Chapter 7

What are issues with compensation surveys?

- Defining relevant market - Timing - Data - Choosing Benchmark Jobs - Small Companies

Why do most companies opt against a custom survey?

- High cost - Threat of collusion - Hard to gather data from competitors - Need qualified professionals

What three categories shape market competitiveness?

1. Labor market factors 2. Product market factors 3. Organization factors

About ________% of all businesses participate in compensation surveys.

80%

What two companies were charged with collusion (and lost) for colluding to set engineer pay rates?

Apple and Google

Who conducts area wage surveys, white-collar pay surveys, and employee benefit surveys?

Bureau of Labor Statistics

A number that represents the typical numerical value in the data set.

Central Tendency

Pay level and pay mix decisions focus on what?

Controlling costs Attracting & retaining employees

What are two types of inferential statistics?

Correlation and Regression

What are the 2 main categories of compensation surveys?

Custom Made and Published

Pay policy alternative where companies compete based on their overall reputation as a place to work (ex: SAS)

Employer of choice

What are the 4 measures of central tendency?

Frequency, mean, median, mode

Are job evaluation points the independent or dependent variable?

Independent

What are the two types of labor markets?

Internal and External

What are the three conventional pay-level policies?

Lead Meet Lag (follow competition)

_______________ ______________ is expressed in practice by: - Setting a pay level that is above, below, or equal to that of competitors. - Determining mix of pay forms relative to those of competitors.

Market Competetiveness

Pay relationships among organizations - an organization's pay relative to its competitors.

Market Competitiveness (external equity)

What pay mix policy alternative includes large base and benefits?

Market Match

A representation of typical market pay rates, expressed as mean or median, relative to a company's job structure.

Market Pay Line (Line of best fit)

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.

NAICS

What does NAICS stand for?

North American Industrial Classification System

The average of the array of rates paid by an employer

Pay Level

The various types of payments that make up total compensation.

Pay Mix (AKA Pay Forms)

What pay mix policy alternative includes a large bonus?

Performance Driven

What are sources of compensation survey information?

Professional Associations Bureau of Labor Statistics Industry Associations Consulting Firms

What professional association publishes information on salaries in the HR field?

SHRM

In compensation, what is the regression equation trying to predict?

Salary level for a job

What pay mix policy alternative is made up of only base pay and benefits?

Security (Commitment)

Pay policy alternative that begins with traditional options of lead, meet, or lag; and adds a second part that offers employees choices in the pay mix. *employees have more say in forms of pay recieved!

Shared Choice

The mean distance of each salary figure to the mean.

Standard Deviation

What are the two measures of variation?

Standard Deviation Variance

What professional association publishes the Salary Budget Survey, reported by region and industry?

The American Compensation Association

T/F: A single company's market position may differ depending on whether comparing base pay or total compensation

True

T/F: Cost of compensation surveys can range from $2,000 (less than 500 employees) to $12,000 or more (more than 5,000 employees)

True

T/F: New pay policies emphasize flexibility among: - Policies for different employee groups - Pay forms for individual employees - Elements of the employee relationship that company wishes to emphasize in its external competitiveness policy.

True

T/F: Pay mix varies within a job structure (i.e., an entry level employee may have a different pay mix than an executive)

True

T/F: The closer dots are to the market pay line, the better the relationship between job worth and pay.

True

Represents the amount of spread or dispersion in a set of data

Variation

What pay mix policy alternative includes a very large benefits package?

Work/life balance

In the regression equation, what variable is the independent variable?

X ("predictor variable")

In the regression equation, what variable is the dependent variable?

Y (Y depends on the value of x)

What is the formula for pay level?

base pay + bonuses + benefits + value of stocks / number of employees

What is an internal labor market?

promotion from within

What is the equation for the market pay line?

y=mx+b (regression equation)