Oganizational reward/Compensation Test 2 Study Guide

What is the purpose of a job evaluation? (3 of them)

- Help set pay for jobs where market pay survey data are unavailable by comparing the internal value. - Match a job in a particular company to a comparable job of similar value in a market pay survey - Pay jobs based on which ones are most important to the company's strategy

Describe job value

- Job value orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization's goals - Job value may also include the job's value in the external market

How is it possible to lead the market in base pay and lag in total compensation? (or vice versa)

- Lag competition in pay level but lead in terms of work (ex: hot assignments, location, colleagues, work/lifer balance) -

Describe a pay with competition policy.

- Tries to equal wage costs to those of its competitors - Its ability to attract applicants will be approximately equal to its labor market competitors

External competitiveness is shaped by what factors?

- setting a pay level that is above, below or equal to the competitors - determining the mix of pay forms relative to those of competitors.

What is the purpose of factor weights in the point factor method of evaluation?

-After degrees have been assigned, factor weights are determined -Factor weights reflect the relative importance of each factor to the overall value of the job -Often determined by advisory committee

Point factor methods all have 3 things (components) in common. What are they?

-Compensable factors -Factor degrees numerically scaled -Weights reflecting the relative importance of each factor

Why are they based on these?

-Factors are scaled to reflect the degree to which they are present -Weighted to reflect their importance to the organization -Attached to each factor weight

Give me an example of a benchmark job and describe the characteristics of a benchmark job

-Its contents are well known & relatively stable over time -Job is common across a number of different employers -Reasonable proportion of the workforce is employed in this job Examples -Accountant -Marketing Manager -IT Helpdesk Technician -Administrative Assistant -Top Operations Executive -Engineer

Describe the characteristics of a lag level pay policy.

-Paying below market rates may hinder a firm's ability to attract potential employees - If a lag pay-level policy is coupled with the promise of higher future returns, this may increase employee commitment and foster teamwork, increasing productivity

Not all jobs are considered benchmark jobs. How do you align them with your internal hierarchy?

-Ranking simply orders the job descriptors from highest to lowest based on relative value or contribution to success -To perform a job evaluation

What criteria should you consider when scaling compensable factors?

-Use degrees (or levels) within each factor -Factor scales consist of four to eight degrees Ensure that the number of degrees is necessary to distinguish among jobs Use understandable terminology Anchor degree definitions with benchmark job titles/behaviors Make it apparent how the degree applies to the job

Point Factor

Compare jobs on rating scales of specific factors Jobs are assessed on required know-how, problem-solving abilities, and accountability. Each factor is assigned points and the total number of points indicates the job's ranking.

In the context of the point method of job evaluation, ________ are job attributes that provide the basis for evaluating the relative growth of jobs inside an organization. a. Competitive skills b. Compensable factors c. Core competencies d. Benchmark factors

Compensable factors

Which of the following labor demand theories states that work with negative characteristics requires higher pay to attract or retain workers? a.Job competition b.Compensating differentials c.Efficiency wage d.Sort and signaling

Compensating differentials

What does employer of choice mean?

Corresponds to the brand or image a company projects as an employer

Job Ranking

Jobs are paired and for each pair the most impactful job is chosen. This results in a forced ranking of different jobs. Compare jobs using a single global factor that presumably combines all parts of the job.

What is the most prevalent method of job evaluation that is used?

Market Pricing

This type of job evaluation method looks at the external market to get an idea of the going rate for benchmark jobs and uses this to create an internal hierarchy

Market pricing

What factors are used to determine a company's relevant labor market?

Occupation - skill or knowledge required Geography - willingness to relocate, commute, or become a virtual employee Competitors - other employers in the same product or service and labor markets

How do organizations certify that employees possess and apply skills?

Organizations may use peer review, on-the-job demonstrations, or tests to certify that employees possess and apply skills

What is the difference in pay level and pay mix?

Pay Level is the average of the array of rates an employer pays Example: base + bonus + benefits/# of employees Pay Mix is the various types of payments, or pay forms, that make up total compensation

How is external competitiveness defined?

Refers to pay relationships among organizations - an organization's pay relative to its competitors

Describe the difference in a reliable and a valid evaluation technique.

Reliable A reliable evaluation has evaluators producing the same results -Improve reliability with trained evaluators familiar with the work -Reliability for job evaluation scores are higher than those for job analysis ratings Valid Validity refers to the degree to which the job evaluation assesses what is intended - the relative worth of jobs to the organization

A pay mix that focuses heavily on base wage and benefits with little to no inclusion of bonuses/incentives describes what type of pay mix?

Security (commitment)

What type of pay plan is used in environments that rely on teams, multiskilled works, flexibility?

Skill-based pay

What is the systematic process of identifying and collecting information about skills required to perform work in an organization.

Skills analysis

Define job evaluation

The process of systematically determining the relative worth of jobs to create a job structure for the organization. The evaluation is based on a combination of job content, skills required, value to the organization, organizational culture, and the external market

Job content is (select one) - The ordering of jobs from highest to lowest -The work that is performed and how it gets done -Assigning a weight to each factor

The work that is performed and how it gets done

An employer offering lower base pay with high bonuses is a likely signal that it is seeking risk-taking employees. True or False

True

Compared to an on-demand review of certifications, scheduling fixed review points makes it easier to budget and control payroll increases. True or False

True

Market Pricing

Value of each job is determined through the analysis of the external marketplace as typically reported through salary surveys

What type of structure begins by looking at the work performed in the organization?

competency-based structure - The underlying knowledge, skills, and behaviors that form success at any level or job are the core competencies -Competency sets translate each core competency into action -Competency indicators are observable behaviors

Most factor scales have ________ degrees. a. Six to nine b. Four to eight c. Three to seven d. Two to four

Four to eight

Employees in a multiskill system earn pay increases: a.Increasing their productivity b.Based on job content c.Based on job assignments d.By acquiring new knowledge

By acquiring new knowledge

Job Classification

Defines categories of jobs and slots jobs into these classes. An example classification is a CEO, vice president, director, manager, and operator.

Since business strategies may change often, compensable factors should rarely be added or deleted. True or False

False

Recognize (list) the benefit of job content evaluations

Internal consistency Organizational alignment Control labor costs Fairness & equity Job worth hierarchy Market competitiveness

A ________ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess. a.Performance based b.Competency based c.Job based d.Skill based

Job Based

Explain the difference in a job based structure and a person based structure related to pay plans

Job Based Structure - Uses job analysis, evaluation, point factors, and compensable factors to determine pay. Person Based Pay Plans - Skill Based (Specialist & Generalist) - Links pay to the depth or breadth of the skills, abilities, and knowledge a person acquires relevant to work Competency Based - Looks at the work performed in the organization

Which type of job evaluation plan is this an example of?

Job classification

In what type of evaluation plan do raters look at each job and compare them with every job possible in their department?

Job ranking Paired comparison

What is the purpose of pay level & pay mix?

Pay level and pay mix focus on two objectives. - Control costs and increase revenues - Attract and retain employees - Labor Costs = (Pay level) times x (number of employees) - How a company compares to the market depends on what competitiors it compares to and what pay forms are included -Comparison of base wage may show one factor but a look at total compensation may show a different pattern

Which of the following statements is true of pay level? a.Pay level is the same across all organizations for the same job. b.The higher the pay level relative to what competitors pay, the lower the relative costs to provide similar products or services. c.Pay level is directly proportional to labor costs. d.Pay level is independent of the number of employees in an organization.

Pay level is directly proportional to labor costs.

A pay mix that relies on a smaller percentage of base wage and an increased focus on options and bonuses would best describe what type of pay mix?

Performance-driven

Which type of job evaluation plan is the most defensible in a court of law? Why?

Point factor, because it's based on compensable factors such as education and scale. It backs up the Performance of the candidate.

What are the pro's & con's of a lead level pay policy?

Pros -Maximizes the ability to attract and retain quality employees and minimizes employee pay dissatisfaction - Research links high wages to ease of attraction, reduced vacancy rates, and better-quality employees Cons - It may force the employer to increase wages of current employees too -It may mask negative job attributes that contribute to high turnover

What is the difference in a specialist and a generalist?

Specialist - Depth Pay is based on the knowledge of the individual -Focus is less about job content or output -Basic responsibilities do not vary on a daily basis Think: specialists in corporate law, finance, HVAC maintenance Generalist - Breadth Those in a multi-skill system earn pay increases by acquiring new knowledge - More pay comes from certification of new skills Responsibilities can change drastically over a short time Think: human resources, marketing, manufacturing

When selecting compensable factors for an organization, what two things should they be based on?

Strategic direction and how the work contributes to these objectives and strategy.

What are the purposes of a skill based structure?

Supports the strategy and objectives - Skills need to be directly related to the organization's objectives & strategy Supports work flow - A main advantage is matching people to changing workflow Is fair to employees - Skill-based plans may give workers more control over their - - - work life but favoritism and bias may be a problem - The legality of such plans have not been addressed in the courts Motivates behavior toward organization objectives - Fluid work assignments require less supervision, resulting in labor cost savings - Responsibility for a complete work process and its results Example in notes: Example of supporting work flow: major hotel chain moves many of its employees to the hotel's front desk between 4 p.m. - 7 p.m. when the majority of guests check in. After 7 p.m. these same employees shift to food and beverage service are

When using the point factor method, how do you know a job's relative value? What is it ultimately determined by? (where it fits in the hierarchy)

The job's relative value is determined by the total points assigned to it