Compensation Exam 2
Which of the following statements about the two types of work is NOT true?
Employees may favor tacit work because it is less stressful
Economic theories of labor markets
Employers always seek to maximize profits People are homogeneous and therefore interchangeable The pay rates reflect all costs associated with employment The markets are competitive, so there is no advantage for a single employer to pay above or below the market rate
Competencies are derived from _____ beliefs about the organization and its strategic intent
Executive leadership's
Which of the following is NOT a common way that an organization may choose to define competencies?
Factors related to the cost-cutting goals of the company
An employer offering higher base pay with low bonuses is a likely signal that it is seeking risk-taking employees
False
If the supply of employees is higher than the demand for employees in a particular job, organizations will be less likely to utilize a lag pay-level policy
False
The degree of competition that an organization faces for its products/services is a key organization factor that will dictate pay decisions
False
Efficiency-wage theory
High wages may increase efficiency and actually lower labor costs if they • Attract higher-quality applicants, lower turnover, increase worker effort, reduce shirking behavior, and reduce the need for monitoring • The underlying assumption is that pay level determines effort
Which of the following highlights the correct ordering of the job evaluation procedure?
Job analysis- job description- job evaluation- structure
Most common traditional job evaluation methods
Ranking and classification
KayDen Corp., a small organization with 15 employees, conducts job evaluation using the cheapest method for the first time. In this case, KayDen is most likely to have used the
Ranking method
Which of the following is linked to high pay levels?
Reduced vacancy rates
Transactional work
Routine work
Key functions of a job evaluation
Set pay when market pay info is not available Match a job to a comparable job externally to identify market pay Set pay based on relative worth of the job to your specific company
Employees tend to like _____ because they can see the link between the work that they do the amount they are compensated
Skill-based pay plan
Five competencies
Skills, knowledge, self-concepts, traits, motives
Purpose of job evaluation
Supports organization strategy Supports work flow Is fair to employees
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?
The labor costs for Company A will increase, but it will be unable to hire additional workers
The demand for an organization's products will impact the likelihood that they will use a lead pay-level policy
True
The supply of labor will impact the effectiveness of a lag pay-level policy
True
Classification
a series of classes covers the range of jobs. Class descriptions describe the kinds of jobs in that class
Pay-with-competition policy
an organization's wage costs are approximately equal to those of product competitors (most common policy)
The first decision of competency analysis
clarify the objective of the plan
A reliable evaluation
different evaluators produce the same results
Signaling theory
employers design pay levels and mix as a strategy that signals to prospective/current employees the behaviors sought
Structure
hierarchy of work
Skill-based structures
link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that are relevant to the work
Lead pay-level policy
maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay
Ranking
orders the job descriptions from highest to lowest based on a global definition of relative value to the organization's success
Lag pay-level policy
paying below-market rates may hinder a firm's ability to attract potential employees
job-based plan
pays employees for the job to which they are assigned, regardless of the skills they possess
The supply side looks at
potential employees
Job evaluation
process of systematically determining the relative worth of jobs to create a job structure for the organization
Benchmark (key) jobs
prototypical jobs (or groups of jobs) used as a reference point for making pay comparisons inside or outside of the organization
The demand side focuses on
the actions of employers
Pay level
the average of the array of rates paid by an employer
External competitiveness
the pay relationships among organizations—the organization's pay relative to its competitors
Value
the relative contribution of jobs to organizational goals and the value of the job in the external market
Pay mix
the various types of payments, or pay forms, that make up total compensation
Content
what work is performed and how it gets done
What percent of organizations tend to use the more traditional "in house" methods of job evaluation?
25%
Who among the following is most likely to be working for a company that uses a competency-based pay plan
Carlos, who focuses on obtaining certifications in her field to get a pay increase
Which of the following is a job evaluation method that can group a wide range of work together in one system but may leave too much room for manipulation?
Classification
Tacit work
Complex work
Breadth
Employees in a multi-skill system earn pay increases by acquiring new knowledge. (generalist)
Which of the following is an assumption held by the labor supply model about the behavior of potential employees?
Job seekers do not face barriers to mobility
Marie hired on with a tech company offering the usual benefits bur paying below market rates. She took the job because the company was promising generous stock options and hefty yearly bonuses if goals are met. Plus, they are paying her to relocate to Hawaii! Marie's new employer is using a
Lag pay-level policy
The behavior model (of potential employees) assumes:
Many people are seeking jobs They possess accurate information about all job openings No barriers to mobility exist
Primary method of job evaluation
Market pricing
Depth
Pay is based on the knowledge of the individual doing the job rather than on job content or output. (specialist)
Schemes for classifying competencies
Personal characteristics Visionary Organization specific
Which of the following is an example of the demand side of labor?
The pay level offered by an employer
Which of the following is a characteristic of benchmark jobs?
They employ a reasonable proportion of the workforce