Comp. Exam 2

· Compensating differentials labor demand theory - what does it state?

o Employers offer higher wages if a job has negative characteristics.

· Employers continue to hire until marginal revenue of the last hire equals their wage rate because as per the first labor market theory assumption:

o Employers seek to maximize profits

· A lead policy can have negative effects:

o It may force the employer to increase wages of current employees too. o It may mask negative job attributes that contribute to high turnover.

· A ___________ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess.

o Job-based

· Managers whose employees use ___________ plans focus on placing the right people in the right job

o Job-based

· Research shows that ___ factor(s) account(s) for 98 to 99 percent of the variance in job evaluation plans

3

· Most factors have _________ number of degrees

4-8 degrees

· Which of the following is NOT true of the usage of multiple plans versus single job evaluation plans?

A single universal plan is acceptable to employees if the work covered is highly diverse.

In the context of job evaluation the two common ways of ranking are?

Alternation ranking and paired comparison

· Definition of the term "camper" in a skill-based pay system

An employee who does not want to rotate jobs

· Employees in a multi-skill system earn pay increases by?

By acquiring new knowledge

· A major decision in job evaluation is to:

Choose among alternative prices

The job evaluation system that most resembles a book case with many shelves:

Classification

· Definition of policy capturing in the context of job evaluation

Combines use of statistical methods and job questionnaires to derive job values based on revailing external or internal pay rates

· T/F: marginal revenue is measurable and used by managers to determine both pay levels and how many employees to hire

True

· Who is most likely to conduct job evaluations of senior management jobs?

Compensation managers

Underlying assumption in the assessment of job content

Content has intrinsic value outside external market.

· The organization specific group for classifying competencies generally includes _________.

Customer orientation

· The reliability of job evaluation techniques is measured by?

Determining if different evaluators produce the same results

· Compensable factors, skill blocks, and competency sets are use for?

Determining what to value

· Wages tend to be lowest in which of the following industries?

Education and Healthcare

· Competencies are derived from the __________ beliefs about the organization and its strategic intent

Executive leadership's

· The most influential theory explaining pay-level differences is marginal revenue productivity. True or false?

False

· The roots of job-based pay structures are traced to?

Frederick Taylor

· Most widely used point method job evaluation

Hay Evaluation

· Disadvantages of the point method according to the text

It can be bureaucratic and rule-bound

· T/F: both pay level and pay mix decisions focus on two objectives: 1) control costs and increase revenues (2) attract and retain employees

True

Least expensive method for doing job evaluation is?

Job Ranking

· From provided examples, be able to identify who among them 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

According to a WorldatWork survey, the primary method of job evaluation is

Market pricing

· The most commonly used job evaluation method in the United States and Europe

Point Method

Which job evaluation method uses compensable factors?

Point method

· An employee's focus in a job-based approach is to?

Seek promotions to earn more pay

· What is a crucial factor that affects the perception of fairness of a skill-based plan?

The design of the certification process

· What are core competencies ?

The underlying knowledge, skills, and behaviors that form success at any level or job

· What do competency sets do?

Translate each core competency into action and determine what to value

T/F Other things being constant, in a hiring scenario, the employer will continue to hire until the marginal revenue generated by the last hire is equal to the costs associated with employing that person.

True

· A lead policy may force the employer to increase wages of current employees too, to avoid internal misalignment and murmuring. True or false?

True

· In practice, organizations use skills and competencies to assess value of labor instead of marginal revenue product. True or false?

True

· Marginal revenues is measurable and used by managers to determine both pay levels and how many employees to hire. True or false?

True

· ___________ reason makes competencies a risk foundation for a pay system

Vagueness and subjectivity

Steps and order in doing the point method

a. Conduct job analysis. b. Determine compensable factors. c. Scale the factors. d. Weight the factors according to importance. e. Select criterion pay structure. f. Communicate the plan and train users. g. Apply to nonbenchmark jobs. h. Develop online software support.

Which of the following statements is true of a job evaluation plan?

a. It is developed using benchmark jobs and then applied to non-benchmark jobs.

· Correct sequence of events in the context of internal alignment

a. Job description > Job evaluation > Job structure

Recognize true comments about the usage of multiple plans vs. single job evaluation plans' characteristics of benchmark jobs

a. Many say that jobs are too varied to be accurately evaluated by a single plan. b. Multiple plans use different plans and different factors for different job families. This approach allows the plan to be tailored to what is important in each type of work.

Focus on information in the text on classification and its own evaluation of its cons

a. descriptions may leave too much room for manipulation

· Book definition of compensable factors

a. those characteristics in the work that an organization values; that help it pursue its strategy and achieve its objectives.

Which of the following is NOT true of the usage of multiple plans versus single job evaluation plans?

aA single universal plan is acceptable to employees if the work covered is highly diverse.

Bourse Market

allows haggling over the terms and conditions until an agreement is reached. eBay is an example of a bourse market - Buyers and the potential employees are the sellers.

Focus on information in the text on classification and its own evaluation of its pros

can group a wide range of work together in one system

· A job description is compared to class descriptions in the ________ of job evaluation (which method?)

classification method

· Which is least likely to be used in establishing skill-based certification methods?

college degree

· the process of identifying competencies in person-based structures resembles identifying _______ as part of job evaluation in job-based structures

compensable factors

Skill-based pay plans work best in organizations using _____ strategy

cost-cutter

According to Frito-Lay's list of competencies for managerial work, the behavior of modeling, teaching, and coaching company values is linked to the _______

doing it the right way

· Definition of "scaling"

each degree equidistant from the adjacent degrees

Exchange Value

is its external market value

Disadvantages of the ranking method

it becomes cumbersome as the number of jobs increases

the majority of applications of skill-based pay have been in?

manufacturing industries

· What are the core competencies often linked to?

mission statements that express an organization's philosophy, values, business strategies, and plans

· Shared choice policy

o An external competitiveness policy that offers employees substantial choice among their pay forms.

· An assumption held by the labor supply model about the behavior of potential employees

o Are seeking jobs. o Possess accurate information about all job openings. o Have no barriers to mobility.

true statements about the relations hip between employer size and its ability to pay?

o Large organizations tend to pay more than small ones. o The relationship between organization size, ability to pay, and pay level is consistent with economic theory that says that talented individuals have a higher marginal value in a larger organization because they can influence more people and decisions, thereby leading to more profits.

· In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that max. profits is that level at which the ___ of the last hire is equal to the ___ for that hire

o Marginal revenue; wage rate

What are the groups of competencies

o Organization specific o Visionary o Personal characteristics

· Definition of the marginal product of labor and how it works

o Output associated with hiring an additional person, holding constant other production factors

· In what condition would product market competitor's data be given more weight than data from labor market competitors?

o Product demand is responsive to price changes

· All of the following are advantages of a lead pay policy except

o Reduced training time

· Among pay-mix alternatives the percentage of base pay is highest in a __________

o Security or commitment policy

· Which of the following is NOT true of the relationship between employer size and its ability to pay?

o Talented individuals have a lower marginal value in a larger organization

· If Company A raises its pay rate by one dollar per hour to hire additional workers and competitors immediately match the increase , what will be the most likely result?

o The labor costs for Company A will increase, but it will be unable to hire additional workers

· ________ puts a lid on the maximum pay level and employer can set

o The product market

· Reason why skill-based plans have maximum flexibility

o They pay employees for the highest level of skill they have achieved regardless of the work they perform.

· The pay mix alternative in which the percentage of benefits is likely to be the highest is known as _________

o Work-life balance policy

· First labor market theory assumption

o assumption is that employers seek to maximize profits.

· What is linked to high pay levels?

o ease of attraction, reduced vacancy rates and training time, and better-quality employees

· Premise Human Capital Theory is based on

o higher earnings flow to those who improve their potential productivity by investing in themselves (through additional education, training, and experience).

· A study of 400 compensation specialists reveal that:

o market data had a substantially larger effect on pay decisions than job evaluation data.

· Lead policy

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

· Evidence shows that in manufacturing _________ is positively correlated with hourly wage level

o productivity

· Definition of pay level

o the average of the array of rates an employer pays.

· What happens if markets are incorrectly defined?

o the estimates of competitors' pay rates will be incorrect and the pay level and pay mix inappropriately established

· External competitiveness

o the pay relationships among organizations—the organization's pay relative to its competitors

· Leadership, customer orientation, and functional expertise are examples of which group of competencies?

organizational specific

· You need to recognize advantages of skill-based pay plans

people can be deployed in a way that better matches the flow of work, thus avoiding bottlenecks as well as idle hands advantage to employees is the more they learn, the more they earn.

· How the alternation ranking method works

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?

Quoted Market

stores that label each item's price or ads that list a job opening's starting wage are examples of quoted-price markets. Amazon is an example of a quoted price market. - Buyers and the potential employees are the sellers.

· Competency indicators

the observable behaviors that indicate the level of competency.

job evaluation

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

· Routine work is also termed?

transactional work

· T/F: in a labor mkt, the demand side focuses on the actions of the employers

true

· T/F: in a labor mkt, the mkt rate is where the lines for labor demand and labor supply cross

true