Compensation Exam 2

Which of the following are forbidden by equal employment legislation in the US from serving as the criteria for setting pay differentials?

-Gender -Race -Religion -National Origin

Identify the true statements about the impact of internal pay structures

-High performers quit less under hierarchical systems when people have knowledge of the structure -High performers quit less under more hierarchical systems when pay is based on performance rather than seniority

Identify the strategic choices involved in tailoring a pay structure that is internally aligned.

-How pay should be distributed throughout the levels in the structure -How specific the tailoring of the pay structure should be to the organization's design and work flow

Which of the following is a difference between layered and delayered pay structures?

As opposed to the layered structure, employees are given more freedom and responsibility in the delayered structure.

How do most organizations motivate employees to apply for higher-level positions?

By associating promotions with money

How do employees judge the equity of their pay?

By making several comparisons

Which of the following processes reflect the changes that are occurring in the design of organizations?

Delayering and outsourcing

True or False In the real workplace, pay structures follow either a job-based structure or a person-based structure.

False (it includes both)

Identify a drawback of egalitarian pay structures.

High-performing and more skilled employees may feel underpaid.

____ ____ --the education, experience, knowledge, abilities, and skills required to perform the work--is a major influence on internal structures

Human capital

In which of the following situations should an organizations' internal structure be redesigned?

If it does not motivate employees to work toward achieving the organization's objectives

Which theory sees organizations as responding or conforming to normative pressures in their environments in order to gain legitimacy and to minimize risk?

Institutional theory

What did Matt Bloomer discover about the effect of pay differences on performance based on eight years of data on MLB?

Teams with small differences in members salaries did better than those with large differentials.

True or False Unions, stockholders, and even political groups are involved in the determination of internal pay structure

True

identify an accurate statement about the pay level in a company.

a company may have varying pay levels for different job families

a lead pay-level policy maximizes the ability of an organization to _____

attract and keep skilled employees

Lead policy

company uses this for jobs requiring skills that are critical to its success

Lag Policy

company uses this for jobs that can be easily filled in the local labor market

Match Policy

company uses this for jobs that requires skills that are not very critical to its success

Pay differences among levels are referred to as ____

differentials

A pay structure itself

distributive justice

External Factors

economic pressures and government policies, laws, and regulations

A characteristic of any pay structure is its _____

hierarchical nature

When outsourcing labor, companies must determine ____

how long the labor cost advantage at significantly lower pay will remain

____ ____ refers to the pay relationships among different jobs or skills or competencies within a single organization.

internal alignment

Product Market Factors

level of competition, and degree of product demand

A company's pay structure should clarify the relationship between each job and the company's objectives. This is an example of ______.

line-of-sight

According to the theory of human capital, improving productive skills by making investments in training will raise one's ____

marginal product

___ ___ is a theory that was put forth in the last half of the 19th century and that countered the views of Karl Max by stating that employers pay use value

marginal productivity

Most common competitive pay-level policy involves ____

matching competitors' wages

Organization Factors

nature of the industry, company strategy and size, and characteristics of individual managers

technology-intensive industries tend to ___ more than labor-intensive industries.

pay higher

The methods used for determining a pay structure

procedural justice

Use value

refers to the value of goods and services produced by an employee in a job

____ is a return (profits) received from activities that are in excess of the minimum pay level needed to attract people to those activities.

rent

___ ___ begins with the traditional alternatives to lead, meet, or lag; it then adds a second part, which is to offer employees choices within limits in the pay mix

shared choice

Pay structures undergo changes due to external factors such as _____.

skill shortages

Organizational Factors

strategy, technology, and human capital

Pay Mix

the different types of payments that constitute total compensation

Pay Level

the mean of the array of rates an employer pays

According to ____ ____, players will be better in a tournament where the prize differentials are large than in a tourney where they are small.

tournament theory

The process by which goods and services are delivered to the customer is referred to as ___ ___.

work flow

According to the efficiency-wage theory, what do high wages need to do if they are to increase efficiency and reduce labor costs

-Attract higher-quality applicants -lower turnover -increase work effort -reduce shirking (screwing around) -reduce the need to supervise employees

What are the assumptions that theories of labor markets usually begin with?

-Employers always seek to maximize profits -People are homogeneous and therefor interchangeable -The pay rates reflect all costs associated with employment -The markets faced by employers are competitive, so there is no advantage for a single employer to pay above or below the market value

Identify the aspects of the pay model that influence the impact of any internal structure on organizational performance.

-Management -Competitiveness -Contributions

Which are the consequences of an internally aligned structure?

-Reduced pay-related work stoppages -Increased experience -Reduced pay-related grievances

How do managers choose their relevant labor markets?

-They look at the skills and knowledge required for a job -They evaluate the important of a job to their organization's success -they consider the products, size, and location of competitors

Which of the following are true of aligned pay structures?

-They support the way work gets done -They are fair to employees

Identify the characteristics of jobs that are thought to make them more susceptible to offshoring

-easily routinized -inputs/outputs easily transmitted electronically -little need for interaction with other workers -little need for local knowledge like social and cultural factors

Identify the consequences of deviations from acceptable wage structures

-more grievances -Diminished motivation

In 14th century western Europe, the Christian church endorsed a(n) ___ ___ ___ that denied market forces such as skills shortages as appropriate determinants of pay structures.

Just wage doctrine

Labor Market Factors

Nature of demand for employees and nature of supply of employees

A disadvantage of egalitarian pay structures is that they may result in a _____.

Negative sorting effect

____ ____ ____ refer to the rules and procedures that determine the pay for the different jobs within a single organization and allocate employees among those different jobs

internal labor markets

Exchange value

refers to the wage agreed upon by the employer and employee for a job