Compensation management 7

Identify an accurate statement about the pay level in a company.

A company may have varying pay levels for different job families.

Which combination may boost employee commitment and encourage teamwork, which may in turn improve productivity?

A lag pay-level policy combined with the promise of increased future returns

Identify the pay-level and pay-mix strategy with the least risk.

A match policy

What are the assumptions that theories of labor markets usually begin with?

A single employer has no advantage to pays below or above the market rate. Employers always aim to maximize profit. All costs associated with employment are reflected in pay rates. People are homogeneous and thus interchangeable.

Identify the factors that shape external competitiveness.

Attributes unique to each company Competition in the product and service markets Competition in the labor market for applicants with various skills

begins with the traditional alternatives of lead, meet, or lag; it then adds a second part, which is to offer employees choices within limits in the pay mix.

Blank 1: Shared choice

In the context of efficiency-wage theory, economists use the term " " to refer to the propensity of employees to allow the marginal revenue product of their labor to be less than its marginal cost.

Blank 1: shirking behavior

How is external competitiveness expressed in practice?

By setting the pay mix in relation to those of competitors By establishing a pay level that is greater than, less than, or equal to that of competitors

Which of the following is a reason for differing pay rates in the labor market and is difficult to document due to the inability to accurately measure and control the factors that go into a net-advantage calculation?

Compensating differentials

What are the objectives that pay-level and pay-mix decisions focus on?

Controlling expenses and raising revenues Attracting and keeping employees

Identify the characteristics of jobs that are thought to make them more susceptible to offshoring.

Easy to routinize Easy to transmit inputs/outputs electronically Little need for local insight on unique social and cultural factors Little need for worker interaction

Blank______ refers to the image or brand a company projects as an employer.

Employer of choice

Each job in the labor market has a fixed "going rate."

False

It is enough for an employer to pay at or above the legal minimum wage in order to be considered to be in compliance.

False

Some reservation-wage theorists say that job seekers accept the first job offer they receive where the pay is below their reservation wage.

False

According to the efficiency-wage theory, under which of the following conditions do high wages increase efficiency and reduce labor costs?

If they decrease turnover If they lure higher-quality applicants If they boost worker effort and decrease shirking behavior If they lower the need to supervise employees

What is the effect of the introduction of new technology within an industry that reduces the skills required of employees?

It causes the employees' average pay to decline.

Due to restrictions placed by the product market on an employer's pay level, what strategies must an employer use to compensate for paying above the maximum?

Passing the higher pay level on to consumers by increasing prices Allocating a large share of total revenues to cover labor expenses

Blank______ provided by an employer are considered integral to every citizen's economic security and are regulated in most countries.

Pensions and health care

What are the effects of offering high wages in a lead pay-level policy?

Reduced vacancy rates and training time Reduced turnover and absenteeism

Which of the following options reduces labor expenses when people flow to the work?

Segmenting the source of labor

Which of the following labor supply theories explains pay-level differences on the premise that higher wages flow to people who invest in themselves to increase their potential productivity?

The theory of human capital

Which of the following do managers consider when choosing their relevant labor markets?

They evaluate the importance of a job to their organization's success. They consider the products, size, and location of the competitors. They look at the skills and knowledge required for a job.

When are the data from product market competitors likely to be given greater weight than that of labor market competitors in defining a relevant market?

When a large share of total expenses is labor expenses When labor supply is not responsive to changes in pay When demand for a product is responsive to price changes When the skills of employee are specific to the product market

When will an employer face no increase in labor supply even after raising its pay level?

When competitors quickly meet the employer's higher offer

When is paying employees above market an efficient strategy for an organization?

When the organization's revenues exceed the strategy's expenses

Having a lag pay-level policy may impede an organization's ability to:

attract job applicants.

The dashboard form of reporting the mix of pay forms of a company focuses on:

comparing each pay form to the market.

The higher wages that employees offer to make up for the negative characteristics of a job are known as:

compensating differentials.

One of the common cuts companies make in times of high unemployment is decreasing:

contributions to 401k retirement plans.

According to agency theory, companies must allot resources to systems that track employee output, which becomes more costly and difficult when:

cultural or geographic distance is great.

The given image depicts the use of a Blank______ to report the mix of pay forms in an organization.

dashboard

The underlying assumption of efficiency-wage theory is that pay level determines:

effort.

According to economic theory, a talented individual will have a higher marginal value when the individual is:

employed at a large organization.

In both the quoted-price market and the bourse, Blank______ function as the buyers and Blank______ function as the sellers.

employers; job applicants

An employer will keep hiring until the marginal revenue generated by the last hire equals the:

expenses associated with employing that person.

The higher the pay level of an organization relative to what its competitors pay, the:

greater the costs to provide comparable products or services.

Diminishing marginal productivity for each new employee added to a firm arises from the fact that each new employee:

has access to a progressively smaller portion of other factors of production.

Research has proven that in manufacturing, productivity has a positive correlation with:

hourly wage level

In the short term, a company's factors of production are Blank______, which causes each new hire to have lower marginal productivity than the previous hire.

inalterable

Employers in extremely competitive markets find it more difficult than other employers to Blank______.

increase prices without loss of revenues

While Blank______ put a floor on the pay level needed to attract sufficient employees, Blank______ put a lid on the highest pay level than an employer can set.

labor market conditions; product market conditions

One of the negative effects of a Blank______ is that it forces an employer to raise the wages of current workers in order to avoid internal misalignment and murmuring.

lead pay-level policy

Nations that have lower average labor costs display a tendency to have:

lower average productivity.

The Blank______ is the increase in output generated by the employment of one additional person, while keeping other production factors constant.

marginal product of labor

An employer cannot alter most factors of production, such as technology, capital, or natural resources, in the short term. Thus, it can only alter its level of production if it alters the level of human resources. In these conditions, a single employer's labor demand coincides with the:

marginal product of labor.

According to the theory of human capital, the wages of new hires match the value of their:

marginal product.

In the given image, the point at which the labor demand line and the labor supply line cross is called the:

market rate.

The most common competitive pay-level policy involves:

matching competitors' wage rates.

In a study conducted to determine the effects of sorting and signaling strategies, it was determined that pay level held more significance for:

materialists than for the risk-averse.

The level of demand that Blank______ is that level at which the marginal revenue of the last hire in the company equals the pay for that employee.

maximizes profits for a company

A benefit of a lead pay-level policy is that it:

offsets less appealing features of work

Technology-intensive industries tend to Blank______ than labor-intensive industries.

pay higher

Evidence has consistently proven that large organizations tend to Blank______ than do small organizations.

pay higher wages

There is evidence that organizations that widely use high-performance work practices and computer-based technology and employ higher-skilled employees:

pay higher wages.

A pay-with-competition policy attempts to ensure than an organization's labor costs are approximately the same as those of its Blank______ and that its ability to attract potential employees is approximately the same as its Blank______.

product market competitors; labor market competitors

When economists describe pay as "noncompensatory," they mean to say that job seekers have a(n) Blank______ below which they will not take up a job, regardless of the attractiveness of other job attributes.

reservation wage level

Employers in markets with no competition have the ability to:

set whatever price they desire.

One of the ways in which employers make pay cuts in times of high unemployment is by requiring employees to:

take furloughs without pay.

Greatly improved communication and software connectivity have accelerated:

the growth of offshoring.

Stores that fix the price of each item or ads that mention the starting wage of a job opening are examples of Blank______, whereas organizations that permit haggling over the terms and conditions until a consensus is reached are examples of Blank______.

the quoted-price market; the bourse

A lead pay-level policy is capable of masking negative job traits that lead to higher Blank______ later on.

turnover

The concept of upward sloping supply in theories of labor markets assumes that as wage rates increase, more people are willing to take a job. However, offers of increased pay may not boost labor supply when:

unemployment rates are low.

The option of off-shoring to reduce labor expenses is also described as:

work flowing to the people.