Organization Rewards and Compensation Exam 2
After degrees have been assigned, ______ are determined.
factor weights
Most factor scales consist of how many degrees?
four to eight
If a lag pay-level policy is coupled with the promise of higher future returns....
it may... - increase employee commitment - foster teamwork - increasing productivity
What job evaluation plan takes less time and costs less?
job ranking
How does a job-based plan contrast from skill-based structures?
job-based plans pays employees for the job, regardless of the skills they possess
Offshoring is now happening to...
lawyers and financial services jobs
Competencies derive from...
leadership's beliefs about the organization and its strategic intent
Some companies compete based on...
overall reputation
Lag pay-level policy:
paying below market rates (may hinder a firm's ability to attract potential employees)
In order to certify that employees possess and apply skills, organizations may use...
peer review, on-the-job demonstrations, or tests
Incentives and stock ownership makes up a greater percentage of total compensation in...
performance driven policies
What is the most common pay level policy?
to match rates paid by competitors
skill based pay plans become increasingly expensive is all workers...
top-out
Comparison of base wage may show one factor but a look at ________ _________ may show a different pattern.
total compensation
pay-with-competition policy:
tries to equal wage costs to those of its competitors - its ability to attract applicants will be approximately equal to is labor market competitors
There is less _____ in terms in the person-based plan than there is in a job-based plan.
uniformity
How a company compares to the market depends on...
what competitors it compares to and what pay forms are included
Structure
a hierarchy of work that translates an internal alignment policy into practice
Skill analysis
a systematic process of identifying and collecting information about skills required to perform work in an organization
factor weights are often determined by....
advisory committee
Who often determines the weights?
advisory committees
Labor Costs =
(pay level) X (# of employees)
Skill based pay plans
(specialist & generalist) - links pay to the depth or breadth of the skills, abilities and knowledge a person acquires relevant to work
Classification method of job evaluation
- A series of classes covers the range of jobs. - Class descriptions are the labels. - Compare job descriptions to class descriptions to find the best fit. - The label captures work detail yet is general enough to cover jobs. - Describe classes further with titles of benchmark jobs.
alternation job ranking
- List of job titles are provided with equal number of blanks - Job title with highest rank is recorded at top and then lowest at bottom. Continue process
straight job ranking
- Ordering info on job titles and/or short briefs - Useful to have actual job description for reference
paired comparison job ranking
- Raters compare all possible pairs of jobs - Compare each pair of jobs at least once - Job title with highest ranking is 'marked' each time it is selected - After all comparisons are made, rank in order of highest to lowest number of 'marks'
Examples of benchmark jobs:
- accountant - marketing manager - IT Helpdesk Technician - administrative assistant - top operations executive - engineer
Compensable factors should be:
- based on the strategy and values of organization - based on the work performed - acceptable to stakeholders affected by the pay structure
How can you express external competitiveness?
- by setting a pay level above, below, or equal to competitors - by determining the pay mix relative to those of competitors
How to do a competency analysis:
- clarify the objective of the plan - core competencies are not always unique for each company
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
3 common characteristics with point methods:
- compensable factors - factor degrees numerically scaled - weights reflecting the relative importance of each factor
point plan disadvantages
- complexity - time & expense
Pay level and pay mix focus on what two objectives?
- control costs and increase revenues - attract and retain employees
Job classifications:
- defines categories of jobs and slots jobs into these classes - an example classification is a CEO, vice president, director, manager, and operator
employees and managers are the source of information for...
- defining the skills - arranging them into a hierarchy - bundling them into skill blocks - and certifying whether a person actually possesses the skills
Product market factors:
- degree of competition - level of product demand
Research links high wages to...
- ease of attraction - reduced vacancy rates - better-quality employees
Job characteristics that can increase susceptibility to offshoring:
- easily routinized - inputs or outputs easily transmitted electronically - little need for interaction with other workers - little need for local knowledge
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
criteria for scaling factors
- ensure the number of degrees is necessary to distinguish among jobs - use understandable terminology - anchor degree definitions with benchmark job titles and/or work behaviors - make it apparent how the degree applies to the job
Major decisions of job evaluation:
- establish purpose of evaluation - decide whether to use single or multiple plans - choose among alternative approaches - obtain involvement of relevant stakeholders - evaluate plan's usefulness
Reliable Evaluations:
- has evaluators producing the same results - can improve it with trained evaluators familiar with the work -the ones for job evaluation scores are higher than those for job analysis ratings
Purpose of job evaluation (3):
- 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
Organization factors:
- industry, strategy, size - individual manager
Key benefits of job content evaluations:
- internal consistency - organizational alignment - control labor costs - fairness and equity - job worth hierarchy - market competitiveness
Potential negative effects of lead policy:
- it may force the employer to increase wages of current employees too - it may mask negative job attributes that contribute to high turnover
Job ranking:
- jobs are paired and for each pair the most impactful job is chosen; this results in a forced ranking of different jobs - compares jobs using a single global factor that presumable combines all parts of the job
3 things that shapes external competitiveness:
- labor market factors - product market factors - organization factors
Cons of ranking:
- lack of good descriptions - differences among ratters - influenced by: current pay, job incumbents' competence, prestige of jobs
skill-based structures
- link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires relevant to work - pay for all the certified skills of the individual, regardless of whether the work requires all or a few skills
When defining the relevant market, you can...
- look at both competitors and the jobs - choose a competitor that isn't even a direct product market competitor
Labor market factors:
- nature of demand - nature of supply
Three factors usually used to determine relevant labor markets:
- occupation: skill or knowledge required - geography: willingness to relocate, commute, or become a virtual employee - competitors: other employers in the same product of service and labor marketts
Purpose of the competency-based structure:
- organization strategy - work flow - fair to employees - motivate behavior toward organization objectives
Specialist:
- 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
Obvious alternatives to pay-mix:
- performance driven - market match - work/life balance - security
skill-based pay
- primarily used in work environments that rely on teams, multi-skilled works, flexibility - primarily seen in manufacturing environments
Pros of ranking:
- simple - easy to explain - takes less time - costs less
two types of person based pay plans
- skill based (specialist and generalist) - competency based
Early conceptions of competencies focused on which five areas:
- skills: demonstration of expertise - knowledge: accumulated information - self-concepts: attitudes, values, self-image - traits: general disposition to behave in a certain way - motives: recurrent thoughts that drive behaviors
point plan advantages
- stability - accuracy - main uses: job classes/grades, job pricing
Three job ranking options:
- straight - alternation - paired comparison
purpose of a skill-based structure
- supports the strategy and objectives - supports work flow - is fair to employees - motivates behavior toward organization objectives
Generalist:
- those in a multi-skills systems 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
Pay-level policies...
- to lead - to meet or match - to lag
How do you scale the factors?
- use degrees (or levels) within each factor
Many employers go beyond a single pay policy choice and may...
- vary the policy for different occupational families - vary the policy for different forms of pay - adopt different policies for different business units facing different competitive conditions
Benchmark (key) jobs:
-Its contents are well known and relatively stable. -The job is common across employers, not unique to one employer. -A reasonable proportion of the work force is employed in this job.
7 steps of market pricing
1. collect 3 or more salary surveys to market price a business 2. identify benchmark jobs and match to the external marketplace 3. summarize market data and analysis for the benchmark jobs 4. develop a salary structure based on market data for the benchmark jobs 5. slot non-benchmark jobs into structure 6. develop a compa-ratio report comparing employees' pay to the midpoint of the recommended salary structure with related costs 7. obtain top management approval
Steps of point factor:
1. conduct job analysis 2. determine compensable factors 3. scale the factors 4. weight the factors according to importance 5. select criterion pay structure 6. communicate plan and train users 7. apply to non-benchmark jobs 8. develop online support if available
Market pricing guidelines
1. use 3 or more salary surveys 2. attempt to match 70% of job content 3. attempt to match 50% or more of your benchmark jobs to the external marketplace 4. obtain surveys with credible and relevant survey participants closely matching your business 5. use surveys with filters such as: # of employees, location, industry, revenue, years of experience
most organizations appear to choose from the same list of _____ core competencies
20
What types of job evaluation plans look at the whole job?
Qualitative: - job ranking - job classification
What types of job evaluation plans looks at job components?
Quantitative: - point factor - market pricing
What is a job evaluation based on?
a combination of job content, skills required, value to the organization, organizational culture, and the external market
compensable factors
based on strategic direction and how the work contributes to these objectives and strategy... - 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
Competency-based structure:
begins by looking at the work performed in the organization
Shared choice:
begins with the lead, meet, or lag alternatives
Generalist is also known as...
breadth
scheduling makes it easier to...
budget and control payroll increases
Organizations are now emphasizing _____________ descriptions of behaviors.
business-related
If people are paid based on competencies, there must be a way to...
certify their possession of that competency
For structure, some balance between ______ and ______ is required.
chaos and control
Person based pay plans include...
competency based
employer of choice
corresponds to the brand or image a company projects as an employer
market pricing
creates a job-worth hierarchy based on the "going rate" for benchmark jobs in the external marketplace relevant to the business
How do you determine the number of classes and write class descriptions?
define boundaries between each class
Each organization operates in many labor markets, each with unique _______ and ________.
demand and supply
The best approach to pay structures...
depends on the situation
Specialist is also known as...
depth
Organizations commonly have multiple structures that apply to...
different functional groups or units
Internally aligned pay structures can be designed to:
help determine pay for the wide variety of work and ensure that pay influences attitudes and behaviors and direct toward objectives
Competency based pay plans:
look at the work performed in the organization
competency based pay plans
looks at the work performed in the organization
What job evaluation plan is most prevalent?
market pricing
Lead pay-level policy
maximizes the ability to attract and retain quality employees and minimizes employee pay dissatisfaction
Competencies are becoming a collection of observable behaviors requiring...
no inference, assumption or interpretation
An internal alignment based on content does what?
orders jobs by skills, duties, and responsibilities
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 (may also include the job's value in the external market)
Which job evaluation plan is easily defended in a court of law? Why?
point factor method: - has the most reasoning behind each point for the job and it can be justified on every level
External competitiveness:
refers to pay relationships among organizations -- an organization's pay relative to its competitors
Validity:
refers to the degree to which the job evaluation assesses what is intended -- the relative worth of jobs to the organization
Job content
refers to what work is performed and how it gets done
Factor weights:
reflect the relative importance of each factor to the overall value of the job
Defining the ___________ _________ is a big part of figuring out what and how much to pay.
relevant markets
Ranking
simply orders the job descriptions from highest to lowest based on relative value or contribution to sucess
What plans are readily accepted by employees and provide strong motivation to increase individual skills?
skill based plans
What are the typical compensable factors?
skill, responsibilities, effort, working conditions
employee involvement is almost built into....
skill-based plans
compa-ratio:
tells us where someone sits in the market for that pay
Pay Level:
the average of the array of rates an employer pays (base+bonus+benefits/# of employees)
Mental demands:
the degree of concentration and ability to make quick important
Under market pricing, the hierarchy of an organization is established based on...
the external marketplace first and the internal equity second
Specialist skill plan
the pay for a high school teacher is based on knowledge as measured by education level
The market match simply mimics...
the pay mix of competitors
Job Evaluation
the process of systematically determining the relative worth of jobs to create a job structure for the organization
skill-based plans have very specific information on every aspect of...
the production process
Factor weights reflect...
the relative importance of each factor
Complexity of duties:
the scope, variety, and difficulty of the duties, responsibilities, and skills required to perform the work
What is the job's relative value is determined by?
the total points assigned to it
Pay Mix:
the various types of payments, or pay forms, that make up total compensation
How would an employer offset the higher rates of certification of skills?
with greater productivity
Job evaluation provides _______ and _____ order and logic.
work-related and business-related