Compensation

The Standard Deviation statistical measure

.............shows how similar or dissimilar the market rates are from each other

lump-sum bonus

A ______-_____ _________ requires annually "re-earning" the added pay.

lead

A pay policy most likely to reduce pay dissatisfaction is

match (pay) policy

An organization that has a ______ ______ ________ will pay its employees more than the market rate for some months and less than the market rate for the other months.

match (pay) policy

An organization that has a match (pay) policy will pay its employees more than the market rate for some months and less than the market rate for the other months.

the benchmark conversion approach.

Applying the job evaluation process to pay survey jobs to assess the degree of match between survey jobs and benchmark jobs is called.......

equity theory

As per the ________ ________, relative pay is important as employees evaluate their pay-effort balance in comparison to other employees.

performance

Available evidence indicates managers believe the most important factor for pay increases is ______________.

This is an example of the sorting effect.

Company X pays for performance. Allan, an employee of the company, is not in favor of this reward system and, therefore, leaves Company X in search of another company with different rules for getting rewards.

line of sight

Compared to other incentive plans, _____ ___ ________ is lowest in profit sharing.

Gantt

Compensation security is highest for workers who fail to complete tasks within the standard time under the ________ plan.

balanced scorecard.

Dissatisfaction with financial performance indicators for group incentives has led to greater use of the ____________ _____________.

employers seek to maximize profits.

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

high quality products

Growing evidence suggests that the major effect of skill-based pay is ______ ___________ ____________.

job evaluation

Job structure is to ____ ___________ as pay structure is to pay-policy line.

SVOP

Labor costs are to value added as pay roll costs are to _____.

internal alignment

Market pricers assume that little value is added through ___________ ______________.

communication.

More complex gain sharing plans create needs for higher levels of trust among participants and more effective ________________.

most likely be recruited only locally.

Office and clerical workers as compared to scientists, managers, and executives would

5 and 15

Pay ranges for clerical and production jobs commonly range between ____ and _____.

straight piecework.

Paying a dime for every bottle collected and turned into a collection center is an example of __________ ____________.

Pay structure

Size of pay differentials between grades should support career movement through the _____ ___________.

anomalies

Survey data from one or a few employers that are significantly out of line with other employers are ___________

wage rate

The _______ _______ does not increase for production above the standard in the standard hour plan.

Total cash

The _________ _______ compensation measure of compensation may overstate competitors' pay.

profitability affected the overall pay budget.

The study referred to in the text on how managers make wage adjustment decisions found

talented individuals have a higher marginal value in a larger organization, talented people can influence more people and decisions, and influence of talented people leads to more profits

True relationships between employer size and its ability to pay:

individual spot awards

Usually _____________ ______ ________ are awarded for exceptional performance, often on special projects or for performance that so exceeds expectations as to be deserving of an add-on bonus.

low

Wages tend to be ______ in the education and health care industries.

high

When moving from an individual to a group incentive plan, you would expect ______ turnover among high performers.

Financial data in pay surveys

are used to group firms by size

A relevant labor market

includes all employers who compete in one or more of the following areas except pay similar wages.

Segmented labor supply

involves hiring from different sources, paying workers differently that are performing the same work, and employing regulars, part-timers, and temps.

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

is referred to as the marginal product of labor.

The human capital theory

is the most influential in explaining pay-level differences

The market pay rate

is the point at which supply and demand lines cross.

Efficiency wage theory

is typically associated with greater profits

Advantages of team incentives

it stimulates problem solving, may better reflect how work is performed, and it minimizes distinctions between team members

Examples of potential anomalies:

outliers, a large variation in base pay for a job at one company, and one company dominates the results.

Advantages of group incentive pay plans include:

performance measures are easier to develop than for individual plans; cooperation within and across groups is encouraged; and, employee participation in decision-making increases

The Bureau of Labor Statistics

publishes extensive information on various occupations in different geographic areas. It is a major source of publicly available compensation data.

The product market

sets a maximum pay level an employer can pay.

The theory of compensating

supports the idea that coal mining should be paid more than office clerical work

A market pay line

.........links a company's benchmark jobs with market rates paid by competitors.

Bedeaux

A ___________ plan divides a task into simple actions and determines the time an average worker takes to complete each action.

the low-high method of job matching.

A company using a skill-based pay system prices the job of lead assembler at between $10 and $22 per hour. Survey data showed the job assembler averaged $10 per hour and the job of assembly supervisor at $22 per hour. The company was using........

appraisal system

A key factor in increasing trust in top management is an acceptable _________ ___________.

reverse incentive plan.

A penalty for poor performance rather than reward for good is an example of a __________ ____________ _____.

decentralized

A person with low self-esteem is likely to seek a large, ________________ organization with little performance-based pay.

lead strategy

A survey conducted in January, 2013 found the median pay effective January 1, 2013, for a clerk was $22,000 and the forecast rate of wage increases in the market for 2013 was 5% and another 5% for 2014. An employer choosing to follow a _______ ___________ of 4% above the market for the plan year, we need to multiply salary by 105% and then by 109%.

free rider problem

A team leader with a ______ ________ __________ could maximize performance by specifying performance levels and due dates.

Answer: The team's perception of reward fairness.

A team works on a project with specific performance level goals and time deadlines, but weather problems cause the team to miss the deadline. What is the key factor affecting how the team feels about their incentive?

expectancy theory

According to _______________ _______ of motivation theory it important for organizations to pay attention to the training and development needs of their employees.

expectancy theory

According to _______________ ________, effort level depends on expectancy, valence, and instrumentality factors.

reduced turnover, reduced absenteeism, and higher financial performance.

Advantages of a lead pay policy include

trust between workers and management

Advantages of individual incentive plans include all of the following except greater ________ ____________ _________ ____ _____________.

lead/lag

Aging market data to a point halfway through the plan year is called _______ _____

task accomplishment is independent of others, the worker has a strong commitment to their profession, and production methods and labor mix are stable.

All of the following are conditions supporting use of individual incentives except:

managers open to criticism, competent supervision, and cooperative union-management attitudes

All of the following factors have been associated with success of Scanlon/Rucker plans:

nature of demand, industry strategy, and level of product demand.

All of the following shape external competitiveness:

base pay

Among pay-mix alternatives, ______ ______ is largest in security or commitment.

the supply of labor is responsive to changes in pay.

An example of a situation where data from labor market competitors would be given more weight than product market competitors' data is when

Merrick

An incentive system with three piecework rates is the _____________ plan.

ageing or trending

Because employers are raising employee pay at various times during the year, survey data must be updated using a process called ________ or ___________.

flexibility and innovation

Best supports a culture of ___________ and _____________: A strong commitment to job security.

Scanlon and Rucker

Components identified as vital to the success of both _________ and ________ plans are a productivity norm and effective worker committees.

increased probability of union-free status, reduced voluntary turnover, and reduced pay-related work stoppages.

Consequences of level of competitiveness of total compensation include

this choice incurs increased training costs.

Considering the third assumption of labor market theory, although some firms find lowering the job requirements and hiring less-skilled workers a better choice than raising wages,

positively

Evidence shows that in manufacturing, productivity is ____________ correlated with hourly wage level

A product on Amazon

Example of a quoted-price:

product demand, degree of competition, and productivity of labor.

Factors affecting an employer's ability to pay high wages include

Answer: Level

Hoarding star performers, reluctance to accept new team members and resistance to transferring team members are examples of which team-related compensation problem?

turnover rates, total recruitment costs, and promotability index.

Human resource capabilities performance indicators used for group incentive plans include:

Answer: The pay mix differs (Pg. 213)

If Company A and Company B pay the same total compensation for a job, which of the following is most likely true?

Higher labor costs for Company A, but not more workers.

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

reservation wage theory

Implication of the ____________ ______ _________ is that pay level affects an employer's ability to recruit.

skill/knowledge required, product acceptance, and product and/or labor market competitors.

Important factors in defining a market for compensation purposes include

Maslow's

In ___________ theory, incentive pay is motivating if it helps an employee gain a sense of achievement, recognition or approval.

reservation wage theory

In ________________ ________ _________, pay is described as non-compensatory.

that level at which the marginal revenue of the last hire is equal to the wage rate for that hire.

In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that maximizes profits is

productivity

In gain sharing plan formulas, labor inputs are the numerator and _____________ measures the denominator.

x

In the regression equation, y = a + bx, job evaluation points are ___________

Answer: Expectancy and goal setting.

Line of sight is an important pay implication for which theory or theories?

Expenses

Pay level decisions have a significant impact on _________. Other things being equal, the higher the pay level, the higher the labor costs

the demand side of labor

Pay level offered by an employer is an example of

reference rates

Paying jobs of different functions different rates within a pay band is called ____________ ______.

Gantt plan, Rowan plan, Halsey 50-50 method.

Plans that use the time period per unit of production to determine the rate:

employees are more productive, turnover will be lower, and to attract more job applicants

Reasons a company might pay base wages above market competitors:

the efficiency wage theory.

Rent sharing is most commonly associated with

efficiency wage theory

Research on ____________ ________ _________ shows that more unqualified workers apply

incentives

Research suggests that for employees to notice and work hard to perform behaviors desired by the organization, ___________ need to be 15-20 percent.

selection

The ability triangle includes _____________.

distributive justice.

The amount of fairness given to employees refers to _______________ ___________.

there are no firm rules

The answer to the question of how many firms to include in a pay survey is

when unemployment is low.

The assumption of the upward sloping supply curve may not hold....

innovation, customer service, and process improvements.

The balanced scorecard includes all of the following performance categories:

gain sharing

The best variable pay plan for employees, when company financial performance is poor, is _______ __________.

incentive pay

The common feature to all types of incentive plans is a standard of performance to determine magnitude of ____________ _____.

design grades and ranges

The final major decision in pay-level determination is

check for the accuracy of job matches

The first step in interpreting survey data is ........

specify pay-level policy

The first step in setting competitive pay and designing a pay structure is

a large variation in average base pay for a job across companies.

The following is an example of something that is NOT a potential anomaly:

Improshare.

The gain sharing plan is most similar to the standard hour plan is _______________.

Taylor

The incentive system with two rates, one for above production standard and one for below standard is the _______ plan.

cafeteria-style compensation

The key ingredient in ______________-________ ______________ is careful cost analysis to make sure the dollar cost of the package an employee selects meets employer budgetary limits.

objectives, measures, eligibility, and funding.

The key to designing a pay-for-performance system rests on standards. Specifically, managers need to be concerned about the _____________, ___________, ____________, and ___________.

internal alignment

The market pricing pay strategy emphasizes external competitiveness and deemphasizes ____________ _____________.

outliers

The median minimizes distortion of the central tendency caused by __________

match

The most common pay policy is

straight piecework.

The most frequently used incentive system is the __________ ______________.

ability

The most obvious sorting factor is ________.

culture

The motivation triangle includes ___________.

hybrid policy

The pay policy associated with increased productivity is the

work-life balance

The pay-mix component in which benefits is likely to be largest is

organizational strategy

The primary guiding force that determines needed employee behaviors is _______________ _________.

the compensation manager.

The primary responsibility for conducting a pay survey is

survey leveling.

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 ___________ ___________.

estimate the organization's impact on the labor market.

The purpose of collecting data on number of employees in a pay survey is to

cash profit sharing pay plan

The purpose of the ______ _________ ____________ ______ _______is to foster a "one for all" culture and to educate employees about business.

define purpose of survey

The second major decision in pay-level determination is

the efficiency wage theory

The theory that has the most implications for staffing is

bourse

The total compensation for a top athlete is an example of a __________.

gain-sharing

The trend in recent variable-pay design is to combine the best of ______-___________and profit-sharing plans.

productivity and quality.

The two most commonly used team incentive performance standards are ______________ and _________.

gain sharing.

The variable pay plan with the highest instrumentality is _______ ___________.

exchange

Theories dealing with _____________ include expectancy, equity and agency.

increase

There is evidence that every 10 percent __________ in the bonus paid to employees yields a 1.5 percent increase in ROA to the firm.

incentive plans.

When a firm is high on business risk and outcomes are uncertain, corporate performance is higher without any __________ _______.

base pay

When an organization's performance has regular and large swings and individual performance is unclear and hard to measure, the most effective compensation mix is to offer _______ ______ with low incentives and a variety of rewards.

flexible compensation system

When developing a ___________ ___________________ ___________, Maslow's theory and Herzberg's theory would be most useful

monetary rewards with large 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 ..................

Sample answer: Control

Which among the following components of a reward system is a dimension of empowerment?

Answer: Maslow and Herzberg's two-factor.

Which theories would support a higher minimum wage?

The balanced scorecard

_____ ______________ _____________ offer(s) a reward pool based upon achieving performance targets and communicates organizational priorities.

Lump-sum bonus

______-_____ ________ is an individual level form of performance pay.

Long-term incentive plans

______-_______ ______________ ______ include such plans as ESOP, Broad-based option plans (BBOPs), and Performance plans

Pay ranges

_______ _________reflect the differences in performance or experience that an employer wishes to recognize with pay.

Total cash

_______ _______measures competitors' use of performance-based pay

Lump-sum bonuses

_______-______ ____________ are less expensive than merit pay, are disliked by employees, and are a more visible reward than merit pay.

Stock options

________ __________ have (has) advantages of having minimal impact on the company's financial statements.

Base wage

________ ________shows how competitors value work in similar jobs.

Broad-bands

________-______ foster cross-functional growth.

Stock options

_________ _________ have the disadvantage that employees may be required to spend money to obtain the incentive.

Agency theory

___________ _________argues that performance-based pay is best for complex jobs where monitoring employee performance is difficult.

Herzberg's two-factor

____________ _____-___________ theory contends that success-sharing plans will be motivating but at-risk plans will be de-motivating.

Motivation

_____________ involves identifying what is important to a person and offering it to them in exchange for some desired behavior.

Turnover

_____________ tends to be highest among poor performers.

Expectancy theory

______________ ________ contends that we choose to do those things that we believe are most likely to lead to desired rewards.

Instrumentality

________________ is the belief that when a specified level of job performance is attained, the employee will receive a specified reward.

Compensation

________________ should reinforce attracting and hiring good employees, encourage skill development, and motivate high job performance.

Pay level

_____________refers to the average of the array of rates paid by an employer.

The Employment Cost Index (ECI)

allows comparison of labor costs to all-industry averages

True about individual spot awards:

smaller companies may be more casual about recognition, someone in the organization alerts top management to the exceptional performance, and smaller companies are more subjective about deciding the size of the award.