Compensation Definitions: Basic Must Knows for the Entrepreneur or Employee
Compensation Definitions: Basic Must Knows for the Entrepreneur or Employee
Compensation Program: Refers to the kind of pay that the organization uses. It can refer to hourly vs. salary, can include compensation philosophies (discussed below) and usually includes listings and/or values for compensation items such as health insurance, vacation, holidays and tuition reimbursement.
Pay Structure: Is the grouping of pay grades or pay bands. There can be more than one pay structure in a Compensation Program. For instance, there may be one pay structure for service and maintenance positions, one for professional and one for managerial. Or, the organization may have just one structure for all positions.
Salary vs. Hourly Compensation: Salary compensation is a base rate based on annual compensation for an employee who does not receive over time pay. A salaried employee will receive the same compensation regardless of the number of hours worked. Hourly compensation refers to pay based on hours worked. An hourly employee will receive a set hourly fee for each hour worked and should receive time and one half for any hours worked above 40 in one week.
Pay Grade: is the name for a pay range used to determine pay for grouping of jobs within a pay structure. All jobs in one pay grade will be paid similarly. It is made up of a minimum and maximum. The organization may assign a name to the pay grade which would indicate where it falls in comparison to other pay grades. For instance, pay grade 27 would have a lower minimum than a pay grade 29. All individuals working in jobs that fall under one pay grade should be paid somewhere within the minimum and maximum of the range.
Pay Band or Broad Band: Some organizations now use Pay Bands. These are similar to pay grades but are usually much wider and encompass more jobs. The philosophy behind utilizing a pay band vs. a pay grade pay structure usually is one that provides managers with more flexibility for rewarding employees for taking on additional tasks or for working at a higher level. Some organizations will also adopt this kind of structure to help emphasize a policy of promotion within.
Pay Grade Minimum: is the lowest pay that anyone should receive for a job that falls within the grade. Generally, the minimum of the range should be a new hire rate for someone who just meets the minimum requirements of the job.
Pay Grade Median: is the middle of the pay grade. Organizations generally target the median of the pay range to the average rate paid for similar jobs in other organizations. In most compensation programs, the goal is to pay fully functioning (knows all aspects of the job – may takes several years) employees the median of the pay grade – or close to it.
Pay Grade Maximum: The top of the pay grade. This is the most that an employee can make while staying in the same job. Depending on the compensation philosophy of the organization, it can take years to reach the maximum of the range in organizations. Or, if the compensation plan is based on performance, only a handful will ever reach it.
Compensation Definitions Basic Must Knows for the Entrepreneur or Employee - To learn more about this author, visit Kirsten Ross's Website.
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Have you ever been in a staff meeting or other location and had a visit from a Human Resource Professional to discuss Compensation? Or maybe you’ve inquired about salaries or hourly rates – and have you been bombarded with terminology. Here are some basic compensation terms with definitions that will help you sail through those meetings looking like the entrepreneur that you are.
Compensation Program: Refers to the kind of pay that the organization uses. It can refer to hourly vs. salary, can include compensation philosophies (discussed below) and usually includes listings and/or values for compensation items such as health insurance, vacation, holidays and tuition reimbursement.
Pay Structure: Is the grouping of pay grades or pay bands. There can be more than one pay structure in a Compensation Program. For instance, there may be one pay structure for service and maintenance positions, one for professional and one for managerial. Or, the organization may have just one structure for all positions.
Salary vs. Hourly Compensation: Salary compensation is a base rate based on annual compensation for an employee who does not receive over time pay. A salaried employee will receive the same compensation regardless of the number of hours worked. Hourly compensation refers to pay based on hours worked. An hourly employee will receive a set hourly fee for each hour worked and should receive time and one half for any hours worked above 40 in one week.
Pay Grade: is the name for a pay range used to determine pay for grouping of jobs within a pay structure. All jobs in one pay grade will be paid similarly. It is made up of a minimum and maximum. The organization may assign a name to the pay grade which would indicate where it falls in comparison to other pay grades. For instance, pay grade 27 would have a lower minimum than a pay grade 29. All individuals working in jobs that fall under one pay grade should be paid somewhere within the minimum and maximum of the range.
Pay Band or Broad Band: Some organizations now use Pay Bands. These are similar to pay grades but are usually much wider and encompass more jobs. The philosophy behind utilizing a pay band vs. a pay grade pay structure usually is one that provides managers with more flexibility for rewarding employees for taking on additional tasks or for working at a higher level. Some organizations will also adopt this kind of structure to help emphasize a policy of promotion within.
Pay Grade Minimum: is the lowest pay that anyone should receive for a job that falls within the grade. Generally, the minimum of the range should be a new hire rate for someone who just meets the minimum requirements of the job.
Pay Grade Median: is the middle of the pay grade. Organizations generally target the median of the pay range to the average rate paid for similar jobs in other organizations. In most compensation programs, the goal is to pay fully functioning (knows all aspects of the job – may takes several years) employees the median of the pay grade – or close to it.
Pay Grade Maximum: The top of the pay grade. This is the most that an employee can make while staying in the same job. Depending on the compensation philosophy of the organization, it can take years to reach the maximum of the range in organizations. Or, if the compensation plan is based on performance, only a handful will ever reach it.
Compensation Definitions Basic Must Knows for the Entrepreneur or Employee - To learn more about this author, visit Kirsten Ross's Website.
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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