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Compensation Glossary


Base Pay

The rate paid by the hour, week, month, or year to an individual for the job performed. This does not include shift differentials, overtime, incentives, benefits, or any other pay element other than base pay.

Benchmark Job

A job commonly found in the marketplace which is used as a reference point for making pay comparisons. Pay data for these jobs are readily available in published salary surveys.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required. Essentially, it's a combination of your pay, vacation, bonuses, health insurance, and any other perk you may receive.

Compensation Philosophy

A compensation philosophy spells out the company’s intentions, identifies the market for pay comparison, considers the strategic plan and mission and vision (drives business decisions), focuses on HR and compensation (drives compensation decisions), and identifies the total compensation elements.

Competencies

Basic units of knowledge, skills and abilities employees must acquire or demonstrate in order to successfully perform work.

Compression

Pay differentials too small to be considered equitable. In some organizations, the term may apply to differences between:

  • Pay of supervisor and subordinates;
  • Pay of experienced and newly hired employees in the same job;
  • Midpoints in successive grades.

Equal Employment Opportunity Commission (EEOC)

A commission of the federal government charged with enforcing the provisions of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Equal Pay Act of 1963, and other fair employment practices legislation.

Equal Pay Act of 1963

An amendment to the Fair Labor Standards Act of 1938 prohibiting gender-related pay differentials on jobs that are substantially equal in skill, effort, responsibility, and working conditions unless the differences exist due to a seniority, merit- or production-based pay system, or any other job-related factor other than gender.

Exempt

Employees exempt from the overtime provisions of the Fair Labor Standards Act. Generally this group includes executives, administrative/professional employees, and outside sales.

Equity

The quality of being fair and impartial.

External Equity

A measure of an organization’s pay levels or salary ranges compared to that of its labor market competitors.  External equity implies that the employer pays wages that are competitive with prevailing external market pay rates.
 

Fair Labor Standards Act (FLSA)

A federal law governing minimum wage, overtime pay, equal pay for men and women in the same types of jobs, child labor and record-keeping requirements. Contained within this law are the categories of exempt and non-exempt work. Exempt employees are those whose jobs are not subject to minimum wage or overtime payment provisions of the FLSA. Non-exempt employees are those whose jobs are subject to the overtime pay provision of the FLSA.

Hybrid Job

A job that encompasses multi-functional responsibility for a combination of different areas that are all important and necessary for the role (e.g., incumbent wears multiple hats) and typically represents two or more separate jobs (e.g., financial analyst and trainer).

Incentive Compensation

A reward that compensates an employee for high performance or for achievement above and beyond the defined normal job requirements.


Internal Equity

A standard that fairly establishes a pay level that corresponds to each job's relative value to the organization.

Job

An activity, often regular and often performed in exchange for payment of some kind.  A series of jobs an individual holds in their life is considered to be their career.

Job Classification

The assignment of a job to a hierarchical structure and salary grade based on job evaluation of job content and the going rate for comparable jobs in the external labor market.

Job Description

A summary of the most important features of a job, including the general nature of the work performed (essential duties and responsibilities) and level (e.g., skills, effort, responsibility and working conditions) of the work performed. It typically incudes job specifications that detail employee characteristics required for competent performance of the job. A job description describes and focuses on the job itself, not on any specific individual who might fill the job.

Job Family

A group of jobs involving similar types of work and requiring similar training, skills, knowledge and expertise.  The Job Family concept helps organize related jobs for purposes of pay, career progression and performance management.

Job Family Examples:

  • Human Resources
  • Information Technology
  • Library Services

Market Analysis

A process conducted by the University of Cincinnati’s Compensation team to analyze job trends and salary levels/rates paid in the market. Market data reflect the geographic regions and the types of industries from which we recruit. These may include for-profit and not-for-profit organizations, local and national organizations, and higher education institutions as well as general industry firms. Results of a market analysis may be used to make an annual recommendation for UC’s Compensation Program.

Market Rate

Rate of pay for each job based on the aggregate, representative market data from salary surveys.

Market Pricing

Relative to compensation, the technique of establishing pay structures almost exclusively through matching pay for a very large percentage of jobs with the rates paid in the relevant external market.

Midpoint

The salary that represents the middle of a given salary grade’s salary range. The midpoint is also commonly referred to as the “control point” for the average salary within a market-driven set of pay ranges.

Nonexempt

Employees who are subject to the minimum wage and overtime pay provisions of the FLSA.  For University of Cincinnati purposes, all employees considered non-exempt are paid on an hourly basis.

Salary Grade (or Pay Scale Group)

A specific component in a salary structure that groups jobs for pay policy application. All jobs in a salary grade have the same salary range: minimum, midpoint and maximum.

Salary Range

The range of pay rates, from minimum to maximum, established for a salary grade or classification. Typically used to set individual employee pay rates, the range reflects the acceptable lower and upper bounds of pay for jobs within particular salary grades.

Salary Structure

The array and hierarchy of salary grades and the associated pay ranges established for different jobs within an organization.

Salary Survey

The gathering, summarizing and analysis of relevant market data on wages and salaries paid by other employers for selected key classes of jobs or benchmark jobs. Salary surveys are used to establish or price a salary structure, analyze pay-related problems, and/or adjust pay levels in response to competitive pay changes.

Total Compensation

The complete pay package for employees, including all forms of salary, bonuses, benefits and services.

Total Cash Compensation

The sum of base salary and short-term incentives (bonuses, additional compensation, etc.) received over an annual (12) month reporting period.