What is job architecture? Job architecture provides a company with a framework to understand roles and align jobs based on the type of work performed. It makes for a uniform way of defining roles within a company and then serves as a basis for making strategic decisions. Why is job architecture important? How to set…
What is incentive pay? Incentive pay is a payment system that is based on rewarding employees for their performance instead of the number of hours that they work. The focus of incentive pay is to motivate employees to focus on outcomes as opposed to the amount of time that they work. This type of compensation,…
What are gross wages? Gross wages and salaries are the amounts earned by an employee before taxes and deductions are taken from the paycheck. In other words, this term refers to the taxable compensation an employee receives. What is included in gross wages? The salary or wage itself is not the only thing included in…
What is say on pay? Say on pay is a term referring to the law in which the shareholders of a company can vote on the compensation of executives and also on general compensation policies. Say on pay votes can be applied to: The Say on Pay role is supported by corporate law and is…
What is retro pay? Retro pay (short for retroactive pay) refers to compensation added to an employee’s salary to correct an error made in a previous compensation cycle. The difference between the amount an employee should have received and what is paid to them in the next cycle is the amount of the retro pay.…
What is premium pay? Premium pay refers to increased compensation that may be provided to an employee for a variety of reasons: How do I calculate premium pay? Depending on the job and the type of hours worked, the rate of the premium has to be determined. Usually, the premium rate may not be less…
What is competitive pay? Competitive pay is the total compensation package awarded to an employee with a value equal to or greater than the market offering for a similar position in an industry and geographical area. “Competitive” indicates that employers are offering compensation better in relation to other companies to secure high-performing employees. This is…
What is a remuneration committee? A remuneration committee consists of board members responsible for setting an appropriate reward policy that motivates executives to achieve the long-term interests of the investors/shareholders. Responsibilities include setting the remuneration policy for executive management, determining individual compensation for executive directors, and providing direction on equity plans, salaries, bonuses, and pensions.…
What is gainsharing? Gainsharing aims to increase company profitability by seeking higher levels of participation and employee performance. Employees receive a financial share of the profit of the company gained by a performance improvement they helped design. Gainsharing aims to eliminate waste in processes and motivate employees to work hard. It’s a group-based initiative in…
What is merit pay? Merit pay is a compensation approach that gives employees an increase in their base salary or provides bonuses based on their performance. Employers use it to ensure they are rewarding their best-performing employees. Merit pay can take the form of a merit increase in salary, commission, or bonuses. How does merit…