Rewards and Compensation Exam 2- uark

Mean

- calculate by adding each company's base wage and dividing by the number of companies

There are several ways to translate external competitiveness policy into practice

- choice of measure - updating

employee behavior is a function of

- motivation -ability - environment

Central Tendency

-A measure reducing a large amount of data into a single number - calculate a mean - calculate a weighted mean

Low-high approach

-Convert market data to fit the skill - or competency-based structure -Use the lowest- and highest-paid benchmark jobs as anchors

Frequency Distribution

-Help visualize information and may highlight anomalies, or outliers

Updating

-If a company chooses a "match" policy, they will be lagging the market -Aging the market data to a point halfway through the plan year is called lead / lag

Benchmark Job Approach

-If the purpose of the survey is to price the entire structure, then select benchmark jobs to include the entire structure -The degree of match is assessed by various means

Specialist- depth

-Pay is based on the knowledge of the individual -Rather than on job content or output -A teacher is an example -Basic responsibilities do not vary on a daily basis

Advantages of broad banding over traditional approaches

-Provide flexibility to broadly define job responsibilities -Support organizations that have eliminated layers of managerial jobs -They foster cross-functional growth and development -Helps manage the reality of fewer promotions in flat organizations -The flexibility eases mergers and acquisitions

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

Benchmark Conversion/survey leveling

-When jobs do not match survey jobs, quantify the difference using benchmark conversion -If an organization uses job evaluation, then apply that system to the survey jobs

2 objectives of pay mix

-control costs & increase revenues -attract & retain employees

match policy

-lagging the market - part of updating

market line

-links benchmark jobs on the horizontal axis with market rates paid by competitors on the vertical axis -summarizes the distribution of going rates paid by competitors in the market

agency theory

-pay directs & motivates EE performance

Great 8 Competencies

1. Leading and deciding 2. Supporting and cooperating 3. Interacting and presenting 4. Analyzing and interpreting 5. Creating and conceptualizing 6. Organizing and executing 7. Adapting and coping 8. Enterprising and performing

Approaches to Pay

1. benchmark job approach 2. low-high approach 3.benchmark conversion/ survey leveling

Pay level and pay mix are focused on what 2 objectives?

1. control cost and increase revenue 2. attract and retain employees

Equity of fairness includes these 2 types of concerns to employees

1. distributive justice 2. procedural justice

Types of motivation theories

1. expectancy theory 2. equity theory 3. goal setting theory

A range has 3 features

1. midpoint 2. minimum 3. maximum

What 3 factors are usually used to determine relevant labor markets?

1. occupation 2. geography 3. competitors

The 2 basic types of markets

1. quoted price market 2. bourse market

Types of Skill Plans

1. specialist 2. generalist

Efficiency involves these 3 general areas of concern

1. strategy 2. structure 3. standards

Compensation should reinforce these behaviors

1.attraction 2. retention 3. development 4. performance

specialist and generalist

2 types of skill based plans

Quoted Price Market

Amazon is a quoted price market, price is known

retention

It needs to make sure good employees stay

attraction

It should make recruiting and hiring easier

aging

_____ the market data to a point halfway through the plan year is called lead/lag

advantage of skill-based pay

a better match of people to flow of work, avoiding bottlenecks and idle hands

same results

a reliable evaluation has evaluators producing the ______ _____

knowledge

accumulated information

self-concepts

attitudes, values, self-image

4 behaviors compensation reinforces

attraction retention development performance

Weighted Mean

calculated by adding base wages for all employees and dividing by the number of employees

A common first step in verifying data is to

check the accuracy of the job matches

leadership's beliefs

competencies derive from _________ _______ about the organization and its strategic intent

Broad Banding

consolidates four or five traditional grades into a single band with a minimum and maximum

skills

demonstration of expertise

variation

distribution of rates around the central tendency

Bourse Market

eBay is an example, allows haggling

standards

employers should be concerned with objectives, measures, eligibility, and funding

procedural justice

fairness in determining rewards

distributive justice

fairness in the amount distributed

success depends on

finding people with ability

goal setting theory

focuses on desired behaviors

traits

general disposition to behave in a certain way

One way to measure validity is

hit rates

trained evaluators familiar with the work

how do you improve reliability?

match

if a company chooses a "______" policy, they will be lagging the market

the culture should point

in the same direction

An advantage of skill based pay

is a better match of people to flow of work, avoiding bottlenecks and idle hands

Lag pay level policy

is coupled with the promise of higher future returns, this may increase employee commitment and foster teamwork, increasing productivity

Pay Level

is the average of the array of rates an employer pays

Hit Rates

is the degree to which the evaluation plan matches an agreed upon pay structure for benchmark jobs

Pay Mix

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

less

is there more or less uniformity in terms of the person-based plan than there is in job based plan?

Skill Based Pay

is used mostly in manufacturing

aging the market data to a point halfway through the plan year is called

lead/lag

competencies derive from

leadership beliefs about the organization and its strategic intent

Is there more or less uniformity in terms of the person based plan than there is in job based plan?

less

Skill Based Structure

link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires relevant to work

competency-based structure

looks at the work performed in the organization; underlying knowledge, skills, and behaviors that form success

lead pay-level policy

maximizes the ability to attract and retain quality employees and minimizes employee pay dissatisfaction

materialistic

more concerned about pay level

3 factors used to determine relevant labor markets

occupation geography competitors

purposes of the competency-based structure

organizational strategy work flow fair to employees motivate behavior toward org objectives

Competitors

other employers in the same product or service and labor markets

lag pay-level policy

paying below market rates may hinder a firm's ability to attract potential employees

upper & lower

ranges set _____ & ______ pay limits for all jobs in each grade

motives

recurrent thoughts that drive behaviors

External Competitiveness

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

Validity

refers to the degree to which the job evaluation assesses what is intended- the relative worth of jobs to the organization

pay and other rewards should

reinforce desired behaviors

reinforcement theory

rewards reinforce performance -withholding payouts discouraged unwanted behaviors

a reliable evaluation has evaluators producing the

same results

Occupation

skill or knowledge required

5 conceptions of competency

skills knowledge self-concepts traits motives

regression

straight line that best fits the data by minimizing variance around the line

The first step in developing a grade is to group different jobs considered

substantially equal for pay purposes into grades - •Grades allow people to move among jobs with no pay change

survey

systematic process of collecting and making judgements about the compensation paid by other employers

marginal revenue of labor

the additional revenue generated when the firm employs one additional person

3 pay-level policies

to lead to meet or match to follow competition, or lag

pay-with-competition policy

tries to equal wage costs to those of its competitors

Ranges set

upper and lower pay limits for all jobs in each grade

risk-averse

want less performance-based pay

risk takers

want more pay based on performance

individualists

want pay plans based on individual performance, not group performance

low self-esteem

wants large, decentralized organization with little pay for performance

Midpoint

where the pay-policy line crosses the center of the grade

Geography

willingness to relocate, commute, or become a virtual employee

How do you improve reliability?

with trained evaluators familiar with the work

Choice of measure

•A company can use a specific percentile for base pay and another percentile for total compensation

development

•After attracting and retaining good employees, concentrate on building further knowledge and skills

performance

•Compensation should motivate employees to apply their abilities in ways that contribute to organizational performance

Flexible Compensation

•allows employees to choose rewards which best suit their personal needs

equity theory

•believes people are highly concerned with equity of the exchange process

expectancy theory

•holds that employers choose behaviors that yield the most satisfactory exchange

Motivation

•involves what's important to a person, and offering that in exchange for some desired behavior

Lead pay-level policy

•maximizes the ability to attract and retain quality employees and minimizes employee pay dissatisfaction - •Research links high wages to ease of attraction, reduced vacancy rates and training time, and better-quality employees

strategy

•the plan must support corporate objectives and link well with HR strategy

structure

•will it allow flexible variations on a general plan?