Chapter 7

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

A lag policy

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

A lead policy

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

A match policy

Due to the restrictions placed by the product market on an employer's pay level, what strategies must an employer use to compensate for paying above the maximum?

Allocating a larger share of total revenues to cover labor expenses Passing the high pay level on to consumers by increasing prices

The dashboard form of reporting the mix of pay forms of a company focuses on

Comparing each pay form to the market

Which of the following is a reason for differing pay rates in the the labor market and is difficult to document due to the inability to accurately measure and control the factors that go into a net-advantage calculation?

Compensation differentials

Identify the factors that shape external competitiveness

Competition in the labor market for applicants with various skills Competition in the product and service markets Attributes unique to each company

According to agency theory, companies must allot resources to systems that track employee output, which becomes more costly and difficult when ________.

Cultural or geographical distance is great

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

Decrease turnover Boost worker effort and decrease shrinking Lower the need to supervise employees Lure higher-quality applicants

The underlying assumption of efficiency wage theory is that pay level determines ...

Effort

In both the quoted-price market and the bourse, ______ function as the buyers and __________ fiction as the sellers.

Employers; recruiters

An employer will keep hiring until the marginal revenue generated by the last hire equals the ...

Expenses associated with employing that person

__________ _________ refers to the pay relationship among organizations - an organization's pay relative to its competitors.

External competitiveness

T/F: it is enough for an employer to pay at or above the legal minimum wage in order to be considered to be in compliance.

False

What are the observable results of increased wages?

Greater employee attraction and retention Improved quality, effort and performance Greater pay satisfaction

The higher the pay level of an organization relative to what its competitors pay, the _________.

Greater the costs to provide comparable products or services

Diminishing marginal productivity for each new employee added to a firm arises from the fact that each new employee ________.

Has access to the house a progressively smaller portion of other factors of production

In short term, a company's factors of production other than its human resource pool are ________, which causes each new hire to have a lower marginal productivity than the previous hire .

Inalterable

Employers in extremely competitive markets find it more difficult that other employers to ________.

Increase prices without loss of revenue

What is the effect of the introduction of new technology within an industry that reduces the skills required of employees

It causes the employee's average pay to decline

According to a study on managers approaches to pay decisions under varying economic conditions, how did level of unemployment affect wage adjustment recommendations?

It had almost no impact on wage adjustment recommendations

One of the negative effects of a __________ is that it forces an employer to raise the wages of current workers in order to avoid internal misalignment and murmuring

Lead pay level policy

How did the study on managers approach to pay decisions in light of varying unemployment, profitability, and labor market conditions directly contradict the efficiency- wage theory?

Managers blamed difficulties w attracting and retaining people on poor management

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

Marginal product

An employer cannot alter most factors of production, such as technology m, capital, or natural resources, in the short term. Thus, it can only alter its level of production if it alters the level of Human Resources. In these conditions, a single employers labor demand coincides with the ________.

Marginal product of labor

This strategy is most likely to appeal to people who just want to show up and are risk-adverse

Matching the market wage and offering no performance based pay

The level of demand that ___________ is that level at which the marginal revenue of the last hire in the company equals the pay for the employee

Maximizes profit for a company

Technology-intensive industries tend to ________ than labor-intensive industries

Pay higher

Evidence has consistently proven that large organization tend to _________ than do small organizations.

Pay higher wages

This strategy is most likely to appeal to risk-takers who seek flexible schedules, more interesting projects, or more opportunities for promotion

Paying below the market for base pay yet offering generous bonuses

What are the effects of offering high wages in lead pay-level policy?

Reduced vacancy rates and training time Reduced turnover and absenteeism

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

Rent

When economists describe pay as "noncompensatory" they mean to say that job seekers have a(n) __________ below which they will not take up a job, regardless of the attractiveness to f other job attributes.

Reservation wage level

Which option to reduce labor expenses is used when people flow to the work?

Segmenting the source of labor

__________ _________ begins with the traditional alternatives of lead, meet, or lag; it then adds a second part, which is to offer employees choice wishing limits in the pay mix.

Shared choice

A study of how economic factors translated into wage decisions for managers found that the profitability of a company was viewed by managers as a factor for higher management in determining ________.

The general pay budget

Greatly improved communication and software connectivity have accelerated

The growth of offshoring

How do managers choose their relevant labor markets?

They consider the products, size, and location of competitors They evaluate the importance of a job to their organizations success They look at the skills and knowledge required for a job

T/F: The marginal product and the marginal revenue of a new hire are not directly measurable quantities

True

When are the data from product market competitors likely to be given greater weight than that of labor market competitors in defining a relevant market.

When employee abilities are specific to the product market When labor expenses from a large share of total expenses When demand for a product is responsive to price changes When labor supply is not responsive to pay changes

When is paying employees above market an efficient strategy for an organization?

When the organizations revenues exceed the strategy's expenses

Having a lag pay level policy may impede an organizations ability to __________.

attract job applicants

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

A single employer has no advantage if it pays above or below the market rate People are homogenous and this interchangeable All costs associated with employment are reflected in pay rate Employers always aim to maximize returns