In the first edition of Industrial Engineering Terminology, the terms and definitions comprising the field of industrial relations, were included in the section called Applied Psychology.  In the second edition (1982), as section covering Wage and Salary Administration was added.

In the third edition (1989), the Z94 Committee voted to combine the two sections under the title Employee and Industrial Relations.  This change reflected the more commonly understood and generally used terms in referring to this organizational function as the industrial relations department, the employee relations department or the personnel department.  Today, in some enterprises, such departments are often known as the Human Resources Department.  Nevertheless the functions are the same and are included in the definitions within this section.

Although the administration of the wage and salary functions are the responsibility of industrial relations departments, the Z94 Committee voted to include the Wage and Salary Administration terminology in the Employee and Labor Relations section because of the involvement of industrial engineering in the design and control of incentive plans, training, human factors (ergonomics), work place environment, job analysis, job evaluation, and participation in handling grievances concerning work standards, productivity and safety.

The previous, and third edition (1989) of Industrial Engineering Terminology formed the basis for the work of this subcommittee in reviewing the contents to determine what terms are now archaic and no longer needed to be included and, more important, what terms have come into the language since the last addition.

In addition, the subcommittee reviewed and used definitions set forth by the American Arbitration Association in its book Labor Arbitration, the American Compensation Association in its pamphlet Glossary of Compensation Terms, and in the glossary set forth by R.S. Schuler, N.J. Buetell and S.A. Youngblood in the Publication, Effective Personnel Management (West Publishing Co. third edition, 1989) The Z94 subcommittee wishes to express its appreciation to these organizations for their help and assistance and permission to include some of their definitions in this section.

Other publications referred to include Glossary of Personnel Management and Industrial Relations Terms published by the Society for Advancement of Management in 1959, and the Glossary of Current Industrial Relations and Wage Terms, Bulletin Number 1438 published by the United States Department of Labor.

The members of the Employee and Industrial Relations Subcommittee, involved in the preparation of this section of Industrial Engineering Terminology, consisted of representatives from business, labor and academia and are listed below:


Soter G. Liberty, P.E.
President, S.G. Liberty Associates Inc.
Adjunct Professor
Lawrence Tech University
Director, IIE Society for Eng. & Mgmt. Systems


Dr. Adnan Aswad Ph.D.
Industrial & Manufacturing   
Systems Engineering   
University of Michigan

Irving Bluestone
Professor of Labor Studies
Wayne State University/Detroit MI.
Retired UAW Vice President

Stanley Harris, Ph.D., CMfgE, CEI
Associate Professor
College of Engineering
Lawrence Technological University

Dolores Infante
Ergonomics Coordinator
Industrial Engineering
GM Tech Center
General Motors

Douglass V. Koch SPHR
Associate Provost
Human Resources Consultant
Lawrence Technological University

John E.S. Moffat E.A.
Industrial Engineer
And Tax Consultant
Washington, D.C.

Irvin Otis P.E.
IIE Area II Vice President
President, Otis & Associates
Adjunct Professor Central Michigan
Retired Chrysler Executive


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ABANDON. The act of shutting down a plant or facility for an indefinite period of time; a period during which operations are temporarily suspended; differs from a close down in which an operation is completely closed with no plans for reopening. (Specific to the steel industry.)

ABANDONMENT. The dollar loss recognized as a tax deduction when a taxpayer irrevocably discards a depreciable asset with the intention of neither reusing it nor reselling it.

ABILITY. Demonstrable knowledge or skill. Ability includes aptitude and achievement.

ABILITY TO PAY. A concept sometimes expressed in collective bargaining related to the economic base upon which the cost of wages and/or benefits is to be borne. Uses the effects of wage levels on costs to an organization (rather than as income to employees) and, therefore, helps determine whether or not an organization can afford a specific wage and benefit level.

ABSENCE. The act of employees on a company’s active payroll who are away from their work with or without the employer’s prior knowledge or authorization.

ABSENTEEISM. Failure of workers to report to work when scheduled. Often applied to unjustified failure to report to work.

ABSENTEE RATE. A ratio indicating the number of man- days or man-hours lost to the total number of available man-days of employment during some base period; usually one month.

ACCESSION. The hiring of a new employee, or the rehiring, appointment, or reinstatement of a former employee.

ACCIDENT. Any unintentional event which causes injury, death or property damage.

ACCIDENT AND SICKNESS BENEFITS. Regular payments to workers who lose time from work due to off-the- job disabilities through accident or sickness. Usually insured and part of a private group health and insurance plan financed in whole or in part by the employer. (See HEALTH AND INSURANCE PLAN, TEMPORARY DISABILITY INSURANCE, WORKER’S COMPENSATION, SICK LEAVE.)

ACCIDENTAL DEATH AND DISMEMBERMENT BENEFITS. An extra lump-sum payment made under many life insurance plans for loss of life, limb, or sight as a direct result of an accident. Coverage may be for occupational and non- occupational accidents. (See WORKER’S COMPENSATION.)

ACCIDENT PRONENESS. The tendency of some workers, because of peculiarities in intelligence, coordination, temperament, or other physical and mental characteristics, to become victims of accidents or possibly the cause of accidents to others.

ACCOUNTABILITY. The total obligation that subordinates have to render to their superiors an account concerning the degree to which assigned responsibilities have been or have not been met and carried out.

ACCRUAL ACCOUNTS. Accounts set up within an accounting system to provide funds for an obligation at some future date.

ACCRUAL OF BENEFITS. The process, method or formula normally based on various factors such as length of service, hours worked, or level of responsibility which is used to determine either when benefits become legally enforceable claims or increase in number, value, or percentage.

ACHIEVEMENT. An accomplishment of value or importance in relation to a standard.

ACROSS THE BOARD INCREASE. An identical pay increase (the amount or percent) given to every employee. Sometimes known as a general increase.

ACTIVE EMPLOYEES. Employees at work, as distinguished from retired or laid-off employees. (Includes Employees on sick leave.)

ACTIVITY PLATEAU. A level of performance established informally, resulting from past practice, or by design such as under the application of a wage incentive plan.

ACTUAL-HOURS-WORKED. The number of hours worked in a pay period.

ACTUARY. A person normally trained in mathematics, statistics, legal accounting methods, and the principles of sound operation of insurance, annuities, and pension plans, who employs life expectancy projections, financial projections, and related data in the funding and management of such plans.


ADDITIVE, HOURLY (ADD-ON, ADDER). A fixed sum of money that is added to incentive earnings for work upon which an operator has no opportunity to earn incentive wages. Wages paid outside incentive earnings or the base for incentive earnings. (Initially designed to separate out COLA payments).

ADMINISTRATIVE LABOR. In the steel industry, any labor, whether paid hourly or salary, which is not direct labor or indirect labor. In the automotive industry, all labor residing outside of the production or manufacturing plants, is considered as General & Administrative (G&A) i.e., corporate and division headquarter locations. In the production (manufacturing) plants all labor is either direct or indirect.

ADMINISTRATION. (1) (noun) That body of individuals in an organization accountable and responsible for the performance of the functions of executive leadership. (2) (verb) Performing the administrative functions of planning, organizing, motivating and controlling the activities of an organization so that it may effectively achieve its goals.

ADMINISTRATIVE SERVICES ONLY (ASO). Claims services arrangement provided by insurance carriers to employers with self-insured health and disability benefit plans.

ADMINISTRATOR. (1) A person responsible for the performance of specific administrative duties. (2) The person or organization (frequently the sponsor) specifically designated by the terms of the instrument under which a pension or welfare plan operates to direct the plan.

ADVANCE NOTICE. In general, an announcement of an intention to carry out a certain action, given to an affected or interested party in sufficient time to prepare for it, as in informing a union of planned changes in production methods or plant shut- down, notifying a worker that he or she will be laid-off on a certain date, and notifying management of the union’s intention to terminate or modify a collective bargaining agreement on its expiration date. (See PAY-IN-LIEU-OF NOTICE.)

ADVANCE ON WAGES. Refers to any practice by which employees are entitled to draw wages or salaries in advance of actual work performance or prior to the normal pay date for work already completed.

AFFIRMATIVE ACTION. Recruitment to accelerate achievement of a balanced work force according to non-discriminatory guidelines as to gender, ethnic, and/or racial minorities.

AFL-CIO (AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS). Federation of autonomous national and international unions created by the merger of the American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO) in December 1955. More than 75 percent of union members in the United States come within the orbit of the AFL-CIO through their membership in affiliated unions. The initials AFL-CIO after the name of the union indicate that the union is an affiliate.

AGE DISCRIMINATION AND EMPLOYMENT ACT (ADEA) OF 1967 (AMENDED, 1978). This law makes non-federal employees between 40 and 70 a protected class relative to their treatment (in pay, benefits, employment and other personnel actions). Most direct impact on compensation programs was to preclude mandatory retirement prior to 70 (in most states) and to mandate group insurance coverage for employees over 60.

AGENCY SHOP. Provision in a collective bargaining agreement that assesses all bargaining unit employees who do not join the union to pay a fixed amount monthly, usually the equivalent of union dues, as a condition of employment to help defray the union’s expenses in acting as a bargaining agent. Under some arrangements, the payments are allocated to the union’s welfare fund or to a recognized charity. May operate in conjunction with a modified union shop. (See UNION SHOP, EXCLUSIVE BARGAINING RIGHTS.)

AGREEMENT. Written contract between an employer (or an association of employers) and a union (or unions), usually for a definite term, defining conditions of employment (wages, hours, vacations, holidays, overtime payments, working conditions, benefits, etc.), rights of workers and union, and procedures to be followed in settling disputes or handling issues that arise during the life of the contract. (See COLLECTIVE BARGAINING.) (BARGAINING AGREEMENT.)

ALCOHOLISM PROGRAM. A program provided by an employer, a union, or both to assist employees in rehabilitation from alcoholism. The service may be supplied directly by the employer or by an outside service agency.

ALLOWANCE. A pay or work time adjustment to compensate an employee for job fatigue, unavoidable delays, personal needs, and rest.

ALLOWED TIME. The basic time established for the performance of a task increased by appropriate allowances.

AMALGAMATED CRAFT UNION. A craft union formed by two or more trade unions of the same general make-up in order to consolidate related trades.

AMERICAN ARBITRATION ASSOCIATION. Private nonprofit organization established to aid professional arbitrators in their work through legal and technical services, and to promote arbitration as a method of settling commercial and labor disputes. Provides lists of qualified arbitrators to unions and employers on request.

AMERICANS WITH DISABILITIES ACT (ADA). This Act, enacted July 26, 1992, contains requirements concerning employment of people with handicap ping conditions. The definition of handicapped has been broadened significantly. Under this Act even applicants or workers who are temporarily disabled may request accommodation, consequently more careful scrutiny must be given to including, rather than excluding, persons with handicaps for job opportunities.

ANNUAL BONUS. Usually a lump sum payment made in addition to an employee’s normal salary or wage. May be based on performance (individual or company).

ANNUAL EARNINGS. The total amount of compensation received for services by a worker during the year, including wages, salaries, bonuses, overtime pay, and incentive earnings. The total annual earnings of a worker may be the result of work performed for a single employer or a number of employers in a given year, and includes profit sharing.

ANNUAL IMPROVEMENT FACTOR (PRODUCTIVITY). Introduced in the 1948 agreement between the General Motors Corporation and the United Automobile Workers, and altered over the years, for wage increases granted automatically each contract year, in addition to the cost-of-living adjustment. The provision is prefaced with the following words which set it apart from ordinary deferred wage increases: “the annual improvement factor provided herein recognizes that a continuing improvement in the standard of living of employees depends upon technological progress. It further recognizes the principle that to produce more with the same amount of human effort is a sound economic and social objective.” (See DEFERRED WAGE INCREASES.)

ANNUAL WAGE OR EMPLOYMENT GUARANTEE. An arrangement under which an employer guarantees workers a minimum amount of wages or hours of work during a year.

ANNUITY. A fixed payment to a specific person at stated intervals either for a definite number of years or for life. Usually associated in industrial relations with a pension plan. (See PENSION PLAN.)

ANTI-RACKETEERING LAW. Federal law making it a felony to obstruct, delay, or affect interstate commerce by robbery or extortion, e.g., Hobbs Act (1934).

ANTI-STRIKEBREAKER LAW. Federal law prohibiting the interstate transportation of strikebreakers, e.g., Byrens Act (1936).

ANXIETY. A state of apprehension or uneasiness related to fear. The object of anxiety is ordinarily less specific than the object of fear.

APPENDIX. The final portion of a labor contract which may include wage schedules, details of insurance plans, and  other material not usually included in the main body of an agreement or labor contract.

APPLICANT. A person who seeks and applies for employment in an organization.

APPLICATION FORM (BLANK). A prepared set of questions arranged to provide an applicant with the means to set forth in writing, pertinent personal experience, and educational information to serve as a basis for his/her selection or rejection by an employer or agent.

APPRENTICE. A person who enters into an agreement to learn a skilled trade and to achieve a journeyman status through supervised training and experience, usually for a specified period of time. Practical training is supplemented by related technical off- the-job instruction.

APPRENTICE RATE. The schedule of wage rates applicable to workers being given formal apprenticeship training for a skilled job, in accordance with set standards. The rate schedule is usually established in such a manner as to permit the gradual achievement of the minimum journeyman wage rate.

APTITUDE. Ability to develop requisite performance skills.

APTITUDE TEST. An actual or simulated trial to determine qualification or fitness to perform a task or job. A method to determine aptitude.

ARBITRATION (VOLUNTARY, COMPULSORY, ADVISORY). Method of settling labor-management disputes through recourse to an impartial third party, whose decision is usually final and binding. Arbitration is voluntary when both parties agree to submit disputed issues to arbitration, and compulsory if required by law. (A court order to carry through a voluntary arbitration agreement is not generally considered compulsory arbitration.) Advisory arbitration: As provided in federal government agreements, arbitration without a final and binding award.

ARBITRATOR. An impartial third party to whom disputing parties submit their differences for decision (award). The arbitrator may be involved in “issue” arbitration as well as “grievance” arbitration. An adhoc arbitrator is one selected to act in a specific case or a limited group of cases. A permanent arbitrator is one selected to serve for the life of the contract or a stipulated term. (See IMPARTIAL CHAIRMAN.)

AREA DIFFERENTIAL. Additional compensation paid for similar jobs performed in one geographical location as compared to another. Also called area rate differential. (See INTERCITY DIFFERENTIAL.)

AREA WAGE SURVEY. Wage surveys conducted by the Bureau of Labor Statistics of the U.S. Department of Labor in Standard Metropolitan Statistical Areas (SMSAs).

ASSESSMENT. A charge levied by a union on each member for a purpose not covered by the regular dues. Assessments may be either one-time or periodic charges.

ASSOCIATION AGREEMENT. An agreement negotiated and signed by an employer’s association, on behalf of its members, with a union or unions. (See MULTI-EMPLOYER BARGAINING.)

ATTENDANCE BONUS. Payment or other type of reward (e.g., a day off) for employees whose record of daily reporting for work, without absences, meets certain standards of excellence.

ATTENTION. The focusing of perception leading to heightened awareness of a limited range of stimuli.

ATTITUDE. An orientation toward or away from some object, concept, or situation; readiness to respond in a predetermined manner to the object, concept, or situation.

ATTITUDE SURVEY. A device for appraising employee morale by determining workers' feelings or opinions toward their job, supervisor, management policies and practices, or the company in general.

ATTRITION ARRANGEMENT. A process of relying upon voluntary quits, deaths, and retirements to reduce a company’s labor force over time instead of resorting to dismissal of workers.

AUTHORITY. The right to influence or command thought, opinion or behavior, e.g., the right of an executive to evaluate performance or to prepare and issue directions with respect to the plans, procedures, processes, policies, practices, or other factors relating to particular functions or activities, wherever they may be performed within the organization.

AUTHORIZATION CARD. A statement signed by the worker authorizing a union to act as the representative in dealings with management, and/or authorizing the company to deduct union dues from his/her pay. (See CHECK-OFF.)

AUTOMATIC INCREASES. Additional pay resulting from predetermined policy. (See AUTOMATIC PROGRESSION.)

AUTOMATIC PROGRESSION. Increases in job pay or classification resulting from predetermined formula or policy.


AUTOMATIC WAGE ADJUSTMENT. Automatically increasing or decreasing wages in accordance with some specific plan.

AUTOMATIC WAGE PROGRESSION. Automatically increasing wages after specified periods of service (also known as length-of-service increases).

AUTOMATION. Highly mechanized processes designed to deliver consistent production through the integration of various mechanisms to produce a finished item with relatively few or no worker operations; usually includes electronic computing controls, and robots. Advanced automation systems involve self-regulating machines (feedback) that can perform highly precise sequential operations. In common practice, the term is often used in reference to any type of advanced mechanization; more specifically, it is often associated with cybernetics.

AVERAGE EARNED RATE. An hourly rate arrived at by dividing hours worked into the equivalent earnings paid for a calendar quarter for use in the next quarter. Excludes payments not considered to be earnings.

AVERAGE EARNINGS. Individual or group earnings over a period of time divided by the number of time or production units in the period under consideration.

AVERAGE HOURLY EARNINGS EXCLUSIVE OF OVERTIME PAYMENTS. Average hourly earnings from which premium payments for overtime work have been eliminated. Also a measure of average hourly earnings published by the Bureau of Labor Statistics in which gross average hourly earnings in manufacturing are adjusted statistically to eliminate the influence of premium overtime payments at time and one half the regular rate of pay after a fixed number (presently, 40) hours of work a week. The adjustment does not compensate for other forms of overtime payment nor for other types of premium pay. (See AVERAGE STRAIGHT-TIME HOURLY EARNINGS, GROSS AVERAGE HOURLY EARNINGS.)

AVERAGE INCENTIVE EARNINGS. The amount of money earned while performing under an incentive plan divided by the number of hours worked under the incentive plan.

AVERAGE STRAIGHT-TIME HOURLY EARNINGS. Average wages earned per hour excluding premiums for overtime and shift assignment.

AVERAGE TIME. Mathematical mean of selected work cycle or elemental times.

AVOIDABLE DELAY. Delay controllable by a worker and therefore not allowed in the job standard.

AWARD. The decision of an arbitrator in a dispute. In labor arbitration, the arbitrator’s reasons are generally expressed in the form of a written opinion which accompanies the award.

AWARD A JOB. The act of assigning a job to an employee where a bidding process is used. After all the bids on the job have been reviewed, the successful candidate is then awarded the job.

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