Glossary …

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z


A


Aging
A calculation used in market pricing to adjust market salary from different effective dates to a common date.


B


Base Pay/Base Salary
A fixed amount of compensation paid to an employee for performing a specific job, exclusive of additional payments or allowances.

Benchmark Job
A position commonly found across a wide range of industries and organizations with similar definitions within the marketplace. Primarily used to make pay comparisons, either within an organization or to comparable jobs outside the organization.

Blended Job/Hybrid Job
A job with multi-functional responsibility for a combination of different areas, often found within the administration and/or operations area of an organization.

Broad Banding
A method of grouping a number of similar jobs into only a few job grades with wider salary ranges.


C


Comparable Worth
A method of setting compensation that provides equal pay for work of equal value. Often used as a means of achieving parity in pay for employees in jobs with pay traditionally lower than comparable positions.

Compa-Ratio
The relationship of base pay to market expressed as a percentage of the midpoint of the salary range.

Comp Philosophy
Usually in the form of a written statement, the values and principles used by an organization to guide decision-making regarding pay, benefits, and total rewards.


D


Defined Benefit Plan
A retirement plan that uses a specific, predetermined formula to calculate the amount of an employee’s future benefit.

Defined Contribution Plan
A retirement plan in which the employer makes specified contributions but the amount of the retirement benefit is not specified.


E


Exempt Position
A job or position that is not subject to the Fair Labor Standards Act (FLSA) minimum wage and overtime requirements and that is usually paid on a salaried basis.


F


Flagged Rate (Green Circle, Red Circle)
A wage rate that is below or exceeds the formal pay rate or range of rates for a job due to varied factors.


G


Grade Differential
The difference between one grade level and the next highest grade level in a job grade structure.

Grade Family
A grade family is used to group together job grades for similar titles or jobs in a specific department or branch.


H


Hardship Allowance
An additional payment made to employees for working under adverse conditions, for example: outside during periods of extremely cold weather.

Hazard Pay
Additional pay made to an individual worker or a group of workers working under dangerous or undesirable conditions.


I


Incentive Pay
A general term for wage payment that relates earnings of workers to their actual production either individually or as a group.

Internal Equity
The monetary relationship between jobs requiring comparable knowledge, skill, and ability, as well as education and experience, within an organization.


J


Job Analysis
Systematic study of a job to assess its specifications, its mental, physical, and skill requirements, its relation to other jobs in the establishment, etc., usually for wage setting or job simplification purposes.

Job Classification
Arrangement of tasks in an organization or industry into a limited series of jobs or occupations, rated in terms of skill, responsibility, experience, training, and similar considerations, usually for wage setting purposes. This term, or job class, refers to a single cluster of jobs of approximately equal “worth.”

Job Description
A written record of the requirements related to a position that describes the basic elements of the job, the responsibilities, authority, and autonomy, as well as, the essential functions of the position and the environment in which the work is to be executed. Also, forms the basis for an appraisal of the employee’s job performance.

Job Evaluation (Job Grading, Job Rating, Job Ranking)
The process of determining the relative importance, or the ranking, of jobs in an organization for wage setting purposes, by systematically rating them on the basis of selected factors, such as skill, responsibility, experience, etc.

Job Grade
A level within an organization’s salary structure, with either a single salary or a salary range associated with it. A hierarchy of categorized positions within an organization. Also may be referred to as salary structure and/or job evaluation points.


K


KSA (Knowledge, Skills & Abilities)
Elements of a job description used to identify the requirements an employee needs to be successful in the position.


L


Labor Grades
One of a series of rate steps (single rate or a range of rates) in the wage structure of an organization’s occupations. Labor grades are typically the outcome of some form of job evaluation, or of wage rate negotiations, by which different occupations are grouped, so that occupations of approximately equal “value” or “worth” fall into the same grade and, thus, command the same rate of pay.


M


Market Adjustment
An adjustment to a position’s salary range that brings that position within its market value range.

Market Average
The sum of the market rates reported for a job within a market survey divided by the total number of market rates reported.

Market Rate
The value of similar jobs in the marketplace as reported by salary surveys.

Mean
The average of the salaries reported for a specific demographic element or across all demographic elements.

Min, Mid, Max
Min: The minimum dollar amount in a salary range.
Mid: The middle dollar amount in a salary range.
Max: The maximum dollar amount in a salary range.


N


NAICS (North American industry Classification System)
The standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.


O


On Call Pay
Pay received by employees for being ready to report to work if necessary. Employees receiving on call pay usually are required to be readily available by phone or pager, within a reasonable distance from the workplace, and able to report promptly to work.


P


Pay Compression
A lessening of the difference in pay between workers in different pay grades. Pay compression can be caused by workers receiving across-the-board, flat sum pay increases or by workers at higher pay grades receiving smaller percentage salary increases than those at lower pay grades.

Pay Range/Salary Range
The low, middle, and high end of salary paid for a specific position. It can be based on a variety of factors including type of work and the skills needed to be successful, the level of experience and education needed, internal equity, and market analysis of the average pay for that job.

Point-Factor Job Evaluation
A process that assigns numerical scores to the fundamental elements of a job.

 Premium Pay
An employee’s compensation that is paid at a rate that is greater than his or her regular rate. It may refer to overtime, shift differentials, or penalty rates.

Prevailing Wages
A term that may be used in varying contexts. For example, it may refer to average level of wages paid by employers for specific occupations in a community or area; or rate most commonly paid; or rate paid to most workers; or rate established by union contracts.


Q


Quality of Work Life Committees
Committees existing at multiple organizational levels within a company charged with developing changes to improve performance and the quality of employees’ work life. If committees are established as part of a labor-management agreement they do not address contractual issues such as pay and benefits.


R


Range Penetration
The level an individual salary compared to the total pay range.

Range Spread
The difference between the minimum and maximum dollar amounts within a salary range.


S


Step Rates
Fixed levels between the minimum and maximum rates for an occupation in a wage progression system.


T


Total Compensation
An employee’s complete pay package that includes wages and salaries, non-cash wage payments, and the employer’s cost of employee benefits.

Turnover Rate
The rate at which employees leave a company, either voluntarily or involuntarily.


U


Union Rate
Minimum rate (hourly or weekly) paid to qualified workers in a specific occupation or trade under the terms of a union agreement.


V


Vacation Pay
Wages received by an employee for his vacation period. See also Paid Vacation. Pay in lieu of vacation – vacation pay to workers who do not take the actual time off, paid in addition to wages for time worked.


W


Wage Progression
Plan providing within grade pay increases, generally at specified time intervals or on a merit basis, for workers in occupations having established minimum and maximum wage rates.


X


Y


Z

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