MG 411 Chapter 7
pay satisfaction
a function of the discrepancy between employees' e perceptions of how much pay they should receive and how much pay they do receive. in these perceptions are equal, an employee is said to experience pay satisfaction
segmented labor supply
a labor supply that comes from multiple markets. some employees may come from different global locations, may receive different pay forms, and may have varied employment relationships
reservation wage
a theoretical minimum standard below which a job seeker will not accept an offer, no matter how attractive the other job attributes
efficiency wage theory
a theory that explains why firms are rational in offering higher-than-necessary wages
lead pay-level policy
a wage structure that is set to lead the market throughout the plan year. its aim is to maximize a firm's ability to attract and retain quality employees and to minimize employee dissatisfaction with pay
lag pay-level policy
a wage structure that is set to match market rates at the beginning of the plan year only. the rest of the plan year, internal rates will lag behind market rates. its objective is to offset labor costs, but it may hinder a firm's ability to attract and retain quality employees
human capital theory
an economic theory proposing that the investment one is willing to make to enter an occupation is related to the returns one expects to earn over time in the form of compensation
shared choice
an external competitiveness policy that offers employees substantial choice among their pay forms
pay forms
are the various types of payments, or pay mix, that make up total compensation
compensation differentials
differentials in pay among jobs across and within organizations, and differences among individuals in the same job in an organization
bourse
example: being allowed to haggle over the terms and conditions until an agreement is reached
quoted price
example: stores that label each item's price or ads that list a job opening's starting wage - you cannot name your own price
pay-with-competition policy
policy that tries to ensure that a firm's labor costs are approximately equal to those of its competitors. it seeks to avoid placing an employer at a disadvantage in pricing products or in maintaing a qualified work force
pay level
refers to the average of the array of rates paid by an employer' (base + bonuses + benefits + value of stock holdings) / number of employees
external competitiveness
refers to the pay relationships among organizations - the organization's pay relative to its competitors
ability to pay
the ability of a firm to meet employee wage demands while remaining profitable; a frequent issue in contract negotiations with unions. a firm's ability to pay is constrained by its ability to compete in its product market
marginal product of labor
the additional revenue generated when the firm employees one additional unit of human resources, with other factors held constant
utility theory
the analysis of utility, the dollar value created by increasing revenues and/or decreasing costs by changing one or more human resource practices. it has most typically been used to analyze the payoff to making more valid employee hiring/selection decisions
base pay
the basic cash compensation that an employer pays for the work performed. tends to reflect the value of the work itself and ignore differences in individual contributions
base wage
the basic cash compensation that an employer pays for the work performed. tends to reflect the value of the work itself and ignore differences in individual contributions
total compensation
the complete pay package for employees, including all forms of money, bonuses, benefits, services, and stock
labor demand
the employment level organizations require. an increase in wage rates will reduce the demand for labor, other factors constant. thus, the labor demand curve (the relationship between employment levels and wage rates) is downward-sloping
employer of choice
the view that a firm's external wage competitiveness is just one facet of its overall human resource policy and that competitiveness is more properly judged on overall policies. challenging work, great colleagues, or an organization;s prestige must be factored into an overall consideration of attractiveness
signaling theory
this theory holds that employers deliberately design pay levels and mix as part of a strategy that signals to both prospective and current employees the kinds of behaviors that are sought
relevant markets
those employers with which an organization competes for skills and products/services. three factors commonly sued to determine the relevant markets are the occupation or skills required, the geography (willingness to relocate and/or commute), and employers that compete in the product makret