around the World

    • Chapter 14 Compensating Expatriates

      • Competitive Advantage and How International Activities Fit In

        • Lowest-Cost Producers’ Relocations to Cheaper Production Areas

        • Differentiation and the Search for New Global Markets

        • How Globalization Is Affecting HR Departments

        • Complexity of International Compensation Programs

      • Preliminary Considerations

        • Host Country Nationals, Third Country Nationals, and Expatriates: Definitions and Relevance for Compensation Issues

        • Term of International Assignment

        • Staff Mobility

        • Equity: Pay Referent Groups

      • Components of International Compensation Programs

      • Setting Base Pay For U.S. Expatriates

        • Methods for Setting Base Pay

        • Purchasing Power

      • Incentive Compensation for U.S. Expatriates

        • Foreign Service Premiums

        • Hardship Allowances

        • Mobility Premiums

      • Establishing Employee Benefits for U.S. Expatriates

        • Standard Benefits for U.S. Expatriates

        • Enhanced Benefits for U.S. Expatriates

      • Balance Sheet Approach for U.S. Expatriates’ Compensation Packages

        • Housing and Utilities

        • Goods and Services

        • Discretionary Income

        • Tax Considerations

      • Repatriation Pay Issues

      • COMPENSATION IN ACTION

      • Summary

      • Key Terms

      • Discussion Questions

      • CASE: Jenkins Goes Abroad

      • Endnotes

    • Chapter 15 Pay and Benefits outside the United States

      • North America

        • Canada

        • Mexico

      • South America

        • Brazil

      • Europe

        • Germany

      • Asia

        • India

      • People’s Republic of China

      • COMPENSATION IN ACTION

      • Summary

      • Discussion Questions

      • CASE: North American Expansion for Threads Apparel

      • Endnotes

    • Epilogue

    • Chapter 16 Challenges Facing Compensation Professionals

      • Fallout from the “Great Recession”

        • What Is an Economic Recession?

      • Underemployment: Implications for Compensation

        • The Compensation–Productivity Gap

      • Executive Compensation

      • Rising Wages in China

      • Challenges in Health Care Reform

      • Workforce Demographic Shifts

        • Labor Force Diversity

        • Relevance for Employee Benefits

        • Considerations for Employee Motivation

      • Marriage between Same-Sex Individuals and the U.S. Supreme Court Ruling on the Defense of Marriage Act

      • Summary

      • Key Terms

      • Discussion Questions

      • Endnotes

  • Glossary

  • Author Index

  • Subject Index

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