Exam 2 Study Guide Stevens

Explain the difference in a job-based structure and a person-based structure related to pay plans

-A person-based structure increases pay through promotions or acquisition of skills -A job-based approach pays only as much as the work is worth

Point-factor

-Compare jobs on rating scales of specific factors -Jobs are assessed on required know-how, problem-solving abilities, and accountability. Each factor is assigned points and the total number of points indicates the job's ranking.

Job Classification

-Defines categories of jobs and slots jobs into these classes. -An example classification is a CEO, vice president, director, manager, and operator.

What criteria should you consider when scaling compensable factors?

-Ensure the number of degrees is necessary to distinguish jobs -Use understandable terminology -Anchor definitions with benchmark job titles and work behaviors -Make it apparent how the degree applies to the job

What is the purpose of a job evaluation?

-Help set pay for jobs where market pay survey data are unavailable by comparing the internal value -Match a job in a particular company to a comparable job of similar value in a market pay survey -Pay jobs based on which ones are most important to the company's strategy

Recognize (list) the benefit of job content evaluations

-Internal consistency -Organizational alignment -Control labor costs -Fairness & equity -Job worth hierarchy -Market competitiveness

Job Ranking

-Jobs are paired and for each pair the most impactful job is chosen. This results in a forced ranking of different jobs. -Compare jobs using a single global factor that presumably combines all parts of the job

External competitiveness is shaped by what factors?

-Labor Market Factors (Nature of demand, nature of supply) -Product Market Factors (Degree of competition, level of product demand) -Organization Factors (Industry, strategy, size, individual manager)

Describe job value

-Orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization's goals -May also include the job's value in the external market

Describe the difference in a reliable and a valid evaluation technique

-Reliability means that evaluations produce the same results -Validity refers to the degree to which the job evaluation assesses what is intended

What are the purposes of a skill-based structure?

-Supports strategy and objectives -Supports workflow -Is fair to employees -Motivates behavior towards organizational objectives

Pay Level

-The average of the array of rates an employer pays -Ex. Base + Bonus + Benefits / # of employees

What three components do all point-factor methods have in common?

COMPENSABLE FACTORS, numerically-scaled factor DEGREES, and WEIGHTS reflecting the relative importance of each factor

How do organizations certify that employees possess and apply skills?

Competency analysis methods include peer reviews, on-the-job demonstrations, and/or tests

What type of structure begins by looking at the work performed in the organization?

Competency-based structure

This type of job evaluation method looks at the external market to get an idea of the going rate for benchmark jobs and uses this to create an internal hierarchy

Market Pricing

What is the most prevalent method of job evaluation that is used?

Market Pricing

Not all jobs are considered benchmark jobs. How do you align them with your internal hierarchy?

Non-benchmark jobs are slotted into the hierarchy after the benchmark jobs have been identified and ranked

What factors are used to determine a company's relative labor market?

Occupation (skills or knowledge required), Geography (willingness to relocate, commute, or become a virtual employee), and Competitiveness (other employers in the same product or service and labor markets)

How is external competitiveness defines?

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

A pay mix that focuses heavily on base-wage and benefits with little to no inclusion of bonuses/incentives describes what type of pay mix?

Security

What is the systematic process of identifying and collecting information about skills required to perform work in an organization?

Skill Analysis

What type of pay plan is used in environments that rely on teams, multi-skilled works and flexibility?

Skill-based

What are the two types of person-based plans?

Skill-based and Competency-based

Pay Mix

The various types of payments, or pay forms, that make up total compensation

True or False: An employer offering lower base pay with high bonuses is a likely signal that it is seeking risk-taking employees

True

True or False: Compared to an on-demand review of certifications, scheduling fixed review points makes it easier to budget and control payroll increases.

True

Market Pricing

Value of each job is determined through the analysis of the external marketplace as typically reported through salary surveys

In the context of the point method of job evaluation, ________ are job attributes that provide the basis for evaluating the relative growth of jobs inside an organization. a) Competitive skills b) Compensable factors c) Core competencies d) Benchmark factors

b) Compensable factors

Which of the following labor demand theories states that work with negative characteristics requires higher pay to attract or retain workers? a) Job competition b) Compensating differentials c) Efficiency wage d) Sort and signaling

b) Compensating differentials

Most factor scales have ________ degrees. a) Six to nine b) Four to eight c) Three to seven d) Two to four

b) Four to eight

Job content is (select one) a) The ordering of jobs from highest to lowest b) The work that is performed and how it gets done c) Assigning a weight to each factor

b) The work that is performed and how it gets done

A ________ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess. a) Performance-based b) Competency-based c) Job-based d) Skill-based

c) Job-based

Which of the following statements is true of pay level? a) Pay level is the same across all organizations for the same job. b) The higher the pay level relative to what competitors pay, the lower the relative costs to provide similar products or services. c) Pay level is directly proportional to labor costs. d) Pay level is independent of the number of employees in an organization.

c) Pay level is directly proportional to labor costs.

Employees in a multi-skill system earn pay increases: a) Increasing their productivity b) Based on job content c) Based on job assignments d) By acquiring new knowledge

d) By acquiring new knowledge

Generalist

Breadth: -Those in a multi-skill system earn pay increases by acquiring new knowledge -More pay comes from certification of new skills -Responsibilities can change drastically over a short time

Specialist

Depth: -Pay is based on the knowledge of the individual -Focus is less about content or output -Basic responsibilities do not vary on a daily-basis

What is the purpose of factor weights in the point-factor method of evaluation?

Factor weights reflect the relative importance of each factor to the overall value of the job

Why are compensable factors based on those two things?

Factors are scaled to reflect the degree to which they are present, weighted to reflect their importance to the organization, and attached to each factor weight

True or False: Since business strategies may change often, compensable factors should rarely be added or deleted.

False

Give me an example of a benchmark job and describe the characteristics of a benchmark job

Its contents are well-known and relatively stable over time, common across a number of different workplaces, and a reasonable portion of the workforce is employed in it Ex. Accountant, Marketing Manager, IT Helpdesk Technician, Administrative Assistant, Top Operations Executive, Engineer

Which type of job evaluation plan is this an example of?

Job Classification

In what type of evaluation plan do raters look at each job and compare them with every job possible in their department?

Job Ranking

What are the four types of job evaluation plans?

Job ranking, job classification, point-factor, and market pricing

A pay mix that relies on a smaller percentage of base-wage and an increased focus on options and bonuses would best describe what type of pay mix?

Performance-driven mix

Which type of job evaluation is most defensible in a court of law and why?

Point-factor (Explain why)

What are the pros and cons of a lead-level pay policy?

Pros: Cons:

When selecting compensable factors for an organization, what two things should they be based on?

Strategic direction and how the work contributes to these objectives and strategy

When using the point factor method, how do you know a job's relative value? What is it ultimately determined by?

The job's relative value is determined by the total points assigned to it

Define job evaluation

The process of systematically determining the relative worth of jobs to create a job structure for the organization