Text 9. Understanding compensation and benefits terms
After you hire the best people, you need to keep all that great talent you’ve attracted. The compensation system that is established for employees is one of the main engines that drive your business.
The compensation and benefits aspect of the human resources function is very detail-oriented. And the bigger is the company, the more complicated it can be to maintain the required paper trail. But benefits and compensation is also one of the most engaging areas of human resources. Your business overall compensation package plays a major role in your ability to recruit and retain employees.
The basic language of Employee compensation.
Compensation: use this term to define all the rewards that employees receive in exchange for their work, including base pay, bonuses and incentives.
Base wage or salary: the base wage of salary is simply the salary or wage – before deductions or incentives – that employees receive for the work they do. If you want to get really technical, you generally use wages to describe the pay arrangements of employees who work on an hourly base and salary to describe the pay arrangements of employees who receive their compensation as a flat amount, paid weekly, biweekly or monthly, regardless of how many hours they work.
Raises: this term refers to increases in base salary or rate of pay, as oppose to one-time or periodic awards.
Bonuses and incentives: it’s tempting to treat these two terms as synonyms. To some degree they are. What both have in common is an objective of making employees feel appreciated and valued. But the terms also have key differences. A bonus is a reward for a job well done. Though usually financial, bonuses also can include rewarding time off, free membership in a local health club or discounts on merchandise. In contrast, an incentive is a tool used to boost productivity. In other words, an incentive program sets a goal – «Contact ten new customers within a month» – and rewards employees who attain it. An easy way to remember the distinction: an incentive comes before work is done; a bonus comes after.
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Benefits: benefits are also items that you offer to employees in addition to their base wage or salary. Examples include health insurance and retirement plans.
Commission: this term refers to a percentage of the sales price of service or product that sales people receive in addition to salary.
Pay raises.
Traditional pay systems often link raises to tenure (that is, time spent in that grade or position). Other systems frequently tie raises to performance. The most common types of raises include:
♦Seniority step-ups: These types of raises usually depend solely on an employee's length of service and are pretty much automatic.
♦Merit raise: These raises are increases for superior performance, usually as a formal performance evaluation system measures it, but sometimes driven by other considerations, such as attainment of an educational or training objective.
♦Productivity increases: These raises generally involve increasing pay after employees exceed a certain norm – a production quota, for example. These systems usually apply to production or assembly workers or to clerical workers performing repetitive tasks.
Bonuses.
Bonuses are one-time payments that you always key to results: the company's, the employee's, or those of the employee's department. The following types of bonuses exist:
♦Annual and bi-annual bonuses: These bonuses are one-time payments to all eligible employees, based on the company's results, individual performance, or a combination thereof.
♦Spot bonuses: Spot bonuses are awarded in direct response to a single instance of superior employee performance (an employee suggestion, for example). Employees receive the bonus on the spot – that is, at the time of, or immediately thereafter, the action that has earned the bonus.
♦Retention bonuses: You make such payments to persuade key people to stay with your company. These bonuses are common in industries that employ hard-to-recruit specialists or to retain top managers or star performers.
♦Team bonuses: These bonuses are awarded to group members for the collective success of their team.
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Incentives.
Incentives are like bonuses in that they don’t increase base pay. The difference is that most incentive programs, unlike bonuses, are often long term in nature to cement employee loyalty or spur productivity.
Profit-sharing plans.
Profit-sharing plans enable the company to set aside a percentage of its profits for distribution to employees. If profits go up, the employees get more money. The programs can be very sharply focused, by allocating the profit sharing on a department or business-unit bases.
Stock.
Stock in the company is an incentive that publicly traded firms (or firms planning to go public) may choose to offer their employees. Stock option plans give employees at publicly held companies the right to purchase shares in the company at a time of their own choosing, but at a price that is set at the time the option is awarded. Employees are under no obligation to exercise that option, but should the stock go up, employees can buy the stock at the cheaper price and either hold on to it, or sell it for the current value, thereby earning a profit.
Stock options have also given small growing companies a way to attract top talent without having to pay high salaries. In the 1990s, these plans became common in fast-growing industries such as technology.
Vocabulary:
detail-oriented – ориентированный на подробное изучение; paper trail – documents (зд.) объем документации;
engaging – привлекательный, притягательный, занимательный; base pay – базовая ставка (заработной платы);
rate of pay – ставка заработной платы; bonus – премия;
incentive – стимул, поощрение;
wage – заработная плата (на сдельной основе);
salary – заработная плата, оклад (на повременной основе); flat amount – фиксированная сумма;
raise – повышение заработной платы;
benefits – компенсационные выплаты, неденежные выплаты; commission – комиссионное вознаграждение;
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tenure – срок пребывания в должности; attainment – достижение;
quota – доля, квота, часть;
eligible – правомочный, имеющий право на, удовлетворяющий критериям;
merit – поощрение;
spot bonuses – премии и вознаграждения (одноразовые выплаты); retention bonuses – премии, выплачиваемые с целью удержива-
ния сотрудников в компании; spur – стимулировать, поощрять;
publicly traded firms, publicly held companies – компании, акции которых котируются на бирже;
option – опцион, т.е. право купить ценные бумаги компании – эмитента на определенных условиях;
to award an option – предоставить право на опцион;
to exercise an option – реализовать свои права по опциону.
Ex. 1. Find in the text English equivalents to the following words and phrases:
ориентированный на подробное изучение; документация; зарплата до вычетов; почасовая ставка; фиксированные выплаты за месяц; комиссионное вознаграждение; установить зависимость повышения зарплаты от результатов работы; повышения з/п за выслугу лет; надбавка за высокое качество работы; по другим причинам; норма выпуска продукции; зависеть от результатов; премии по итогам годовой и полугодовой работы; сотрудники, имеющие право на что-то, ведущие специалисты; немедленно, сразу, тут же; программы поощрительного вознаграждения; компании, акции которых котируются на бирже; реализовать права по опциону.
Ex. 2. Write down Russian equivalents for the following words and phrases:
detail-oriented; paper trail; salary before deductions; hourly base; flat monthly amount; commission; tie raises to performance; seniority stepups; merit raise; by other considerations; production quota; key to results; annual and bi-annual bonuses; one-time payments; eligible employees; key people; on the spot; incentive programs; publicly traded firms; to exercise the option.
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Ex. 3. Answer the questions, based on the text.
1.What plays a major role in your ability to recruit and retain employees?
2.Explain the terms «salary» and «wage». What is the difference?
3.What is the difference between bonuses and incentives? Can you formulate it in one sentence?
4.What are the most obvious examples of benefits?
5.What does the term «commission» mean?
6.Name the most common types of raises. Explain each of them.
7.Name the most common types of bonuses. Explain each of them.
8.What is stock option plan? What companies were using stock option plans?
Ex. 4. What do you think the main idea of the text is?
1.The bigger is the company, the more complicated it is to maintain the required paper trail.
2.Your business overall compensation package plays a major role in your ability to recruit and retain employees.
3.Incentives are like bonuses in that they don’t increase base pay.
Ex. 5. Prepare to present a summary of the text.
1.Make a plan of the text.
2.Write down phrases and expressions you will be using when talking about each part.
3.Present a summary.
Ex. 6. Translate into English.
1.Такая сфера деятельности отдела по управлению персоналом, как установление размеров заработной платы и льгот, требует пристального внимания.
2.Основная (базовая) ставка заработной платы – это сумма заработной платы, которая начисляется сотрудникам до вычетов и дополнительных начислений.
3.Поощрительные выплаты производятся до выполнения работы, а премия – после.
4.Льготы – это то, что предлагается сотрудникам помимо основной зарплаты, например медицинское страхование, пенсионный план.
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