Chapter 4 HW, MGT 4350- Chp 3, MGT Chap 2, MGT 461 Chapter 7&8 TEST 2, Compensation Chapter 1, Chapter 2 - Strategy of Compensation Plans, MGT 461 Exam 2 - Ch. 5-8, Compensation Chapter 3, MGT386 Exam 1
Gramhold, Inc., a pharmaceutical company, reduces its ten salary grades to just three broad bands. Which of the following statements is most likely to be true in this case? Gramhold will ________________. -experience more career moves within bands than career moves between bands -offer recognition via titles rather than through cross-functional experience and lateral progression -find that the new structure hinders cross-functional growth -face difficulty in defining job responsibilities broadly with the new structure
-experience more career moves within bands than career moves between bands
Work/life balance is most closely associated with the ________ aspect of mapping a total compensation strategy. -external competitiveness -internal alignment -employee contributions -objectives
-external competitiveness
The well-defined jobs at McDonald's and their small differences in pay are an example of a(n) ________ internal pay structure. -loosely coupled -very competitive -closely tailored -egalitarian
-closely tailored
The Fair Labor Standards Act of 1938 (FLSA) sets forth regulations regarding all of the following except _________________. -minimum wage -overtime pay -record-keeping requirements -immigration documentation
-immigration documentation
________________________ is a policy that women performing jobs judged to be equal on some measure of inherent worth should be paid the same as men, excepting allowable differences, such as seniority, merit, production-based pay plans, and other non-sex-related factors. -valuation discrimination -disparate treatment -disparate impact -comparable worth
-comparable worth
Which of the following is a policy, and NOT an objective, of the pay model? -fairness -efficiency -competitiveness -ethics
-competitiveness
A compensation system focusing on system control and work specifications is most closely associated with a(n) _______________ strategy. -differentiated -innovator -cost-cutter -consumer-focused
-cost-cutter
Discrimination theory that outlaws the application of pay practices that may appear to be neutral but have a negative effect on females or minorities unless those practices can be shown to be business-related. -American with Disabilities Act -disparate impact -disparate treatment -pay equity
-disparate impact
In firefighting and rescue squads and global software design teams, a(n) ________ structure is most closely associated with higher performance. -layered -hierarchical -egalitarian -pyramidal
-egalitarian
The decisions to implement pay for performance, flat rate pay, and profit sharing are examples of ________ policy decisions. -management -internal alignment -efficiency -employee contribution
-employee contribution
The degree to which pay influences individual and aggregate motivation among employees at an point in time is referred to as a(n): -sorting effect -incentive effect -directional effect -turnover effect
-incentive effect
A compensation system using market-based pay is most likely to be part of a(n) __________________ strategy. -innovator -cost leadership -customer-focused -cost-cutter
-innovator
Flexible-generic job descriptions would most likely be used with a(n) _________________ strategy. -innovator -customer-focused -differentiated -cost-cutter
-innovator
________ refers to comparisons among jobs or skill levels inside a single organization. -a merit increase -internal alignment -external competitiveness -compliance
-internal alignment
Which of the following is given as an increment to base pay in recognition of past work behavior? -a long-term incentive -a short-term incentive -base pay -merit pay
-merit pay
Compensation policy choices that affect the pay level relative to other companies are most closely associated with the ________ aspect of the pay model. -training and skill development programs -job responsibilities -monetary incentives -goal setting and job enrichment
-monetary incentives
When employee performance is easily measured and the organization's performance is fairly stable over time, the most effective type of compensation is to offer _____________________. -monetary rewards with large incentives -an increase in base pay -a variety of rewards with significant incentive pay -a large base pay and low incentive pay
-monetary rewards with large incentives
_____________ refers to the process used to make pay decisions. -internal alignment -relational return -regression analysis -procedural fairness
-procedural fairness
James says, "I don't trust the way the company determines pay rates in my department." If James feels this way despite being happy with his current salary, he is most likely concerned about ... -procedural justice -internal equity -external equity -distributive justice
-procedural justice
Which of the following is often the largest component in an executive pay package? -merit pay -base pay -perks -stock options
-stock options
Incentives do not permanently increase labor costs because: -they are given based on the past performances of employees -they increase the base wage -they rely on a subjective rating of performance -they are one-time payments
-they are one-time payments
Describe a total compensation strategy in four steps.
1. Asses Total Compensation Implications 2. Map a Total Compensation Strategy 3. Implement 4. Reassess and Realign
What is the first step in a total compensation strategy?
1. Asses Total Compensation Implications Understand the specific industry in which your organization wants to compete in - What business should be in? How do we win in that business? - To cope with turbulent competitive dynamics, focus on what factors in the business environment are important today. What will be important in the future? - How will you compete to win? Competitive Dynamics Culture/values Social and political context Employee/Union needs Other HR systems
What are some External Factors that might impact Internal Structure?
1.) Economic pressures 2.) Government policies, laws, regulations 3.) Stakeholders 4.) Cultures and customs
Positive outcomes from an internally aligned job structure
1.) Ee's Motivated to develop 2.) Increases ee KSA's 3.) Facilitates career progression 4.) Increases perceived fair 5.) Reduces pay grievances 6.) Reduces turnover 7.) Better morale
What two choices are involved in tailoring pay structure?
1.) How specifically tailored to the organization's design and work flow to make the structure 2.) How to distribute pay throughout the levels in the structure
What might constitute a fair decision?
1.) If they are consistently applied to all employees 2.) If the Employees participated in the process 3.) If appeals procedures are included 4.) If the data used is accurate
What are some Organizational Factors that might impact Internal Structure?
1.) Strategy 2.) Technology 3.) Human Capital 4.) HR policy 5.) Employee acceptance 6.) Cost implications121
Most factor scales have _____ degrees. 6-9 4-8 3-7 2-4
4-8
Recent surveys show that, on average, an outstanding performer receives a _____ merit increase, an average performer a _____ merit increase, and a poor performer a 0.4% merit increase.
4.4%; 2.8%
TreeWind Inc. is a bookstore that uses skill and responsibility as its compensable factors. It assigns 20 percent weight to responsibility and 80 percent weight to skill. If the responsibility factor scores a 60 after multiplying the subfactors with their corresponding weights, and if the skill factor has two subfactors that are rated as 4 and 5, what is the total weightage given to the job? 40 120 420 990
420
Pay ranges for office and production work commonly range between _____ and _____ percent.
5; 15
Which of the following is an example of a company that uses broad banding?
A company in which there is more lateral movement with no pay adjustment than promotions
Which of the following is an example of a company that uses broad banding? A company in which there is more lateral movement with no pay adjustment than promotions A company that has pay guidelines and controls designed right into the pay system A company that has unlimited total salary budget A company that pays all its employees the same salary
A company in which there is more lateral movement with no pay adjustment than promotions
How would a Content based structure rank jobs?
A content based structure would rank jobs based on the skills required, complexity of tasks, problem solving, and/or responsibility.
What is a Job Based Structure?
A job based structure relies on the work content- tasks, behaviors, and responsibilities.
What is an important factor influencing Internal Pay Structure?
A major factor that influences Internal Pay Structure is the acceptability to the employees involved.
How would a Value based structure rank jobs?
A value based structure would focus on the relative contribution of these skills, tasks, and responsibilities to the organization's goals.
What is the alignment test for competitive advantage?
Alignment of the pay strategy includes 3 aspects - Align with business strategy - Align externally with the economic and sociopolitical conditions - Align internally within the overall HR system Easiest test to past
Which of the following statements regarding allowing employees a choice in their pay mix is NOT true?
Allowing employees their choice is easy for competitor companies to imitate
Which of the following methods requires evaluators to agree on which jobs are the most and least valuable, then the next most and least valued, and so on until all the jobs have been ordered? Alternation-ranking method Classification method Point method Paired-comparison method
Alternation-ranking method
What is an Internal Labor Market?
An Internal Labor Market refers to the rules and procedures that: 1.) Determine the pay for the different jobs within a single organization 2.) Allocate employees among those different jobs.
When cooperation is important for successful organization performance, which of the following pay structures is most suitable?
An egalitarian pay structure
What happens when a pay system is in a VIRTUOUS CIRCLE?
An organization whose profits or market share is increasing is able to pay larger bonuses and stock awards Paying these bonuses fairly improves employee attitudes and work behaviors, which in turn improves their performance Employees receive returns that compensate for the risks they take, and get to share in the organization's success
Mark and Steve work as crane operators in a construction company called Asai Corp. Asai uses a skill- based plan that establishes single flat rates for each skill level. Mark performs better than Steve even though Steve has more seniority. Which of the following statements is most likely to be true in this scenario?
Both Mark and Steve will be paid the same amount.
The _____ publishes extensive information on various occupations in different geographic areas. It is a major source of publicly available compensation data.
Bureau of Labor Statistics
The _____ publishes extensive information on various occupations in different geographic areas. It is a major source of publicly available compensation data. Chamber of Commerce Bureau of Labor Statistics Compensation Association Department of Economics
Bureau of Labor Statistics
Which of the following is NOT a characteristic of aligned pay structures?
Characteristics: They support the way work gets done; they fit an organization's business strategy; they are fair. Not: They are designed to increase the turnover rate.
A job description is compared to class descriptions in the _____ of job evaluation. Position Analysis Questionnaire method point method Hay Group Guide Chart—Profile MethodSM classification method
Classification Method
Which of the following is least likely to be used in establishing skill-based certification methods? Tests College degree Peer review On-the-job demonstration
College Degree
The process of identifying competencies in person-based structures resembles identifying _____ as part of job evaluation in job-based structures. compensable factors job description employee requirement work flow outlay
Compensable factors
How do you implement HR strategy with compensation?
Compensation is the key to attracting, retaining, and motivating employees with the abilities necessary to execute the business strategy and handle greater decision-making responsibilities. Compensation is also the key to motivating them to fully utilize those abilities.
What are best-pay practices?
Compensation practices that allow employers to gain preferential access to superior human resource talent and competencies (i.e., valued assets), which in turn influence the strategies the organization adopts
_____ translate each core competency into action. Competency indicators Multifunctional skills Skill-based structures Competency sets
Competency sets
What is Procedural Justice?
Consider you got a speeding ticket. Procedural Justice refers to the process by which that decision was reached: the right to an attorney, the right to an impartial judge, and the right to receive a copy of the arresting officer's statement.
Which of the following is the underlying assumption in the assessment of job content? Content has intrinsic value outside external market. Content has no artistic value. Stakeholders are the best judge for assessing the quality of content. Content can be determined with or without external market.
Content has intrinsic value outside external market
What is content & value?
Content refers to the work performed by a specific job. i.e. the tasks, behaviors, knowledge required, etc. Criteria refers to the worth of the work performed by a specific job: its relative contribution to the organization objectives.
Skill-based plans tend to work best in organizations using a(n) _____ strategy. innovator defender laissez-faire cost-cutter
Cost-cutter
In the point method, the second step in designing a plan is to: conduct job analysis. scale the factors. determine the compensable factors. prepare a job evaluation manual.
Determine the compensable factors
Reliability of job evaluation techniques is measured by: determining if different evaluators produce the same results. asking the question "What does the evaluation measure?" determining hit rates. surveying employee attitudes about the evaluation.
Determining if different evaluators produce the same results
Compensable factors, skill blocks, and competency sets are used for: assessing relative value. collecting work content information. determining what to value. completely different purposes.
Determining what to value
Which of the following policy decisions directly affects employees' attitudes and work behaviors?
Employee
The roots of job-based pay structures is traced to _____. Frederick Taylor Karl Marx Adam Smith Ronald McFreyer
Frederick Taylor
Hourly compensation costs for production workers in manufacturing are higher in _____ than in the United States.
Germany
T/F: Focusing on the end product of the internal alignment process, the pay structure, is more important for acceptance of the results than focusing on the approach chosen.
False
T/F: Market pricers emphasize any unique or difficult-to-imitate aspects of an organization's pay structure.
False
T/F: Pay ranges for top-level management positions are smaller than the pay ranges for entry-level managerial positions.
False
T/F: Recent research shows that the use of online job evaluation by independent managers is more reliable than traditional job evaluation committees.
False
T/F: Since business strategies may change often, compensable factors should rarely be added or deleted.
False
T/F: The final step in determining externally competitive pay levels and structures is the merging of internal and external pressure.
False
T/F: The number of job evaluation plans required depends only upon the number of employees in the organization.
False
T/F: The policy capturing approach and the committee a priori approach for developing pay structures yield the same pay structure.
False
T/F: The primary reason for documenting the views of employees and supervisors on compensable factors is to meet requirements of the Equal Pay Act.
False
T/F: The product market sets the floor on the minimum wage required to attract sufficient numbers of employees.
False
Which of the following is an example of a bourse market?
Flatcake, a website that allows buyers to negotiate the prices with the sellers of handmade goods
Gramhold Inc., a pharmaceutical company, reduces its 10 salary grades to just three broad bands. Which of the following statements is most likely to be true in this case?
Gramhold will experience career moves within bands more than career moves between bands.
Whole Foods' shared-fate philosophy of limiting executive salaries to no more than 19 times the average pay of full-time employees is an example of which strategic pay decision?
Internal alignment
_____ refers to comparisons among jobs or skills inside a single organization.
Internal alignment
Which of the following is an example of a bourse market? Neurofort, a website that sells surgical equipment in bulk at fixed prices Hardknox, a hardware store that sells all its products at 10 percent above the maximum retail price Needlefarm, a store that sells premium furniture at discounted rates Flatcake, a website that allows buyers to negotiate the prices with the sellers of handmade goods
Flatcake, a website that allows buyers to negotiate the prices with the sellers of handmade goods
What should internal alignment address?
Internal alignment should address the relationships INSIDE the organization.
Apply the three tests for sources of competitive advantage.
Is it aligned? Does it differentiate? Does it add value
Which of the following is true regarding the Employment Cost Index (ECI)?
It allows comparison of changes in its average costs to an all-industry average.
Which of the following is a disadvantage of the point method? It can leave too much room for manipulation. It can become bureaucratic and rule-bound. It does not allow for comparisons. It does not communicate what is valued.
It can become bureaucratic and rule-bound.
what is strategic compensation?
It is the design and implementation of a compensation system that reinforces the objectives of both a company HR strategy AND business strategy.
In the context of internal alignment, which of the following is the correct sequence? Job description > Pay structure > Job evaluation Job evaluation > Job description > Job structure Pay structure > Job description > Job evaluation > Job analysis Job description > Job evaluation > Job structure
Job description > Job evaluation > Job structure
_____ is the process of systematically determining the relative worth of jobs for the purpose of creating an organization's job structure. Performance evaluation Job restructuring Job evaluation Point factor evaluation
Job evaluation
Which of the following is an ordering of jobs based on their content or relative value?
Job structure
Who among the following is examining the validity of a job evaluation? Keira, who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs Laila, who is measuring the effectiveness of a formal appeals process Keith, who is surveying employee attitudes about the job evaluation plan Rita, who is requesting the management for a reanalysis and a reevaluation of the required skills as she feels her job is evaluated incorrectly
Keira, who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs
The pay policy that is most closely associated with the decreased ability to attract employees is a(n) _____ policy.
Lag
The pay policy that is most closely associated with the decreased ability to attract employees is a(n) _____ policy. lead match lag employer of choice
Lag
Which of the following is NOT true?
Large raises with a promotion decreases effort and increases absenteeism.
In the context of pay relationships, which of the following is illegal in the United States?
Legal examples: Paying on the basis of the nature of jobs; paying on the basis of pay comparisons with competitors; and, Paying on the basis of one's skill level. Illegal example: Paying on the basis of one's age, gender, religion, natural origin, and disability
_____ refers to the average of the array of rates inside an organization.
Pay level
Which of the following statements is true of pay level?
Pay level is directly proportional to labor costs.
Which of the following is an example of the demand side of labor?
Pay level offered by an employer
How does culture and values shape pay systems?
Pay systems reflect the values that guide an employee's behavior and underlie its treatment of employees Pay systems also mirror the company's image and reputation
What is a pay structure?
Refers to the array of pay rates for different work or skills within a single organization. 1.) The number of levels 2.) The differentials in pay between the levels 3.) The criteria used to determine those differences describe the structure
In the strategic approach to pay, internal alignment is the _____ issue to be decided.
Second Note: first issue is setting objectives.
Among pay-mix alternatives, the percentage of base pay is highest in _____. work-life balance policy security or commitment policy performance-driven policy market match policy
Security or commitment policy
What is a Person-Based Structure?
Shifts the focus to the employee: the skills, knowledge, or competencies the employee possesses, whether or not they are used in the employee's job.
Most unions prefer which of the following
Small pay differences among jobs and seniority-based promotions
Which of the following statistical measures shows how similar or dissimilar the market rates are from each other?
Standard deviation
What are stated compensation strategies?
Stated strategies are compensation strategies that are written for all to see and understand Rational and deliberate
Which of the following is often the largest component in an executive pay package?
Stock options
What is strategy?
Strategy refers to the fundamental directions that an organization chooses.
virtuous circle describes...
Suggests performance-based pay works best when there is success to share! :)
Relationships should:
Suppor the organizations strategy support the work design be fair mtivate ee work behavior
Size of pay differentials between grades should _____. be based upon differentials in market surveys be approximately 15 percent support career movement through the pay structure be between 10 and 25 percent
Support career movement through the pay structure
what is the supporting compensation approach when it comes to strategic choice?
Supporting compensation approach places less emphasis on evaluating skills and jobs and more emphasis on incentives designed to encourage innovations.
In today's organizations, in order to increase competitiveness and success, work is analyzed by separating transactional work from: core work. hygiene work. tacit work. system work.
Tacit work
Which of the following is NOT true of the relationship between employer size and its ability to pay?
Talented individuals have a lower marginal value in a larger organization.
Which of the following is NOT true of the relationship between employer size and its ability to pay? Talented individuals have a lower marginal value in a larger organization. Talented people can influence more people and decisions. Influence of talented people leads to more profits. Talented people prefer to work in larger organizations.
Talented individuals have a lower marginal value in a larger organization.
What is Exchange Value?
The Exchange Value is whatever wage the employer and employee agree on for a job.
What is the Use Value?
The Use Value reflects the value of goods/services an employee produces in a job.
_____ is the additional output associated with the employment of one additional person, with other production factors held constant.
The marginal product of labor
_____ is the additional output associated with the employment of one additional person, with other production factors held constant. Productivity The marginal product of labor Incremental productivity The marginal revenue of labor
The marginal product of labor
Which of the following jobs would most likely fall into a fuzzy market?
The position of Senior Director of Future Vision Services that was filled by a software engineer with e-commerce, marketing, and theater experience
What is work flow?
The process by which goods and services are delivered to the customer.
_____ puts a lid on the maximum pay level an employer can set.
The product market
A small lawn care company has two mowers and four employees. If it hires another employee and the factors of production remain the same, how will the productivity of the fifth employee compare to that of the current four employees?
The productivity will reduce
A small lawn care company has two mowers and four employees. If it hires another employee and the factors of production remain the same, how will the productivity of the fifth employee compare to that of the current four employees? The productivity will reduce. The productivity will increase. The productivity will remain the same. There is not enough information to determine productivity.
The productivity will reduce
What is the importance of relationships defined by internal alignment?
The relationships defined by internal alignment are important because they form a PAY STRUCTURE that should: 1.) Support the organization strategy 2.) Support the work flow 3.) And motivate behavior toward organization objectives
_____ is an example of a bourse.
The total compensation for a top athlete
_____ is an example of a bourse. The stated starting wage of a job in an ad The total compensation for a top athlete The price of a product on Amazon The price of a box of cereal at a grocery store
The total compensation for a top athlete
Which of the following statements is true about market pricers?
They assume that little value is added through internal alignment.
Which of the following statements is true about market pricers? They align pay structures with the business strategy. Their pay structures are unique and difficult to imitate. They assume that little value is added through internal alignment. They emphasize pay structures based on unique technology or the way work is organized.
They assume that little value is added through internal alignment.
Which of the following statements is true regarding broad bands?
They foster cross-functional growth.
Which of the following statements is true regarding broad bands? They remove limits on total salary budgets. They support recognition via titles or career progression. They foster cross-functional growth. They increase the hierarchical nature of organizations.
They foster cross-functional growth.
Which of the following is NOT a reason a company might pay base wages above market?
To increase turnover rates
Which of the following is NOT a reason a company might pay base wages above market? To increase employee productivity To increase turnover rates To increase wage satisfaction To attract more job applicants
To increase turnover rates
_____ measures reveal competitors' use of performance-based cash payments. Base cash pay Short-term incentive pay Total cash Long-term incentive pay
Total Cash
_____ measures reveal competitors'; use of performance-based cash payments.
Total Cash
Which theory predicts that individual performance will be maximized when the pay differentials between job levels is large?
Tournament theory
_____ refers to openness and communication about pay.
Transparency
Which of the following programs introduced by Congress includes restrictions on executive pay that are designed to discourage executives from taking "unnecessary and excessive risks"?
Troubled Asset Relief Program
Skill-based plans establish single flat rates for each skill level regardless of performance or seniority.
True
T/F: A pay range exists when at least two employees in the same job are paid different rates.
True
T/F: A potential disadvantage of skill-based pay is that labor costs can be a source of competitive disadvantage.
True
T/F: A pure market pricing strategy carried to its extreme tends to ignore internal alignment completely.
True
T/F: According to efficiency-wage theory, paying higher wages than competitors can lower labor costs due to more efficient workers.
True
T/F: Advocates of competencies say that by focusing on optimum performance, rather than average performance, competencies can help employees maintain their marketability.
True
T/F: Aging the market data to a point halfway through the plan year is called lead/lag.
True
T/F: An employer offering lower base pay with high bonuses is a likely signal that it is seeking risk-taking employees.
True
T/F: As experience with competencies has grown, organizations are placing greater emphasis on business-related descriptions of behaviors.
True
T/F: By encouraging employees to take charge of their own development, skill-based plans may give them more control over their work lives.
True
T/F: Combat pay premiums paid to military personnel to offset some of the risk of being fired upon is an example of a lead pay-level policy.
True
T/F: Compensable factors are aspects of work that add value to the organization.
True
T/F: Defining the compensable factors and scales to include the content of jobs held predominantly by women is one of the methods to ensure that job evaluation plans are bias-free.
True
T/F: Graduating students usually find themselves in a quoted-labor market.
True
T/F: In cases where the content of an organization's jobs does not sufficiently match that of the jobs in the salary survey, an effort can be made to quantify the difference via benchmark conversion.
True
T/F: In determining the compensation strategy, a major strategic decision is whether to mirror what competitors are paying.
True
T/F: Managers often regard external market data as more objective than internal job evaluation.
True
T/F: Many employers use market surveys to validate their own job evaluation results.
True
T/F: One approach to both improving and measuring the level of acceptance of job evaluation is to establish a formal appeals process.
True
T/F: Paired-comparison and alternate-ranking methods may be more reliable than simple ranking.
True
T/F: Point plans represent a significant change from ranking and classification methods in that they make explicit the criteria for evaluating jobs: compensable factors.
True
T/F: Regression smoothes large amounts of data while minimizing variations.
True
T/F: Research shows that a lead pay strategy reduces turnover.
True
T/F: Segmenting sources of labor is a means of reducing labor costs.
True
T/F: Skill-based pay plans can focus on both the depth and breadth of work.
True
T/F: Skill-based plans are generally well accepted by employees because it is easy to see the connection between the plan, the work, and the size of the paycheck.
True
T/F: Skill-based plans establish single flat rates for each skill level regardless of performance or seniority.
True
T/F: The main appeal of competencies is the direct link to the organization's strategy.
True
T/F: When there is an unusual level of turnover in a job, an employer is likely to conduct a market survey.
True
T or F: Cookie cutter strategies don't work for most firms
True; Tailor compensation system to your business strategy
In the regression equation, y = a + bx, job evaluation points are denoted by _____. a b x y
X
All of the following are examples of potential anomalies EXCEPT _____.
a large variation in average base pay for a job across companies
All of the following are examples of potential anomalies EXCEPT _____. outliers a large variation in base pay for a job at one company one company dominating the results a large variation in average base pay for a job across companies
a large variation in average base pay for a job across companies
Based on the opinions of 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select _____.
a more flexible work schedule
Because employers are raising employee pay at various times during the year, survey data must be updated using a process called _____ or _____.
aging; trending
Common characteristics of the point method include all of the following EXCEPT: benchmark factor classes. numerically scaled factor degrees. factor weights. compensable factors.
benchmark factor classes.
Most job structures are best described as:
both person- and job-based structures
Employees in a multiskill system earn pay increases: by increasing their productivity. based on job content. based on job assignments. by acquiring new knowledge.
by acquiring new knowledge
The best way to establish _____ is to account for competing explanations, either statistically or through control groups.
causation
A common first step in interpreting survey data is to _____.
check for the accuracy of job matches
A major decision in job evaluation is to: choose which stakeholders to eliminate in the process figure out how to eliminate the use of multiple plans choose among alternative approaches figure out how to eliminate the use of single plans
choose among alternative approaches
A major decision in job evaluation is to: choose which stakeholders to eliminate in the process. figure out how to eliminate the use of multiple plans. choose among alternative approaches. figure out how to eliminate the use single plans.
choose among alternative approaches.
A job description is compared to class descriptions in the _____ of job evaluation. Position Analysis Questionnaire method point method Hay Group Guide Chart—Profile MethodSM classification method
classification method
The well-defined jobs at McDonald's and their small differences in pay are an example of a(n) _____ internal pay structure.
closely tailored
In the context of the point method of job evaluation, _____ are those characteristics in the work that an organization values; that help it pursue its strategy and achieve its objectives. competitive skills compensable factors core competencies benchmark factors
compensable factors
A measure of how changes in one variable are related to changes in another variable is the:
correlation coefficient
stresses doing more or less by minimizing costs, encouraging productivity increases, and specifying in greater detail exactly how jobs should be performed. Example: Ryanair is a low cost commercial airline in Ireland. Emphasizes keeping training and maintenance costs lower than competitors by only using one particular type of aircraft (Boeing 737); seats don't recline, customers are required to carry luggage to the plane McDonald's training plan - short and sweet
cost cutter's efficiency-focused strategy
stresses delighting customers and bases employee pay on how well they do this Nordstrom - places heavy emphasis on competitive based pay and commission
customer focused strategy
Compensation strategy, HR strategy, and business strategy seek to ...
decrease costs or increase revenues relative to competitors.
The second major decision in pay-level determination is to _____
define the purpose of a survey
The final major decision in pay-level determination is to _____.
design grades and ranges or bands
The final major decision in pay-level determination is to _____. interpret and apply the results of the survey obtain top-management acceptance of the final decisions design grades and ranges or bands draw policy lines
design grades and ranges or bands
Reliability of job evaluation techniques is measured by: determining if different evaluators produce the same results. asking the question "What does the evaluation measure?" determining hit rates. surveying employee attitudes about the evaluation.
determining if different evaluators produce the same results.
The final step in designing a point plan involves _____. developing online software support selecting compensable factors communicating the plan and training users scaling the factors
developing online software support
What is efficiency-focused strategy when it comes to strategic choice?
efficiency-focused strategy stresses doing more or less by minimizing costs, encouraging productivity increases, and specifying in greater detail exactly how jobs should be performed.
In firefighting and rescue squads and global software design teams, a(n) _____ structure is most closely associated with higher performance.
egalitarian
Incentives and merit guidelines are techniques of the _____ policy of the pay model.
employee contributions
The decisions to implement pay for performance, flat rate pay, and profit sharing are examples of _____ policy decisions.
employee contributions
Employers continue to hire until the marginal revenue of the last hire equals his or her wage rate. This is based on the first labor market theory assumption that:
employers seek to maximize profits.
Employers continue to hire until the marginal revenue of the last hire equals his or her wage rate. This is based on the first labor market theory assumption that: markets are competitive. pay rates reflect all costs of employment. employers seek to maximize profits. workers are homogeneous and interchangeable.
employers seek to maximize profits.
Comparisons on the forms of compensation used by other companies are part of _____.
external competitiveness
Compensation policy choices that affect the pay level relative to other companies are most closely associated with the _____ aspect of the pay model.
external competitiveness
All job incumbents can easily complete the PAQ as the reading level required for it is relatively low. (t/f)
f
Employers are more likely to collect task-level job information if the jobs are flexible and fast-changing. (t/f)
f
Reducing the number of job titles in a pay structure tends to raise morale and reduce turnover. (t/f)
f
The Americans With Disabilities Act has led to a significant increase in the employment rate of people with disabilities. (t/f)
f
The certification processes in skill-based pay is analogous to the _____ in a job-based analysis. classes compensable factors regression analysis factor degrees and weights
factor degrees and weights
T or F: Most firms have generic business strategies.
false: Most firms do not have generic strategies. They tend to have aspects of cost and innovation.
A strategic perspective focuses on those compensation choices that ...
help the organization gain and sustain competitive advantage.
All of the following are advantages of a lead pay-level policy EXCEPT _____.
higher turnover rates
All of the following are advantages of a lead pay-level policy EXCEPT _____. reduced vacancy rates higher turnover rates reduced absenteeism better-quality employees
higher turnover rates
External factors are dominant influences on jobs filled via:
hiring graduates
Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high-performance practices.
improves attitudes and behaviors
The degree to which pay influences individual and aggregate motivation among employees at any point in time is referred to as a(n):
incentive effect
Variable pay may also be called_____.
incentives
According to the government's procedures of the job analysis process, the first interview should be conducted with the _____.
incumbent's co-workers
stresses new products and short response time to market trends places less emphasis on evaluating skills and jobs and more emphasis on incentives designed to encourage innovations New and unique products Short response time to market trends
innovator approach
Research shows that _____ will effectively shift an organization in a downward performance spiral to an upward one.
it is unclear what compensation practices
The process of collecting information that identifies the similarities and differences among jobs is known as _____.
job analysis
The list of tasks, duties, and responsibilities that make up a job is known as a _____.
job description
Engineering, sales, and maintenance are examples of _____.
job families
A _____ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess. performance-based competency-based job-based skill-based
job-based
Managers whose employers use _____ plans focus on placing the right people in the right job. person-based skill-based competency-based job-based
job-based
Lisa is a manager at Trell Inc. When she hires her employees, she focuses on finding the right job for the right person. Which of the following pay plans is her employer most likely using? Skill-based pay plan Competency-based pay plan Aptitude-based pay plan Job-based pay plan
job-based pay plan
Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the:
labor costs
Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the: profit margins. labor costs. return on investments. revenues.
labor costs
Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the: profit margins. labor costs. return on investments. revenues.
labor costs.
The pay-level policy that is most likely to reduce pay dissatisfaction is a(n) _____.
lead policy
Aging the market data to a point halfway through a plan year is called _____.
lead/lag
A market pay line _____.
links a company's benchmark jobs with market rates paid by competitors
Organizations in a turbulent and unpredictable environment requiring flexibility in jobs and work processes are likely to be more successful with a(n) _____ internal pay structure.
loosely coupled
A company using a skill-based pay system prices the job of lead assembler between $10 and $22 per hour. Survey data showed that the job of assembler averaged $10 per hour and the job of assembly supervisor averaged $22 per hour. The company is using the _____ method of job matching.
low-high
For organizations using a skill-competency- based pay system or generic job descriptions, the best approach for pricing jobs is _____.
low-high approach
For organizations using a skill-competency-based pay system or generic job descriptions, the best approach for pricing jobs is _____. benchmark-job approach low-high approach survey leveling benchmark conversion
low-high approach
Issues of transparency, technology, and choice are most closely associated with the _____ aspect of mapping a total compensation strategy.
management
The majority of applications of skill-based pay have been in: education industries. manufacturing industries. health-care industries. service industries.
manufacturing Industries
In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the _____ of the last hire is equal to the _____ for that hire.
marginal revenue; wage rate
In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the _____ of the last hire is equal to the _____ for that hire. demand factor; supply factor marginal output; market price incremental output; marginal output marginal revenue; wage rate
marginal revenue; wage rate
The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment.
market pricing
The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment. job structure broad banding reference rate market pricing
market pricing
The most common pay policy is a(n) _____.
match policy
According to the Hudson survey, _____ is the single thing that would make 41 percent of the U.S. workers happier.
more money
A survey conducted in January 2013 found that the median pay effective January 1, 2013, for a clerk was $22,000 and that the forecast rate of wage increases in the market for 2013 was 5 percent and another 5 percent for 2014. An employer choosing to follow a lead strategy of 4 percent above the market for the plan year will need to _____.
multiply the salary by 105 percent and then by 109 percent
In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of _____.
objectives
Managers seek internal alignment within their organization by
paying on the basis of similarities among jobs.
The market pay rate is the:
point at which supply and demand lines cross
The market pay rate is the: minimum wage rate set by the Department of Labor. pay rate at which applicants will deny a job offer. difference between use value and surplus value. point at which supply and demand lines cross.
point at which supply and demand lines cross.
When a statistical process is used to duplicate an existing pay structure, it is called: committee a prior judgement approach policy capturing factor analysis regression analysis
policy capturing
When a statistical process is used to duplicate an existing pay structure, it is called: policy capturing. committee a priori judgment approach. factor analysis. regression analysis.
policy capturing.
Which of the following is an example of a relational return?
recognition and status, employment security, challenging work, and learning opportunities.
Pay ranges:
reflect the differences in performance or experience that an employer wishes to recognize with pay.
Pay ranges: are flexible enough to deal with differences in quality but not with the productivity or value of these quality variations. usually lead to an increase in employee turnover. reflect the differences in performance or experience that an employer wishes to recognize with pay. cause employees to believe that their compensation cannot increase in the same job.
reflect the differences in performance or experience that an employer wishes to recognize with pay.
Among pay-mix alternatives, the percentage of base pay is highest in _____.
security or commitment policy
Among pay-mix alternatives, the percentage of base pay is highest in _____. work-life balance policy security or commitment policy performance-driven policy market match policy
security or commitment policy
The first step in setting competitive pay and designing a pay structure is to _____.
specify a pay-level policy
The first step in setting competitive pay and designing a pay structure is to _____. specify a pay-level policy conduct a job evaluation draw policy lines specify the relevant market
specify a pay-level policy
What is a customer-focused business strategy?
stresses delighting customers and bases employee pay on how well they do this
What is the innovative approach when it comes to strategic choice?
stresses new products and short response time to market trends
Size of pay differentials between grades should _____.
support career movement through the pay structure
places less emphasis on evaluating skills and jobs and more emphasis on incentives designed to encourage innovations. Google wants employees to spend 20% of their working time innovating products to make Google better Gmail was made Heavily invested in research development
supporting compensation approach
The process of multiplying survey data by some factor judged to reflect the difference between a survey benchmark job and a company job is called _____.
survey leveling
According to ADA regulations, essential functions refers to the fundamental job duties of the employment position the individual with a disability holds or desires. (t/f)
t
An increasingly common method of conducting job analysis is quantitative job analysis, which is conducted on a website. (t/f)
t
Some organizations analyze work content as part of work flow and supply chain analysis. (t/f)
t
The Americans With Disabilities Act's essential-elements requirement for hiring and promotion decisions seems to require less detail than what is required for pay decisions. (t/f)
t
The level at which an analysis begins affects whether the work is similar or dissimilar. (t/f)
t
All of the following are important factors in defining a market for compensation purposes EXCEPT:
the ability to pay
Job analysis is important for both managers and employees because it is
the basis for a work-related rationale for pay differences.
In most organizations, the responsibility for managing a pay survey lies with _____.
the compensation manager
_____ is a crucial factor that affects the perception of fairness of a skill-based plan. The design of the certification process The number of compensable factors The extent of alignment with an organization's strategy The number of weights and factor degrees
the design of the certification process
The problem that is most likely to be faced by organizations using an egalitarian pay structure is _____.
the difficulty in external recruitment. Must not have problems in maintaining cooperation among employees, the perception of excessive CEO pay, the difficulty in performing teamwork.
Pay for temporary workers is based upon:
the internal structures of their home employer.
Incentives do not permanently increase labor costs because:
they are one-time payments
Which of the following is NOT a reason a company might pay base wages above market? To increase employee productivity To increase turnover rates To increase wage satisfaction To attract more job applicants
to increase turnover rates
Routine work is also termed _____. transactional work hygiene work tacit work system work
transactional work
The assumption of the upward sloping supply curve that offers of higher pay will increase supply will most likely NOT hold when _____.
unemployment is low
Marginal productivity theory argues that employers pay _____.
use value
A study of graduating college students found they sought jobs with all of the following pay characteristics EXCEPT _____.
variable pay
A study of graduating college students found they sought jobs with all of the following pay characteristics EXCEPT _____. individual-based pay variable pay flexible benefits job-based pay
variable pay
Suggests performance-based pay works best when there is success to share! :) An organization whose profits or market share is increasing is able to pay larger bonuses and stock awards Paying these bonuses fairly improves employee attitudes and work behaviors, which in turn improves their performance Employees receive returns that compensate for the risks they take, and get to share in the organization's success
virtuous circle
Content refers to the:
work performed in a job and how it gets done.
The pay-mix policy alternative in which the percentage of benefits is likely to be the highest is known as _____.
work/life balance policy
T/F: Factors are scaled after factor weights have been assigned.
False
Among employers that provide health insurance, the cost to provide family coverage per year per employee is approximately _____.
$16,000
The Age Discrimination in Employment Act (ADEA) pf 1967 (amended 1978, 1986, and 1990) - Legislation that makes nonfederal employees age _______________ and over a protected class relative to their treatment in pay, benefits, and other personnel actions. The 1990 amendment is called the Older Workers Benefit Protection Act. -65 -99 -72 -40
-40
When employee performance measures are ambiguous and vary from time to time, but the organization's performance is fairly stable over time, the most effective type of compensation is to offer ___________________. -monetary rewards with no benefits -an increase in base pay -a variety of rewards with significant incentive pay -a large base pay and low incentive pay
-a variety of rewards with significant incentive pay
Which of the following is an example of the sorting effect in action? -an employee leaving a high-paying job for one that provides for work/life balance -the provision of cost-of-living increases by a company -the provision of across-the-board pay increases by a company -an employee choosing fewer incentives in his flexible compensation plan
-an employee leaving a high-paying job for one that provides for work/life balance
Which of the following is the correct order of the steps in formulating a total compensation strategy? -map, assess, implement, and reassess -assess, implement, map, and reassess -map, implement, assess, and reassess -assess, map, implement, and reassess
-assess, map, implement, and reassess
What is Distributive Justice?
Distributive Justice refers to the fairness of the given decision: guilty.
A difference between incentives and merit increases is that incentives:
Do not increase the base wage, whereas merit increases the base wage.
Druk Inc. is a consulting firm with 10 employees. Each new client generates $10,000 in revenue. If the company hires another employee who brings in five new clients and all other factors of production are constant, which of the following statements is true?
Druk needs to pay $50,000 as wage to the eleventh employee to break even.
Wages tend to be the lowest in which of the following industries?
Education and health care
Wages tend to be the lowest in which of the following industries? Education and health care Technology-intensive industries Professional services Pharmaceuticals
Education and health care
T/F: Employers tend to overestimate the importance of pay to employees and underestimate the role of relationships with the supervisor.
False
Which of the following is a major decision in job evaluation? Choosing the stakeholders to eliminate in the process Choosing the method of eliminating multiple plans Establishing standards that solely use a single plan Establishing the purpose of evaluation
Establishing the purpose of evaluation
What shapes Internal Structure?
External Factors & Organizational Factors
The exchange value of a job is its _____. content value performance value internal market value external market value
External Market Value
According to the text, which of the following decisions should be made jointly?
External competitiveness and employee contribution decisions
The certification processes in skill-based pay is analogous to the _____ in a job-based analysis. classes compensable factors regression analysis factor degrees and weights
Factor degrees and weights
Which of the following is NOT one of the factors that define an internal pay structure?
Factors: The pay differentials between the levels; the criteria used to determine pay differentials; the number of levels of work NOT: The number of times the pay structure has been changed.
Which of the following is NOT a factor in defining equal work according to the Equal Pay Act?
Factors: equal skill, equal effort, equal responsibility Not: equal experience
T/F: Career moves between bands are more common than within bands.
False
T/F: Employers in highly competitive markets are more able to raise prices without loss of revenues.
False
Gramhold Inc., a pharmaceutical company, reduces its 10 salary grades to just three broad bands. Which of the following statements is most likely to be true in this case? Gramhold will face difficulty in defining job responsibilities broadly with the new structure. Gramhold will find that the new structure hinders cross-functional growth. Gramhold will experience career moves within bands more than career moves between bands. Gramhold will offer recognition via titles rather than through cross-functional experience and lateral progression.
Gramhold will experience career moves within bands more than career moves between bands.
Which of the following is NOT included in a strategy map?
HR alignment
Hierarchical pay structures have all BUT which of the following characteristics?
Have: Support a close fit with the organization; many levels; based upon the job or person; greater differences in pay between levels and top and bottom jobs. Not: Prefer team performance over individual performance.
Egalitarian pay structures have all BUT which of the following characteristics?
Have: few levels, small differentials, support equal treatment Not Have: Prefer individual performance over team performance.
At a business unit level, the choice shifts to:
How do we gain and sustain competitive advantage in this business?
At the function level strategic choice is:
How should total compensation help this business gain and sustain competitive advantage?
The _____ theory is the most influential in explaining pay-level differences.
Human capital
Describe the differentiation test for competitive advantage?
If the pay system is relatively simple for any competitor to copy, then how can it possible be a source of competitive advantage? The answer is HOW YOU MANAGE IT
Which form of pay does not permanently increase labor costs?
Incentive
Common bases for modern pay structures include all BUT which of the following?
Include: The content of the work; the skills and knowledge required to perform the work; the work's relative value for achieving organizational objectives Not Include: The extent of external competitiveness and equity
Organization factors that shape internal pay structures include all BUT which of the following?
Include: strategy, technology, human capital, HR policy, employee acceptance and cost implications. Not: will pick something from external factors or internal structure. See pg. 80 of text.
Describe the value test for competitive advantage?
Look for the return you are getting from offering your incentives, benefits, and even base pay Measure ROI
One of the reasons why 8 in 10 of the uninsured in the United States are from working families is that _____.
Many small employers are much less likely than larger employers to offer health insurance to t heir employees.
What is the 2nd step in a total compensation strategy?
Map a Total Compensation Strategy Mapping is often a picture of a company's compensation plan. - It can also clarify the message that the company is trying to deliver Provides a visual reference They don't tell which strategy is best, they just provide framework and guidance
The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment. job structure broad banding reference rate market pricing
Market Pricing
The most common pay policy is a(n) _____. lead policy lag policy hybrid policy match policy
Match policy
The _____ minimizes the distortion of the central tendency caused by outliers.
Median
Which of the following is given as an increment to the base pay in recognition of past work behavior?
Merit Pay
You are an HR manager, and your boss has told you to find the best way to raise job performance. After some research, you find that _____ have the greatest instrumental value.
Monetary incentives
_____ are related to greater performance when the work-flow depends on individual contributors.
More hierarchical structures
Which of the following is an example of a quoted-price market?
Nile, a website that allows sellers to sell their products for a fixed price
How do employee/union needs shape pay systems?
Offer choices to benefits Be flexible with compensation options for all types of employees Doing this adds value and makes it difficult for other companies to imitate Make sure to make choices limited though as to avoid confusion and conflict
What is internal alignment?
Often called "internal equity". Refers to the pay relationships among different jobs/skills/competencies within a single organization.
Explain what performance theory is:
P = f(A,M,O) P = performance A = ability M = motivation O = opportunity AMO logic is that HR systems will be most effective when employee ability is developed through selective hiring and training and development.
The _____ method of job evaluation uses compensable factors. classification Position Analysis Questionnaire point ranking
Point
Which of the following is a fundamental objective, and NOT a policy, in the pay model?
Policies: Internal Alignment, Competitiveness, Contributions, and Management Objectives: Efficiency (Performance, Quality, Customer and Stockholder, Cost), Fairness, Compliance, Ethics
Which of the following is a policy, and NOT an objective, in the pay model?
Policies: Internal Alignment, Competitiveness, Contributions, and Management Objectives: Efficiency (Performance, Quality, Customer and Stockholder, Cost), Fairness, Compliance, Ethics
When a statistical process is used to duplicate an existing pay structure, it is called: policy capturing. committee a priori judgment approach. factor analysis. regression analysis.
Policy Capturing
James says, "I don't trust the way the company determines pay rates in my department." If James feels this way despite being happy with his current salary, he is most likely concerned about _____.
Procedural justice
In which of the following conditions would product market competitors' data be given more weight than data from labor market competitors?
Product demand is responsive to price changes.
Evidence shows that in manufacturing, _____ is positively correlated with hourly wage level.
Productivity
Compensation value should influence what 3 aspects of business?
Productivity Availability Satisfaction
Which of the following is NOT a question to ask for determining if research has value?
Proper Question: Is the research useful?; Can alternatives explanations be ruled out?; Is correlation separated from causation? Example of an Improper Question: Was the research conducted by Ph.D. researchers
Which of the following is often used to set pay ranges?
Quartiles and percentiles
What are unstated compensation strategies?
Unstated strategies are inferred from pay decisions Done more chaotically Responds to pressures from economic, sociopolitical, and regulatory context
When organization performance declines, performance-based pay plans do not pay off There are not bonuses The value of stock declines, with potentially negative effects on organization performance This increases the risk of facing employees with smaller bonuses, demotions, wage cuts, and layoffs Unless the increased risks are offset by larger returns, the risk-return imbalance will reinforce declining employee attitudes and speed the downward spiral.
Vicious circle
At a fundamental level, strategic choice is
What business should we be in?
vicious circle describes..
When organization performance declines, performance-based pay plans do not pay off
What happens when a pay system is in a VICIOUS CIRCLE?
When organization performance declines, performance-based pay plans do not pay off There are no bonuses. The value of stock declines, with potentially negative effects on organization performance This increases the risk of facing employees with smaller bonuses, demotions, wage cuts, and layoffs Unless the increased risks are offset by larger returns, the risk-return imbalance will reinforce declining employee attitudes and speed the downward spiral.
The most common bases for determining internal structures are:
Work content and its value
Which of the following pay structure procedures would NOT increase perceptions of pay fairness?
Would: Consistently applying pay procedures to all employees; using accurate data; including appeals procedures. Not: hiring consultants to develop the pay structure
In the regression equation, y = a + bx, job evaluation points are denoted by _____.
X
