broadbanding
A system for condensing compensation rate ranges into broader classifications.

classification or grading system
A job evaluation method that groups jobs together into a grade or classification.

comparable worth
An issue that has been raised by women and the courts in recent years. It means that the concept of equal pay for equal jobs should be expanded to the notion of equal pay for comparable jobs. If a job is comparable to other jobs as determined by job content analysis, that job's pay should be comparable.

compensation
Compensation is the HRM function that deals with every type of reward that individuals receive in return for performing organizational tasks.

delayering
Allowing workers to move among a wider range of tasks without having to adjust pay with each move.

direct financial compensation
Consists of the pay a person receives in the form of wages, salaries, bonuses, or commissions.

equal pay
Equal pay for equal work for men and women. Equal work is defined as work requiring equal skills, effort, and responsibility under similar working conditions.

equity theory
A motivation theory that argues that a major determinant of employees' productivity and satisfaction arises from the degree of fairness or unfairness that they perceive in the workplace.

exchange theory
See distributive justice theory.

exempt employee
A person working in a job that is not subject to the provisions of the Fair Labor Standards Act (1938) with respect to minimum wage and overtime pay. Most professionals, executives, administrators, and outside salespeople are classified as exempt.

factor comparison method
A job evaluation method that uses a factor-by-factor comparison. A factor comparison scale, instead of a point scale, is used. Five universal job factors used to compare jobs are responsibility, skills, physical effort, mental effort, and working conditions.

Fair Labor Standards Act (FLSA)
A 1938 law that set specific minimum wage and overtime pay rates.

indirect financial compensation
All financial rewards (benefits and services) that are not included in direct financial compensation.

job evaluation
The formal process by which the relative worth of various jobs in the organization is determined for pay purposes.

minimum wage
The Fair Labor Standards Act of 1938, as amended, states that all employers covered by the law must pay an employee at least a minimum wage. In June 2000, the minimum was $5.15 per hour.

motivation
The attitudes that predispose a person to act in a specific goal-directed way. It is an internal state that directs a person's behavior.

nonexempt employee
A person working in a job that is subject to the minimum wage and overtime pay provisions of the Fair Labor Standards Act. Blue-collar and clerical workers are two major groups of nonexempt employees.

pay class
A convenient grouping of a variety of jobs that are similar in difficulty and responsibility

pay curve
A graphical portrayal of pay information based on survey data collected.

pay level
Pay set relative to employees working on similar jobs in other organizations.

pay range
A set of data that indicates pay differences between pay classes.

pay satisfaction
The degree of satisfaction an employee has regarding his or her compensation and its fairness.

pay structure
Pay set relative to employees working on different jobs within the organization.

point system
The most widely used job evaluation method. It requires evaluators to quantify the value of the elements of a job. On the basis of the job description or interviews with job occupants, points are assigned to the degree of various factors required to do the job.

ranking of jobs
A job evaluation method often used in smaller organizations, in which the evaluator ranks jobs from the simplest to the most challenging—for example, clerk to research scientist.

reinforcement
Based on the notion that people do things because they know other things (e.g. rewards) may follow. Consequences which give rewards increase a behavior.