HRER Midterm Review Terms
An employer that combines lower base pay with high bonuses may be signaling that it wants employees who are ______.
risk takers
Adam Smith believes that you should choose the job with the greatest ______.
"net advantage"
_______ is a return (profits) received from activities that are in excess of the minimum (pay level) needed to attract people to those activities.
"rent sharing" Rent
Keep in mind that the mix employees receive differs at ______ levels in the internal job structure. While the percentages vary among organizations, greater emphasis on ______ (through _____ and _____) at higher levels is common practice. --> based on the belief that jobs at higher levels in the organization have greater opportunity to influence organization performance.
differs; performance; incentives; stock
_______ structures have fewer levels and/or smaller differentials between adjacent levels and between the highest-and lowest-paid workers.
egalitarian
_____ _____ is an important policy decisions because it directly affects employees' attitudes and work behaviors
employee contirbutions
Many organizations use merit increase grid or salary increase matrix, which uses two factors, __________ and _____- to guide pay increases.
employee performance rating and position in the salary range
Better understanding of ___________ is increasingly important tin determining external compeitiveness.
employee preferences
because the employer competes in the external market for people to fill these _________, their pay must be high enough to attract a pool of qualified applicants
entry jobs
the assumption is that more ___ treatment will improve employee satisfaction, support cooperation, and therefore affect workers' performance.
equal
interval scaling:
equidistance from adjacent degrees. EX on a scale with 8 degrees, the interval scaling would aim for the difference between the first and second degrees to approximate the difference between the fourth and fifth degrees
A number of US cities require min hourly wage rates well above what federal law requires the anticipated outcome of such legislation is a ________________________________.
flatter, more compressed structure of wage rates in society
The first step in building flexibility into the pay structure is to group different jobs that are considered substantially equal for pay purses into a ____. Grades enhance an organization's ability to move people among jobs with nochange in pay.
grade
The observable benefits of higher wages may include:
higher pay satisfaction, improved attraction and retention of employees, and higher quality, effort, and/or performance.
A good job analysis collects sufficient information to adequately _____,_____, and _____________.
identify; define; describe a job
From an __________- the range reflects the differences in performance or experience the employer wishes to recognize with pay. From an ______________, the range is a control device
internal alignment perspective; external competitiveness perspective
When the value of job content is based on what it can command in the external market; it has no ______ value.
intrinsic
_____________ is 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. This potential to blend organizational forces and external market forces is both a strength and a challenge of job evaluation.
job evaluation
Pay levels that ____________ are used in jobs that most directly impact the organization's success (research and development and marketing in pharmacy companies). In jobs with less impact (HRM and manufacturing), pay levels reflect a "____________" policy.
lead competition; meet competition
The extensive ____ _____ governing pay -- including min wage, living wage, overtime, and nondiscrimination regulation - also points to the central importance of pay to employees in the employment relationship.
legal framework
Other research finds that reliability is ___ for jobs that more interdependent with other jobs, and have more autonomy/are less routine.
less
Jobs that require ___ and ___ training (engineering, physicians) should receive higher pay than jobs that require _____ investment (clerical work, elementary school teaching)
long; expensive; less
The labor supply model assumes that:
many people are seeking jobs; that they possess accurate information about all job openings, and that no barriers to mobility (discrimination, licensing provisions, or union membership requirements) exist.
______ is the approach sets pay structures almost exclusively on extant market rates.
market pricing
the impact of any internal structure on organization performance is affect by the other dimensions of the pay model; ______ (competitiveness), _____________ (contributions), and _______________ (management)
pay levels, employee performance, employee knowledge of the pay structure
The _______ of pay is virtually ignored in these theories. The simplifying assumption is that the pay level includes the value of different forms.
pay mix
A ______ exists whenever two or more rates are paid to employees in the same job.
pay range
_________ would carry out a policy statement. If the practice does not match the policy, then employees receive the wrong message
pay-policy line
The ________, _______, ________ all affect compensation decisions.
productivity of labor; technology employer; level of production relative to plant capacity available - VARY more across than within industries
______ and _______ tailored to particular technologies is important in the analysis of labor markets.
qualifications; experience
______ order all data points from lowest to highest, then convert to percentages. commonly used to set pay ranges or zones
quartiles and percentiles
reassess
realign as conditions change; realign as strategy changes
job evaluation is a process for determining the __________.
relative value of jobs
The ____ side looks at potential employees: their qualifications and the pay they are willing to accept in exchange for their services.
supply
alignment of the pay strategy includes three aspects: 1. .... 2.... 3...
1. align with the business strategy; 2.align externally with the economic and socio political conditions 3. align internally within the overall HR system
A manager using a marginal revenue product model must do only two things:
1. determine the pay level set by the market forces 2. determine the marginal revenue generated by each new hire - This will help tell the manager how many people to hire
criteria for scaling factors:
1. ensure that the number of degrees is necessary to distinguish among jobs 2.use understandable terminology 3.anchor degree definitions with benchmark-job title and /or work behaviors 4. make it apparent how the degree applies to the job
A well-thought-out performance management system will be needed to avoid the appearance of salary treatment based on personality and politics: taking 2 steps:
1. set the number of bands (major breaks or differences) 2. price the bands: USE reference market rates (that act like guides and not controls)
external factors that shapes internal structures include:
economic pressures; government policies, laws, regulations; stakeholders; cultures and customs
____ performers quit less under more hierarchical systems when pay is based on ______ rather than seniority and when people have knowledge of the structure.
high; performance
3M's business startegy requires constant product innovation and short-product-desing to market cycle times. The 3M competitive environment is turbulent and unpredictable. No steps at all are laid out. 3M engineers might work on several teams developing several products at the same time. 3M's pay structures are more ______ linked to the organization in order to provide flexibility.
loosely
Historically, ____, ______ jobs were most susceptible to offshoring.
manual; low-skill
So depending on the location and size, a company may be deemed a relevant comparison even if it is not a _______________.
product market competitior
_________: job evaluation aligns with the organization's strategy by including what it is about work that adds value-- that contributes to pursuing the organization's strategy and achieving its objectives. Job evaluation helps answer, how does this job add value?
supports organisation strategy
implement strategy
design system to translate strategy into action. choose techniques to fit strategy
Research shows that _____ wages actually do attract more qualified applicants. But higher wages also attract more _____ applicants. Few companies assess their recruting, thus an above-market wage does not guarantee a more productive workforce
higher; unqualified
An employer who wants to _____ the market may age the data to the end of the plan year.
lead
effects on compensation on employees ( as well as the cost employee compensation) have major implication for how successfully organizations can execute their ______ _____ ______ __ ___
strategies and achieve their goals
Eights steps to design a point (factor) plan:
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 the plan and train users; 7.apply to non benchmark jobs; 8. develop online software support
The steps for conventional job analysis:
1. develop preliminary job information; 2.conduct initial tour of work site; 3.conduct interviews (notes on the selection of interviewees) 4.conduct second tour of work site; 5consolidate job information 6.verify job description
Grades and ranges offer flexibility to deal with pressures from external markets and differences among organizations:
1. differences in quality (skills, abilities, experience) among individuals applying for work 2. differences in the productivity or value of these quality variations 3. differences in the mix of pay forms competitors use
Looking for anomalies:
1. does any one company dominate? If so a separate analysis of the largest company's data will isolate the employer's pay practices and clarify its nature of its influence 2. Do all employers show similar patterns? 3. outliers
The data from product market competitors are likely to receive greater weight when:
1. employee skills are specific to the product market 2. labor costs are a large share of total costs 3. product demand is responsive to price changes. that is people won't pay $4 for a bottle of Leinenkugel; instead they'll go to Trader Joe's for a bottle of Charles Shaw wine ($2); 4. the supply of labor is not responsive to changes in pay
Ranges provide managers the opportunity to:
1. recognize individual performance differences with pay 2.meet employees' expectations that their pay will increase over time, even in the same job 3. encourage employees to remain with the organization
The major decisions in setting externally competitive pay and designing the corresponding pay structures include:
1. specific the employer's competitive pay policy, 2. define the purpose of the survey, 3. select relevant market competitors, 4.design the survey, 5.interpret survey results and construct the market line 6. construct a pay policy line that reflects external pay policy, 7.balance competitiveness with internal alignment through the use of ranges, flat rates, and or bands
internal pay structure can be defined by 1. ___________ 2.____________ 3.__________
1. the number of levels of work 2.the pay differentials between the levels, 3. the criteria or bases used to determine those levels and differentials
Job evaluation serves three major purposes:
1. to help set pay for jobs where market pay survey data are unavailable (non-key or non-benchmark jobs) by helping compare the internal value of these non-key jobs to jobs for which market pay data are available (key jobs or benchmark jobs); 2. to match a job in a particular company to a comparable job of similar value in a market pay survey, which is necessary to identify the market pay for the company job; 3. to pay jobs in a particular company in part based on which jobs are most important to the company's strategy, not just on the basis of what other companies pay those jobs, as indicated by market survey pay data
Outstanding performer receives a ____ percent increase, an average performer a ____ percent increase, and a poor performer a ____ percentage tincrease.
4.4;2.8;0.4
Competitive pressures, both global and local, force managers to consider the affordability of their compensation decisions. Labor costs can amount for more than ____ percent of total costs.
50
_____________ is when the pay system is designed to follow how the work is like ex. nurses since the patients differed on a daily baisis.
People Flow to the Work
over time, _____ pay differences may become accepted as equitable and customary; efforts to change them are resisted.
distorted
____ ___ addresses whether the actual pay differences among employees are acceptable
distributive justice
__________ is the results of those procedural (the pay structure itself)
distributive justice
____ increases by hiring better employees or motivating present employees to work smarter or harder.
efficiency
_____ models will require the pay of the highest to be brought down and the lowest to be brought up to be more egallitarian with less pay differences
egalitarian
The employer will continue to hire until the marginal revenue generated by the last hire is ______ to the costs associated with employing that person. This is assumed because in the short-run other potential costs will not change.
equal
__________ theory says that people compare the ratio of their own outcomes (pay status, enjoyment) to inputs (effort, ability, performance) with the outcome to input ratio as noted above, one or more comparison with others (internal, external, or themselves in a past or future situation)
equity
Employers in _____ competitive markets, such as manufacturers of automobiles of generic drugs, are less able to raise prices without loss of revenues. At the other extreme, _____ sellers of a Lamborghini or a breakthrough cancer treatment are able to se whatever price they choose.
highly; single
If job analysis's is performed at all _____________ and ___________ do it. The analysis is best done by someone thoroughly familiar with the organization and its jobs and trained in how to do the analysis properly.
human resource generalists; supervisors
Once the job evaluation plan is designed, a ____ is prepared so that other people can apply the plan. Point of the manual is to allow users who were not invovled in the plan's development to apply the paln as its developers intended
manual
Labor unions argue for only ____ differentials within pay levels and for similar work, in the belief that more egalitarian structures support cooperation and commitment and improve performance.
small
The high degree of overlap and low midpoint differentials indicate ____ differences in the value of jobs in the adjoining grades. Being promoted from one grade another may include a title change but not much change in pay
small
According to efficiency wage, high wages may increase efficiency and actually lower labor costs if they:
1. attract higher-quality applicants. 2. lower turnover 3. increase worker effort. 4. reduce shirking behavior 5. reduce the need to supervise employees ("monitoring")
At the corporate level, the fundamental strategic choices is:
What business should we be in?
the terms ____ and ____ are not interchangeable. Outcomes such as pay can be unequal across employees, but pay can nevertheless be perceived as equitable or fair, if those perceived as making larger performance contributions are the ones receiving higher pay.
equity; equal
Four policy choices: 1. _________2. __________3._________4._______-
internal alignment, external competitiveness, employee contribution, management of the pay system
there is consistent research evidence that the following practices do matter to the organization's objectives:
internal alignment, external competitiveness, employee contributions, managing compensation, compensation strategy
The ____________ is shown on the horizontal axis (x). The salaries paid by relevant competitors for those benchmark jobs as measured by the survey __________________, are shown on the vertical (y) axis.
internally aligned structure; external competitive data
Research shows that those having ____ pay differentials among top executives experienced slightly higher executive turnover, perhaps because of perceptions on inequity. An increase of ___ standard deveiation in the size of pay differentials was associated with ___% to ___% lower average tenure among executives.
larger; 1; 2-6
The smaller ranges creates ___ overlap, which permits the manager too reinforce a promotion into a new grade with a larger pay increase. The downside is that there may be fewer opprotunities for promotion
less
information to guide the sorting of class descriptions can come from ________, ___________, ___________, and ______________.
managers; job incumbents; job descriptions; career progression consideration
The final result of the job analysis-job description- job evaluation process is a _____, a ____ of work --> translates internal alignment policy into practice
structure; hierarchy
Performance - based pay works best when there is _____ to share. An organization whose profits or market share I increasing is able to pay larger bonuses and stock awards. And paying these bonuses fairly improves employee attitudes and work behaviors, which in turn improves their performance - circle has a sloping up momentum. (virtuous cycle)
success
y=a+bx y= x= a= b=
y= dollars x=job evaluation points a= the y value at which x=o b= the slope of the regression line
The choice is ______ either/or. Instead, the differences are a matter of degree: levels can range from many to few, differentials can be large or small, and the criteria can be based on the job, the person, or some combination of the two.
rarely
The number o incumbents per job from which to collect data probably varies with the ______ of the job, as well as the ease of collecting information.
stability
__________ looks at how an organization does its work: activities pursued to accomplish specific objectives for specific customers.
supply chain analysis
The average annual merit bonus in recent years has been about ___ percent for hourly employees, ___ percent for lower level salaried employees, and ___ percent for higher level salaried employees, all much larger than the more often discussed recent merit increase pools of around ___ percent.
5;6;13;3
Many employers use _______ to validate their own job evaluation results.
market surveys
An employer's pay level is constrained by its ability to compete in the ________ market/
product/service
Stores that label each item's price or ads that list a job opening's starting wage are examples of _________.
quoted-price market and bourse
A study of manufacturing firms found that firms with 100 to 500 workers paid ___ percent higher wages than did smaller firms; firms with more than 500 workers paid ___ percent more than did the smallest firm.
6;12
Descriptions of _________/_________ jobs often include more detailed information on the nature of the job, its scope, and accountability. It must capture the relationship between the job, the person performing it, and the organization objectives- how the job fits into the organization, the results expected, and what the person performing it brings to the job. Less task but more accountabilities.
managerial/professional
______ is when even one job in our benchmark sample has a certain characteristics, we tend to use that factor for the entire work domain
small numbers
Growth rates for jobs on the highly susceptible list are generally ____ or _____, while jobs on the low susceptibility list have shown ____ growth.
small; negative; strong
_______ use din producing goods and services influences the organizational design, the work to be performed, and the skills/knowledge required to perform the work
technology
Equal Pay Act and Civil Rights act require _________
"equal pay for equal work" - equal skill, equal effort, and equal responsibility and is performed under equal working conditions
External competitiveness is expressed in practice by:
(1) setting a pay level that is above, below, or equal to that of competitors and (2) determining the pay mix relative to those of competitors
In 2016, U.S. Bureau of Labor Statistics data indicated that, among full-tine workers in the United States, women earned ____ percent of what men earned, up from ____ percent in 1979.
82;62
Research as far back as the 1940s demonstrates that the skills dimensions explains ___ percent or more of the variance in job evaluation results; threee factors generally account for ___ to ___ of the variation.
90;98;99
____________- groups work information into seven basic factors: information input, mental processes, work output, relationships with other persons, job context, other job characteristics, and general dimensions Where similarities and differences among jobs are described in terms of these seven factors, rather than in terms of specific aspects unique to each job.
Position Analysis Questionnaire (PAQ)
______. smooths large amounts of data while minimizing variations. As the number of jobs in the survey increases, the advantage of the straight line that regression provides becomes clear.
Regression
Defining the ______ is a big part of figuring out how and how much to pay. It is important to find the appropriate competitive positions in these markets.
Relevant market
______ is a measure of the consistency of results among various analysts, various methods, various sources of data, or over time.
Reliability
more _______ structures are related to ____ performance when close collaboration and sharing of knowledge are required (e.g., firefighting and rescue squads, manufacturing teams, global software design team). the competition fostered in the "Winn-take-all" tournament hierarchies appears to have negative effects on performance when the work flow and organization design require teamwork.
egalitarian; greater
Advantages of broad banding:
emphasis on flexibility within guidelines; global organizations; cross-functional experience and lateral progression; reference market rates, shadow ranges; controls in budget, few in system; give managers "freedom to manage" pay; 100-400 percent spread
employees judge the ______ of their pay through comparisons with the compensation paid to others for work related in some fashion of their own.
fairness
Until the ____ factors have been changed, each new hire produces less than the previous hire. (Diminishing marginal utility)
fixed (short-term) manufacturing costs
An obvious concern with _______ policies is to achieve some degree of business alignment and fair treatment for employees among the choices.
flexible
Pay practice of ____ companies can disrupt emerging ____ markets in developing economies
foreign; local
A useful first step in our analysis is to look at a _________ of the pay rates.
frequency distribution
In the US, equal employment legislation forbids pay systems that discrimnate on the basis of ____, _____, _____, or ______ _____.
gender, race, religion, national origin
A number of researchers have linked ________ to ease of attraction, reduced vacancy rates and training time, and better-quality employees. Research also suggests that ______ reduce turnover and absenteeism.
high wages; high pay levels
Pay procedures are more likely to be perceived as fair 1___________ 2__________ 3___________ 4___________
if they are consistency applied to all employees; if employees participated in the process; if appeals procedures are included; if the data used are accurate
Focusing only on the _____ ____ of pay can miss the other major mechanism by which pay decisions influence employees behaviors some times thus it is important to see if it matches objectives
incentive effects
______ this is described as the degree of internal hierarchy
internal alignment
some say that the content of jobs has _____ value that the evaluation will uncover; others say that then only fair measure of job value is found in the _____ market.
intrinsic; external
_____ structure has more levels, with relatively small between-level differentials in comparison to the _____ structured, which only has a few layers.
layered; delayered
In the absence of convincing evidence, the __________ may be to set both pay level and pay mix to match competition.
least-risk approach
Pay for jobs filled via transfer and promotions is connected to external market forces, but the connection is _____ ____.
less direct
The ____________ is the additional revenue generated when the firm employs one additional person, with other production factors held constant.
marginal revenue of labor
The point on the graph at which the incremental income generated by an additional employee equals the wage rate is the _________.
marginal revenue product
After the survey data are all collected, the next step is to analyze the results and use statistics to construct a _____________.
market pay line
Adjustments of pay can be based on the _______________ of pay rates caused by competition for people in the market. Adjustment pay also be based on _____, ______, or _________.
overall movement; performance; ability to pay; terms specified in a contract
_________ method uses a matrix to compare all possible pairs of jobs. When all comparisons have been completed, the job most frequently judged Moree valuable becomes the highest ranked job, and so on.
paired comparison
Survey participants may be guilty of _______ if the overall effect of the information exchange is to interfere with competitive prices, and artificially hold down wages.
price fixing
However it is difficult to have a reliability measuring of preferences. EX., researchers find the people place more importance on pay _______________________.
than they are willing to admit
The _____________ requires that _____ ________ of a job - those that cannot be reassigned to other workers - must be specified for jobs covered by the legislation. If a job applicant can perform these essential elements, it is assumed that the applicant can perform the job. After that, reasonable accommodations must be made to enable an otherwise-qualified handicapped person to perform those elements
Americans with Disabilities Act (ADA); essential elements
How much detail is needed to make these pay decisions?
Enough to help set individual employees' pay, encourage continuous learning, increase the experience and skill of the work force, and minimize the risk of pay-related grievances.
_______ refers to the job titles, departments, the number of people who hold the job, and whether it is exempt from the Fair Labor Standards Act.
Job Identifications
The steps for determining the internal job structure:
Job analysis, job descriptions, job evaluation, job structure
Some recommend the ___________ but the authors do not because the ____ measures the rate of changes in prices for goods and services in the product market, not wage changes in the labor market.
Consumer Price Index; CPI
_______ prominence is the measure of how important total compensation is in the overall HR strategy.
Objectives
______ job analysis that makes fine distinctions among levels of jobs has been accused of reinforcing rigidity in the organization. Where employees may refuse to do certain tasks that are not specifically called out in their job descriptions.
Traditional
Points plan are the most commonly used job evaluation approach in ____ and ____.
US; Europe
______ can help compare the costs and benefits of different pay-level policies.
Utility theory
Troubled Asset Relief Program (TARP)
a legislation that included restrictions on executive pay that were designed to discourage executives from taking "unnecessary and excessive risks"
A range has three salient features:
a midpoint, a min, and a max
It may be that an employer's pay level will not gain any competitive _______, however, the wrong pay level may put the organization at a serious _______.
advantage; disadvantage
_____ often grow out of whatever is in short supply.
allowances
two ways of ranking are common:
alternation ranking and paired comparison.
The analyses of pay grades and pay ranges are usually done with _____ data, since base pay reflects the basic value of the work rather than performance levels of employees.
base pay
The problem with much pay-level research is that it focuses on ______ and ignores bonuses, incentives, options, employment security, benefits or other forms of pay
base pay
__ ____ is the cash compensation that an employer pays for the work performed; tends to reflect the value of the work or skills and generally ignores differences attributable to individuals employees
base wage
Using ____, _____ descriptions that cover a large number of related tasks closer to the job-family level is one way to increase flexibility.
broad; generic
In both the bourse and quoted market, employers are the ______ and the potential employees are the ____.
buyers; sellers
organization factors that shapes internal structures include:
strategy; technology; human capital; HR policy; employee acceptance; cost implications
_____ and ______- for products and services also affect internal structures
supply and demand
The size of the range is based on some judgement about how the ranges _______, ______, and ____________.
support career paths, promotions, other organization systems
internal alignment relationships should form a pay structure that should ____________, ________________, and __________________.
support the organization strategy, support the work flow, motivate behavior towards organization objectives
Teachers are more likely to feel their internal pay structures are fair when they are paid relatively _____ within the structure. They will also feel pay structures are fair even they are relatively low in the internal structure if they work in a high-paying school district.
highly
Aligned pay structures support the __________, _________________, and ___________.
way the work gets done, fit the organization's business strategy, fair to employees
____ if have only companywide measures (rather than individual measures), the rate for each company is multiplied by the number of employees in that company. total of all rates is divided by total number of eployees
weighted mean
The three Hay factors: _________,________, _______ and a fourth factor _____ can be applied where appropriate or required by law
know-how (the sum total of all knowledge and skills, however acquired, required to do the job competently); problem solving (measuring the nature and complexity of the issues and challenges that job has to face); accountability (the measured impact that the job is designed to have on the success of the enterprise); working conditions
Quantitative job analysis questions are grouped into 5 compensable factors:
knowledge, accountability, reasoning, communication, and working condition
In addition to differences in technology across industries affecting compensation, the introduction of new technology ________ influences pay levels.
within an industry
__________ and its ________ are the most common bases for determining internal structures.
work content; value
The simplest way to do the _________ is to identify the lowerst and highest paid benchmark jobs for the relevant skills in the relevant market and to use the wages for these jobs as anchors and then slot jobs in between. hanging two pieces of data on two extremes can cause a questioning on the accuracy of those data.
low-high approach
in a _____-_____ company, there was no connection between employee participation and pay fairness. It may be that employees' pay was so low that no amount of participation could overcome their dissatisfaction. So rather than tossing aside the idea of participation, it may be that in extreme cases (very ow wages) a pay raise may trump participation.
low-wage
Countries with lower average labor costs also tend to have ________________ productivity.
lower average productivity
The _____________ is the additional output associated with the employment of one additional person, with other production factors held constant.
marginal product of labor
the _______ ______, says that employers do in fact pay use value --> unless an employee can produce a value equal to the value received in wages, it will not be worthwhile to hire that worker
marginal productivity
A ______ links a company's benchmark job evaluation points on the horizontal axis (internal structure) with market rates paid by competitors (market survey) on the vertical axis. It summarizes the distribution of going rates paid by competitors in the market.
market line
Even though only benchmark jobs in our company can be directly matched to the survey, the _____________ allows to estimate the market pay for non-benchmark jobs.
market line
________ is where some employers go straight to market surveys to establish their internal structures - mimics competitors' pay structures.
market pricing
Creating a special range that is clearly designated as _____ ______ may be a better approach for jobs that are suddenly imbalanced within the market.
market responsive
Graduating students usually find themselves in a __________ market, though minor haggling may occur.
quoted-labor
_____ is whatever wage the employer and employee agree on for a job. Based on the external market for every location (i.e pay in the US and China is very different)
exchange value
_________, second pay policy, look at comparisons outside the organization - comparisons with other employers that hire people with the same skills.
external competitiveness
Translating any external pay policy into practice requires information on the ___________. _______ provide the data for translating that policy into pay levels, pay mix, and structures.
external market; surveys
_____ and _____ pay comparisons appear to be about equally common, at least in terms of which types of comparisons employees raise with managers
external; internal
The higher the pay level relative to what competitors pay, the ____ the relative costs to provide similar products or services.
greater
Work content that involves more tacit international is believed to add _______ value than more transactional tasks.
greater
the ______ the value added by the skills and experience, the more pay those skills will command
greater
______ generates a straight line that best fits the data by minimizing the variance around the line.
regression
_____ _____ are learning opportunities, status, challenging work are psychological.
relational returns
Determining a pay mix ____ to those of competitors.
relative
A structure based on 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.
_____ also tie pay increases to performance.
incentives
As pay level increases, the number of people will to make that investment _____, thereby creating an upward-sloping supply.
increases
___________: job evaluation can reduce disputes and grievances over pay differences among jobs by establishing a workable, agreed-upon structure that reduces the role of chance, favoritism, and bias in setting pay.
is fair to employees
for managers, compensation influences their success in two ways: first, _______________________. second, __________________________________.
it is a major expense that must be managed; it is a major determinant of employee attitudes and behaviors ( and thus, organization performance)
_______ is a systematic method to discover and describe the differences and similarities among jobs
job analysis
_________ is the systematic process of collecting information that identifies similarities and differences in the work.
job analysis
_______ is the list of tasks, duties, and responsibilities that make up a job
job description
_______ and _____ focus on understanding employee behavior: the supply side of the model.
reservation wage; human capital
In the ________- term, an employer cannot change any other factor of production (i.e technology, capital or natural resources)
short
If job data suggest that jobs are _______, the jobs must be paid equally; if jobs are _______, they can be paid differently.
similar; different
Factors tend to fall into four generic groups: These four were used in the National electrical manufacturers association (NEMA) plan & National Metal Trades Association (NMTA) and are also included in the equal pact act to define equal work.
skills required, effort required, responsibility, and working conditions
Most unions seek _________ pay differences among jobs and seniority- based promotions as a way to promote solidarity among members
small
An employer conducts or participates in a survey for number of reasons:
1. to adjust the pay level in response to changing rates paid by competitors; 2. to set the mix of pay forms relative to that paid by competitors ; 3. to establish or price a pay structure, 4. to analyze pay-related problems; 5. to estimate the labor costs of product/service market competitors
Individuals and business in the United States spend ____ trillion per year, or about ___ percent of US economic output on healthcare.
3.5; 18
Top-level management positions commonly have ranges of ___ to ___ percent above and below the mid point; entry to midlevel professional and managerial positions, between _____ and ____ percent; office and product work, _____ to _____ percent.
30 to 60; 15 to 30; 5 to 15
Only about one in ____ organizations are able to match over ____ percent of jobs to salary survey jobs, with the remaining organizations report less success in matching
3; 80
most factor scales consists of ___ to ___ degrees
4-8
A very basic theory of performance ____ theory
AMO
In the United States, the ______________ is the major source of publicly available compensation (cash, bonus, and benefits but not stock ownership) data.
Bureau of Labor Statistics (BLS)
_________ are based on the strategic direction of the business and how the work contributes to these objectives and strategy. The factors are scaled to reflect the degree to which they are present in each job and weighted to reflect their overall importance to the organization. --> points are then attached to each _________.
Compensable factors; factor weight
____________ is the heart of job analysis, the data involve the elemental tasks or units of work, with emphasis on the purpose of each task.
Job content
____________ refers to the array of pay rates for different work or skills within a single organization. The number of levels, the differentials in pay between the levels, and the criteria used to determine those differences describe the structure.
Pay structure
_______ conditions to a large extent determine what the organization can afford to pay.
Product market
______ simply orders the job descriptions from highest to lowest, based on a global definition of relative value or contribution to the organization's success. It is simple, fast, and easy to understand and explain to employees, it is also the least expensive method, at least initially..
Ranking
Suits have been filed alleging that the direct exchange of survey data violence Section 1 of the ______, which outlaws conspiracies in restraint of trade.
Sherman Act
Many firms select ___ survey as their primary source and use other to cross-check or "validate" the results
one
_______ reveal the actual work performed and its purpose or outcome.
Task data
_________ information reflects the similarities and differences among organizations in the survey.
organization data
______ employees, is based on the internal structure of their home employer
outsourcing
Adjustment to the different forms of pay competitors use (base, bonus, stock, benefits) and the relative importance they place on each form occur less frequently than adjustments to ______ pay level. Less changes to pay mix occur in comparison to pay level.
overall
Motivation, together with employee _____ and work/organizational design, determines employee behaviors such as performance
ability
An organization's _______ is related to the efficiency wage model. Firms with higher profits than competitors are able to share this success with employees
ability to pay
Setting a pay level that ____,____, or ____ to that of competitors
above, below, equal
An employee with consistently high performance ratings should move _____ the market median and range midpoint, whereas an employee with consistently ____ performance should be near the range midpoint.
above; near
The _____ of participation may make it easier for employees and manager to image ways the structure might have been rearranged to their personal liking.
absence
research shows that an ______ structure can lead to better organization performance
aligned
Information on ___ types of pay forms is required to assess the total pay package and competitors' practices.
all
__________ orders job descriptions alternately at each extreme. Evaluators reach agreement on which jobs are the most and least valuable then the next most and least valued and so on, until all the jobs have been ordered.
alternation ranking
________ may also be included so that employees who feel their jobs are unfairly evaluated have some recourse
appeals process
4 Steps to developing a total compensation strategy: 1. ___________ 2. __________ 3._________. 4___________-
assess total compensation implications; map a total compensation strategy; implement strategy; reassess
merit payments are based on an __________ (or ______) of recent past performance made (with or without a formal performance evaluation).
assessment; rating
Research indicate that performance - based pay that shares success with employee does improve employee _____, _____, _____- especially the coupled with the other "high performance" practices.
attitudes, behaviors, performance
how much employees are paid affects their _____, ______, and ____ ___, as well as their _____ ___ _____.
attitudes; performance; job choice; standard of living
_______ is the amount of cash the competitors decide each job and incumbent is worth. A company might use this information for its initial observations of how good the data appear to fit a range of jobs. The market line is based on base pay. FAILS to include performance incentives and other forms, so will not give true picture if competitors offer low base but high incentives
base pay
Compensable factors should be:
based on the strategy and values of the organization; based on the work performed; acceptable to the stakeholders affected by the resulting pay structure
Internal alignment based on content orders jobs on the _________________________________________________________________.
basis of the skills required for the jobs and the duties and responsibilities associated with the jobs
Economic theories must frequently:
be revised to account for reality
Assess total compensation implications:
business strategy and competitive dynamics; hr strategy; culture/value; social and political context; employee/union needs; other hr systems
What should be the size of the pay differentials among levels with a business? It will depend on _____________
career path support business strategy and work flow --> contribute to success
The belief is that more frequent promotions offer a sense of _______________ to employees
career progress
A measure of ________ reduces a large amount of data into a single number
central tendency
So both ________ of applicants (degrees, grades, experience) and organization decisions about _____ (lead, match, lag) and __ (higher bonuses, benefit choices) act as signals that help communicate
characteristics; pay level; mix
_____ is where a series of classes covers the range of jobs, class descriptions are the labels --> a job description is compared to the class descriptions to decide which class is the best fit for that job. Each class is described in such a way that the label captures sufficient work detail yet is general enough to cause little difficulty in slotting a job description onto its appropriate "shelf" or class.
classification
_______ ______ :designed to allow companies to reclaim compensation from executives in some situations are available under Dodd-Frank and have also been adopted in stronger form by some companies.
clawback provisions
The best answer to solve discrepancies is to ______. Enough data are required to ensure consistent, accurate, useful and acceptable results.
collect more data
Organizations with unique jobs and structures face the double bind of finding it hard to get ___________________________________.
comparable market data at the same they are placing more emphasis on external market data
Employees judge the fairness of their organization's internal pay structure by making multiple comparisons:
comparing to jobs similar to their own (internal equity); comparing their jobs to others at the same employer (internal equity); comparing their jobs' pay against external pay levels (external equity)
____________ are those characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives.
compensable factors
________ is used to compensate worth with negative characteristics requires higher pay to attract/retain workers.
compensating differentials
In the past,___________ handled reviews, but increasingly teas of managers and even peers are used.
compensation manager
Managers look at both _____ - their products, location and size -- and the ___ - the skills and knowledge required and their importance to the organization's success.
competitors; jobs
_____ as a pay objective means conforming to federal and state compensation laws and regulation
compliance
Perhaps offering employees too many choices of different kinds of pay will lead to _________,____________,and ________.
confusion, mistakes, dissatisfaction
The decision on the source of the data hinges on how to ensure ______, ______, ______, and ___________ data.
consistent; accurate; useful; acceptable
If prices cannot be changed without decreasing sales, then the ability of the employer to set a higher pay level is ______.
constrained
The most important differences between the grades-and-ranges and broad-banding approaches is the location of _____.
controls
__________ is the most common way to collect job information is to ask the people who are doing a job to fill out a questionnaire. The advantage of conventional questionaries and interviews is that the involvement of employees increases their understanding of the process. BUT if important aspects are omitted, or if the jobholders themsevles either do not realize or are unable to express the importance of certain aspects, the resulting job descriptions will be faulty
conventional methods
_____ _____ is a common measure of association and indicates how changes in one variable are related to changes in another.
correlation coefficient
The ____ ____ efficiency-focused strategy stresses doing more with less by minimizing costs, encouraging productivity increases, and specifying in greater detail exactly how jobs should be performed.
cost cutter
firms that cut costs would be said to follow a _____ _____ strategy
cost leadership
a ____ __ ____ ____ to base wages may be made on the basis of changes in what other employers are paying for the same work, changes in living costs, or changes in experience or skills --> less used as people are linking pay increase to indivdiual and/or company performance
cost of living adjustment (COLA)
The ______ has operating objectives, does not want to lose key individuals, and views compensation as a mechanism to help accomplish these goals; ____ adopts a worldwide perspective and focuses on ensuring that decisions are consistent with the overall global strategy.
country manager; corporate
_______ is a pay structure the committee wish to duplicate with the point plan. Once a criterion structure is agreed on, statistical modeling techniques are used to determine the weight for each factor and the factor scales that will reproduct, as closely as possible, the chosen structure.
criterion pay structure
_______ is very important to make sure that the information is up to date.
currency
The _____ _____ business strategy stresses delighting customers and bases employee pay on how well they do this.
customer-foucsed
The ______ changes the focus from emphasizing the relative importance of each form within a single company to comparing each form by itself to the market (many companies)
dashboard
Compensation strategy, HR strategy, and business strategy ultimately seek to _____ costs or _________ revenues, relative to competitors.
decrease; increase
______ as those that operate in stable markets and compete on costs
defenders
The content of the jobs from job analysis is the basis for ______, _____, and _____ the compensable factors.
defining, scaling, weighting
Product market factors
degree of competition and level of product demand
The pay survey data is the _____ variable; the job evaluation points matched is the _____ variable.
dependent; independent
The _________ in most organizations probably ranges from strategic leadership jobs )CEO, general directors) to the filing and mail distribution takes in entry -level office jobs.
depth of work (vertical)
The __________ means that the managers must be able to explain the salaries paid to employees compared to those a mouse click away.
ease of access
compensation objectives include: ___, ____, ____, ____
efficiency, fairness, compliance, ethics
The ________ corresponds to the brand or image the company projects as an employer.
employer of choice
One source of publicly available labor cost data is the ________, by the Department of Labor, which measures quarterly changes in employer costs for compensation.
employment cost index (ECI)
The use of _____, ________ offers the advantage of being able to compare the relative scope, content and internal value of jobs in th eorganisaiton to similar jobs in other organizations, which can be very helpful in deciding what to pay jobs relative to similar jobs in other organizations.
existing; standardized plans
_____ _____ refers to pay comparisons with competitors.
external competitiveness
______ this includes comparisons on two issues: how much are our competitors paying, and what forms of pay are they using?
external competitiveness
_________ refers to the pay relationships among organizations - the organization's pay relative to its competitors.
external competitiveness
_____ factors are dominant influences on pay for entry jobs, but the differences for non-entry jobs tend to reflect _____ factors.
external; internal
major factors that shape internal structures are _______ and _____ factors
external; organization
_______ reflect the relative importance of each factor to the overall value of the job. Different weights reflect differences in importance attached to each factor by the employer --> weights are often determined through an advisory committe that allocates 100 percent of value among the factors
factor weights
In addition to the pay level, consistent with equity theory, that ______________ perceptions, both distributive and procedural matter.
fairness/justice
Typically _____ data are simply used to group firms by size, expressed in terms of sales or revenues, rather than to analyze competitors' performance
financial
surveys of executive and ups-level positions include ______ and ______, since compensation for these jobs is more directly related to the organization's financial perofrmance
financial; reporting relationship data
Newer pay-level policies emphasize ______: among policies for different employee groups, among pay forms for individual employees, and among elements of the employee relationship that the company wishes to emphasize in its external competitiveness policy.
flexibility
While both merit pay and incentives try to influence performance, incentives explicitly try to influence ___ behavior whereas merit recognizes ____ behavior, which is hoped to influence future behavior.
future; past
These new organization and jobs fuse together diverse knowledge and experience, so "relevant" markets appear more like "____" markets.
fuzzy
Factors that affect the supply of labor:
geographic barriers to mobility among jobs, union requirements, lack of information about job openings, the degree of risk involved and the degree of unemployment also influence labor markets - nonmenetary aspects of jobs may be important aspects of the return on investment
All the jobs within a single ____ will have the same pay _____
grade; range
____ group job evaluation data on the horizontal axis; ___ group salary data on the veritlca axis.
grades; ranges
In hockey, where the sport is very INTERDEPENDENT, was found that teams that differentiated salaries more ____ as a function of individual performance did better, in large part because such teams were more successful in attracting and retaining the most talented players. In other words, larger differentials based on performance generated positive sorting effects.
greatly
More ________ structures are related to _______ performance when the work flow depends on individual contributors (e.g., consulting and law practice, surgical units, stockbrokers, even university researchers.
hierarchical; greater
__________ have beneficial effects on performance only when the pay level itself depends on performance (ie there is a high pay level AND strong pay for performance).
high pay levels
The amount to update is based on several factors:
historical trends in the labor market, prospects for the economy in which the employer operates, and the manager's judgment, among others
It is not only how much but ____ an organization pays that can result in sorting effects
how
The theory of ___________ I based on the premise that higher earnings flow to those who improve the potential productivity by investing in themselves (through additional education, training, and experience) The theory assumes that people are in fact paid at teh value of their marginal product.
human capital
______ - the education, experience, knowledge, abilities and skills required to perform the work - is a major influence on internal structures.
human capital
the ______ _____, the degree to which pay influences individual and aggregate motivation among the employees we have at any point in time
incentive effect
organization factors
industry, strategy, size, individual managers
This relationship between organization size, ability to pay, and pay level is consistent with economic theory that say that talented individuals have a higher marginal value in larger organization because __________________________________.
influence more people and decisions, thereby leading to more profits
The _____ stresses new products and short response time to market trends. A supporting compensation approach places less emphasis on evaluating skills and jobs and more emphasis on incentives designed to encourage innovations.
innovator
Compensable factors are usually defined as ______ (skills required, problem solving required, responsibilities) rather than value of _____.
input; output
_____ theory sees firms as responding/confirming to normative pressures in their environments so as to gain legitimacy and to reduce risk. Predicts that very few firms are first movers; instead, most firms copy innovative practices after innovators have learned how to make the practices work. The potential drawback of such mimetic behavior is that what aligns with the strategy of another organization may not align with the organizaiotn's own strategy. --> * IT IS NOT POSSIBLE TO OUT-COMPETE ONE"S COMPETITORS IF YOU SIMPLY IMITATE THEIR PRACTICES but for some firms that are in bad conditions this may be a good starting point
institutional
Pay can affect the motivational ____, ____, and persistence of current employees.
intensity; direction; persistence
______ ________ refers to comparisons among jobs or skill levels inside a single organization
internal alignment
______, often called internal equity, refers to the pay relationships among different jobs/skills/competencies within a single organization.
internal alignment
Benchmark jobs has the following characteristics:
its contents are well known and relatively stable over time; the job is common across a number of different employers. it is not unique to a particular employer; a reasonable promotion of the workforce is employed in this job
Compensation professionals (usually compensation analysts, sometimes also those at higher levels such as the compensation manager) are primarily responsible for most ________________ for most jobs.
job evaluation
Powerful member of a _______ could sway the results.
job evaluation committtee
Although some firms find lowering _________ and hiring _______ workers a better choice than raising wages, this choice occurs increased training cost.
job requirements; less-skilled
____________ provides an overview of the job; the section on essential responsibilities elaborates on the summary. - focuses on the similarities and differences in content
job summary
A __________ relies on the work content - tasks, behaviors, responsiblies
job-based structure
identical positions make a _____, and broadly similar jobs combine into a _________.
job; job family
Usually you would get the source of data from ______ and the _______. for key managerial/professional jobs, supervisors "________" have also been suggested as valuable sources since they may have a more strategic view of how jobs fit in the overall organization.
jobholders;supervisors; two levels above
wages and benefits are a major focus of _______ ________ efforts to serve their members' interest
labor unions'
________ is a policy of paying below market rates which can hinder a firm's ability to attract potential employees, but it may be coupled with the promise of higher future returns, which may increase employee commitment and foster teamwork, which may increase productivity. It is also possible to lag in pay but lead on other returns from work.
lag pay-level policy
If the company updates survey data to the end of the current year/start of then plan and keeps this rate in effect throughout the plan year this will be ____ the market
lagging
A ___________________ maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay. It may also offset less attractive features of the work.
lead pay-level policy
aging the market data to a point halfway through the plan year is called ________.
lead/lag
An organization may adopt a ____ policy for skills that are critical to its success, a ______ policy for less-critical skills, and a ____ policy for jobs that easily filled in the local labor market.
lead; match; lag
The ______ of any organization is the best source of information on where the business should bee going and how it is going to get there
leadership
The revenue product model provides a valuable analytical framework, but it ________ the real world. As in most companies it is almost impossible to quantify the goods or services produced by an individual employee, since most production is through joint efforts of employees with a variety of skills.
oversimplifies
______ refers to the average of the array of rates paid by an employer (base+bonuses+benefits+value of stock holdings)/number of employees
pay level
________ equity results if the ratios are very similar. The ratios can be similar despite differences in pay if performance differences are perceived to exist.
perceived
Some of the obvious pay - mix strategies include _______, _______, ______, and _______-. Compared to the other three incentives and stock ownership make up a greater percent of total compensation in performance driven policies. Market match simply mimics the pay mix competitors are paying.
performance drive, market match, work/life balance, security
AMO theory: P is _________: A is ____, M is _____, and O is _______. The AMO logic is that HR systems will be most effective when employee ability is developed through selective hiring and training and development, when the compensation system. motivates employees to act on their abilities, and when roles are designed to allow employees to be involved in decisions and have an impact
performance; ability; motivation; opportunity
A _________ shifts the focus to the employee: the skills, knowledge, or competencies the employee possess, whether or not they are used in the employee's particular job.
person-based structure
A national survey found that pay was most often cited reason (51%) among high-performing employees for leaving, whereas relationship with supervisor was cited only (1%) of the time by such employees. Employers, however, somewhat underestimated the role of pay (45% citing pay) and very much overestimated the role of relationship with supervisor (31%). Managers believe that the problems of attracting and retaining people were the result of __________. rather than inadequate compensation.
poor management
Researchers report that employees' perceptions of ___________ fairness significantly influence their acceptance of the results; employees and managers are more willing to accept low pay if they believe that the way this result was obtained was fair
procedural
____ ____ refers to the process used to make pay decisions.
procedural fairness
_________ ________ addresses how design and administration decisions are made and whether procedures are applied in a consistent manner.
procedural justice
_______________ is the procedures for determining the pay structure
procedural justice
_____ and ______ are the two key product market factors.
product demand; the degree of competitions
The notion of relative proportions is the _____ concept in the Hay Group Guide Chart
profile
_______ are more focused on innovation, new markets, and so forth
prospectors
___________________ is a method where employees are directed to a website where they complete a questionnaire online (statistical)
quantitative job analysis (QJA)
________, ______ and ________ are the most common job evaluation methods, though uncounted variations exist.
ranking format; classification; point (Factor)
Where the structure ought to make clear the relationship between each job and the organization's objective is called _______
line of sight
When companies completely does "market pricing" the implied assumption is that ________________.
little value is added through internal alignment
______ ____ incentives are intended to focus employee efforts on multiyear results.
long-term
If an organization is using skill-competency-bsed structures or generic job descriptions it may not have benchmark jobs to match the jobs at competitors who se a traditional job-based approach and thus must use the _________ to convert it into competency strucutre
low-high approach
First it was ______ and _____ from U.S to China and Central America; then _____ blue collar jobs (electronics, appliance); now it is _____ and ______ jobs (accounting, legal engineering, radiology) that are all flowing to Lower wage locations.
low-skill and low-wage; higher-paid; service and professional
A ______ would typically be at least one grade higher than the jobs it supervises. Although a 15 percent pay differntial between manager and employee has been offered as a rule of thumb large overlap and possible overtime in jobs but not managerials jobs can make it difficutl to maintain manager employee differencitals.
managerial job
______ was overwhelmingly chose (68% to 74%, depending on the job level ) as the primary method of job evaluation. Mainly based on survey data and internal equity is greatly de-emphasized
market pricing
Aspects of job content (skills required and customer contacts) take on value based on their relationship to ___________. Because higher skill levels or willingness to work more closely with customers usually commands higher wages in the labor market then skill level and nature of customer contacts become useful criteria for establishing differences among jobs.
market wages
Given the choice to match, lead or lag, the most common policy is to _____ rates paid by competitors.
match
Many non unionized companies tend to ___ or even _____ in order to discourage unions.
match; lead
Although labor market conditions (and legal requirements) put a floor on the pay level required to attract sufficient employees, the ________ puts a lid on the maximum pay level that an employer can set.
maximum
A range ______ sets the lid on what the employer is willing to pay for that work; the range ____ sets the floor.
maximum; min
____ sum all rates and divide by number of rates. If have only company (rather than individual) data, wage of largest employer given same weight as smallest employer
mean
___ order all data points from highest to lowest; the one is the middle is the median.
median
Using the ____ policy avoids placing an employer at a disadvantage in pricing products, it may not provide a competitive advantage in its labor markets.
meet
_____ _____ are based on a performance rating but, unlike merit increases, are paid in the form of a lump sum rather than becoming (a permanent) part of the base salary
merit bonuses
____ _____ are given as increments to base pay and are based on performance
merit increases
Perhaps it is the ______________ by pay mix and levels that is the key to achieving competitive advantage.
message communicated
the optimal relationship between grades is that the ____________ out to be large enough to induce employees to seek promotion into a higher grade. Tracing how an employee might move thorugh a career path in the sturcture and what siz epay increase will accompnay that movement will help answer that question
midpoint progression
Broad bands are often combined with more traditional salary administration practice by using ____, ____, or other control points within bands.
midpoints; zones
A major strategic decision is whether to ____ what competitors are paying or to ____ a pay package that may differ from those of competitors but better fits the business strategy.
mirror; design
____ is the most commonly occurring rate
mode
________: job evaluation clarifies for employees what it is about their work that the organization values, how their jobs support the organization's strategy and its success. it can also help employees adapt to organization changes by improving their understanding of what is valued in their new assignments and why that value may have changed,. Thus, job evaluation helps create the network of rewards (promotions, challenging work ) that motivates employees
motivates behavior toward organizations objectives
employees make ____ pay comparisons to assess the fairness of an internal pay structure. They compare both with other jobs in the same internal strucuture and with the pay of their job in the external market.
multiple
Managers historically justify the match policy by saying that failure to match competitors' rates would cause _________________________________.
murmuring among present employees and limit the organization's ability to recruit
Competition tends to be _____ or _____ for managerial and professional skills but _____ or ____ for clerical and production skills.
national or international; local or regional
Labor Market Factors:
nature of demand and nature of supply
A promotion to a new job title is part o the organization's ___________.
network of returns
_____ norms for employee acceptance will probably need to include recognition that people must become accustomed to constant change, even in internal pay relationships - change and congeal process
new
There is ______ research suggest under what circumstances managers should choose which pay-mix alternative.
no
_____ have their pay calculated as an hourly wage
nonexempts
One groups argues that if fair differentials among jobs are ____ paid, individuals may labor ill will toward the employer, resist change, change employment if possible, become depressed, and lack that zest and enthusiasm which makes for high efficiency and personal satisfaction in work.
not
One feature of any pay structure is its hierarchical nature: the ____________________ and reporting relationships.
number of levels
Banding presumes that mangers will manage employee pay for accomplish the organization's ______ and treat employees _____.
objectives; fairly
The three factors usually used to determine the relevant labor markets are the ________, ________ and _____.
occupations (skill/knowledge required), geography (willingness to relocate, commute or become virtual employees), competitors (other employers in the same product/service and labor markets)
Not only do the weights reflect the ____ importance of each factor, but research clearly demonstrates that the weights influence the _________.
relative; resulting pay structure
differences in performance seem to influence _____.
reliability
job seekers have a _______ level below which they will not accept a job offer, no matter how attractive the other job attributes. If the py level does not meet their minimum standard, no other job attributes can make it up for this inadequacy. A reservation wage may be above or below the market wage. The theory seeks to explain differences in workers' response to offers. Reservation levels likely exist for pay forms too, particularly for health insurance.
reserveration wage
The grade-and-range approach has guidelines and control designed ________.
right into the pay system; range min, max, and midpoints ensure consistency across managers
_____ referring to pay for employees who are exempt from regulations of the Fair Labor Standards Act (FLSA) and hence do not receive overtime pay. (calculated on a monthly or annual rate rather than hourly)
salary
_______ begins with the traditional alternatives of lead, meet, or lag. but it then adds a second part, which is to offer employee choices (within limits) in the pay mix.
shared choice
Matt Bloom found that teams with ___ differences in play salaries did better than those with ___ differentials. In addition to affecting team performance, egalitarian structures had a sizable effect on individual players' performance, too --> mediocre player improved more on a team with egalitarian structure too as the egalitarian reflected a more supportive and flexible culture compared to hierarchical - NON INTERDEPENDENT (baseball)
smaller; large
Advantages of ranges/grades:
some flexibility within controls; relatively stable organization design; recognition via titles or career progression; midpoint controls, comparatives; controls designed into system; give managers "freedom with guidelines" ; to 15r0 percent range-spread
____ ____ is where different types of pay strategies may cause different types of people to apply to and stay with an organization (indirect)
sorting effect
Another way to translate pay-level policy into practice is to simply ________ above or below the regression line that an employer intends to match and then draw a new line at this higher (or lower) level.
specify a percent
_____ (also called shareholders) have a particular interest in executive pay
stockholders
A ______ _____ focuses on those compensation choices that help the organization gain and sustain competitive advantage
strategic perspective
____ refers to the fundamental directions that an organization chooses. An organization defines its strategy through the trade-offs it makes in choosing what (and what not) to do.
strategy
______: job evaluation supports work flow in two ways. It integrates each job's pay with its relative contributions to the organization, and it helps set pay for new, unique, or changing jobs
supports work flow
Karl Marx said that employers unfairly pocketed the ____ ____ created by the difference between use and exchange value
surplus value
A _____ is the systematic process of collecting and making judgements about the compensation paid by other employers.
survey
A low-cost , customer-focused business strategy such as that followed by McDonald's or Walmart may be supported by a closely ______ structure. Jobs are well defined with detailed tasks or steps to follow. Differences in pay among jobs are very small
tailored
The industry in which an organization competes influences the ________ used. Labor intensive industries such as education and health care tend to pay lower than technology intensive industries such as petroleum or pharmaceuticals, whereas professional services such as a consulting firms pay high.
technology
pay model: 1) _____ _______ _______, 2)-__________________, 3____________
the compensation objectives; the policies that form the foundation of the compensation system; the techniques that make up the compensation system
three common bases for today's pay structure:
the content of work; the skills and knowledge required to perform it; its relative value for achieving the organization's objectives
a more academic definition of culture is:
the mental programming for processing information that people share in common --> people who share a mind-set might agree on what size pay differntial is fair
two types of markets:
the quoted-price market and bourse
Objectives serve several purpose: _____________________
they guide the design of the pay system *policies and techniques are the means to reach the objectives + serve as the standards for judging the success of the pay system
Broad banding encourages employees to seek growth and development by moving cross-functionally and this assumption is that ___________________.
this cross-fertilization of idea will benefit the organization --> career moves within bands are more common than between bands
If __________ (and _______) are not willing to seriously consider any changes suggested by job analysis, the process is probably not worth the bother and expense.
top managers; unions
____ ____ include pay received directly as cash (base, merit, incentives, cost of living adjustments) and indirectly as benefits (e.g.. pensions, medical insurance, programs to help balance work and life demands, brightly colored uniforms).
total compensation
______________ includes total cash plus stock options and benefits. reflects the total overall value of the employee (performance, experience, skills, etc) plus the value of the work itself. THIS can risk high fixed costs
total compensation
total returns are categorized as ______ _______ and _____ _____.
total compensation; relational returns
The way to increase reliability in a job analysis is to _______ and _______________.
understand; reduce sources of differences
________ external conditions require pay structures that support agile organizations and flexible people
unpredictable
______ increases in an employer's turnover in specific jobs may require focused market survey to find out if market changes are occuring
unusual
______ reflects the value of goods or services an employee produces in a job
use value
If job analysis does this in a reliable, valid, and acceptable way and can be used to make pay decisions, then it is considered ____.
useful
______ refers to the practicality of the information collected.
usefulness
If several job incumbents, supervisors, and peers respond in similar ways to questionnaires, then it is more likely that the information is _____.
valid
________- refers to the process by which goods and services are delivered to the customer
work flow
Merit increase budgets have been around ___ percent.
3
objectives
efficiency, compliance, fairness
pay can influence employee _____ and ________ in two ways.
motivation; behavior
The underlying assumption of efficiency wage theory is that ________________.
pay level determines effort
a group of tasks performed by one person makes up a ______.
position
Three conventional pay-level policies:
to lead, to meet, to follow competition
______ refers to openness and communication about pay
transparency
_______ helps gain acceptance by employees and managers, is easier to understand and can withstand a variety of challenging to the pay structure
work-related documentation
Theories of labor markets usually begins with four basic assumptions:
1. Employers always seek to maximize profits 2. people are all the same and therefore interchangeable; a business school graduate is a business school graduate is a business school graduate 3. the pay rates reflect all costs associated with employment 4. the markets faced by employers are competitive, so there is no advantage for a single employer to pay above or below the market
both pay-level and pay-mix decisions focus on two objectives:
1. control costs and increase revenues 2. attract and retain employees
Designing a survey requires answering the following questions:
1. who should be involved in the survey design? 2. how many employers should be included? 3.which jobs should be included 4. what information should be collected?
Major decision in job analysis:
1. why are we performing job analysis? 2.what information do we need? 3.how should we collect it? 4.who should be involved? 5.how useful are the results?
External competitiveness has two major consequences:
1.operating expenses 2. employee attitudes and work behaviors
The _____________, methodology considers work to be a process in which knowledge/skill/ability is applied to various issues and challenges in order to create an output that is of value to the organization.
Hay Group Guide Chart
______ send the message that the organization values the differences in work content, individual skills, and contributions to the organization.
Hierarchies
At the business unit level, the choice shifts to:
How do we gain and sustain competitive advantage in this business?
At the function level the strategic choice is:
How should total compensation help this business gain and sustain competitive advantage?
The ________ is where the lines for labor demand and labor supply cross.
market rate
_____________, available from the US Bureau of Labor Statistics, uses a compensable factors knowledge, job contorls/complexity, contacts, and physical environment and can be applied to a wide range of jobs.
National Compensation Survey (NCS)
Evidence shows that in manufacturing , _______ is positively correlated with hourly wage level.
productivity
_____when organization performance declines, performance-based pay plans do not pay off; there are no bonuses; and the value of stock declines - with potentially negative effects on organization performance.
Vicious cycle
_______is the list of knowledge, skills, abilities, and other characteristics that are necessary for an individual to have to perform the job
job specification
The important factor influencing the internal pay structure is its ________ ___ ____ _______ ______.
acceptability to the employees involved
A common first step is to check the ______ of the job matches, and then check for _______, _____, and the _________.
accuracy anomalies; age of data; nature of organiations
_____ market data are increasingly important as organizations move to more ____ work descriptions that focus on the person's skills as well as the job.
accurate; generic
_______ orders jobs on the basis of internal factors (reflected in job evaluation or skill certification)
job structure
To be sure that all relevant aspects of work are included in the evaluation, an organization may start with a sample of _______________ .
benchmark (key) jobs
In cases where the content (job description) of an organization's job does not sufficiently match that of jobs in the salary survey , an effort can be made to quantify the difference via ________________.
benchmark conversion
In the ____ total compensation projects, each firm sees the survey as a customizable database project where they can specify the characteristics of the employers and jobs to analyze
best
___________ are practices that can be applied universally across situations - it is difficult to find out what is the best choice
best-pay practices
If job holders and managers are dissatisfied with the initial data collected and the process, they are not likely to __________________________________________.
buy into the resulting job structure or the pay rates attached to that structure
Why employer would pay more than what theory states is the market-determined rate:
compensating differentials, efficiency wage, and signaling
______ refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship
compensation
in most organizations, the responsibility for managing the survey lies with the ____________. but because compesnation expenses have a powerful effect on profitability, including managers and employees on the task forces make sense. The ones who usually design or provide the survey are usually consulting companies.
compensation managers
_____ _____ _____ systems often with little regard to whether any of these practices fit the organization or its employees and add value
competency-based pay system
Survey data are used as part of employers' broader efforts to gather ________.
competitive intelligence
_____ structure, several levels of job titles are removed so that all employees at all levels become responsible for a broader range of tasks but also have a greater freedom (with less close supervision) to determine how best to accomplish what is expected of them --> more egalitarian and it sends the message that all employees are valued equally, allowing them to excerise independent thought, initiative, and action
delayered
______ can cut unnecessary, noncontributing work, but it can also add work to other jobs, enlarging them
delayering
The _____ side focuses on the actions of the employers: how many new hires they seek and what they are willing and able to pay new employees.
demand
internal labor markets consists of the rules and procedures that 1. ____________________________ 2. ____________________
determine then pay for the different jobs within a single organization; allocate employees among those different jobs
Skill-Based plans establish single _____ for each skill level regardless of performance or seniority. an d many collective bargaining contracts use this too. usually the rate corresponds to some midpoint of the survey.
flat rate
There is consistent evidence that ____ organizations tend to pay more than ___ ones.
large; small
_____ refers to the movement of jobs to locations beyond a country's borders.
offshoring
If women had the same education, experience, and union coverage as men and also worked in the same industries and occupations, the ratio would increase, but most evidence suggests that no more than ______ of the gap would disappear. Thus, even under such a best-case scenario the ratio of women's earnings to men's would be about ____ percent, still leaving a sizable gap.
one-half;90
About ____-____ to ____-_____ of the organizations report that employees raise these comparisons frequently or constantly
one-quarter;one-third
Satisfaction with pay is directly related to the pay level: more is better but the sense of fairness is also related to how _____ are paid.
others
_____ refers to the various types of payments, or pay forms, that make up a total compensation.
pay mix
The pay structure has two aspects:
the pay-policy line and pay ranges
External competitiveness decisions - both how much and what forms - have twofold effect on objectives: 1. _________ 2._________-
to ensure that the pay is sufficient to attract and retain employees- if employees do not perceive their pay as competitive in comparison what other organization are offering for similar work, they may be more likely to leave; to control labor costs so that the organization's prices of products or service can remain competitive in a global economy
_____ is base plus bonus . Total cash measures reveals competitors' use of performance - based cash payments but not all employees may not receive incentives, so it Amy overstate the competitors' pay and does not include long term incentives
total cash
Managers using bands have only a _______ limiting them.
total salary budget
According to _______ ______, all players will play better in the first tournament, where the prize differentials are larger. Thus, the greater the differential between your salary and your boss's salary the harder you will work. One study reproted that giving larger raises with a promotion increases effort and reduces absenteenism.
tournament theory
jobs that are susceptible to outsourcing when input and outputs can easily be _________________, ____________________, ___________, and _______________.
transmitted electronically; little interaction with other workers is required; little local knowledge is required; work can be routinized
Diversity in the work can be thought of in terms of depth (______) and breadth (______).
vertically; horizontally
_________________ was an effort to end the economic and social chaos resulting form the death of one third of the population from plague - supported the existing class structure-- where shortages were deined
"just wage" doctrine
The underlying purpose of each phase of the process for both the job- and person- based structures:
1. collect, summarize work content information; 2. determine what to value; 3. assess relative value 4.translate into structure
Point (factor) methods have three common characteristics:
1. compensable factors, with 2 factor degrees numerically sacred, and 3 weights reflecting the relative importance of each factor. Where the location in the pay structure, is determined by the total points assigned to it.
Factors that affect decisions on pay level and pay mix:
1. competition in the labor market for people with various skills 2. competition in the product and service markets, which affects the financial condition of the organization, 3.characteristics unique to each organization and its employees such as its business strategy, technology, and the productivity and experience of its workforce
Major decisions in job evaluation process:
1. establish the purpose(s), 2. decide on single vs multiple plans 3.choose among alternative methods 4.obtain involvement of relevant stakeholders 5.evaluate the usefulness of the results
two strategic choices are involved to fit or tailor the pay structure to be internally aligned:
1. how specifically tailored to the organization's design and work flow to make the structure; 2. how to distribute pay throughout the levels in the structure
There basic types of data typically are requested for surveys:
1. information about the organizations 2. information about the total compensation system 3. specific pay data on each incumbent in the jobs under study
sources of competitive advantage: three tests -
1. is it aligned? 2. does it differentiate? 3. does it add value?
Two critical use of job analysis:
1. it establishes similarities and differences in work contents of the jobs 2. it helps establish an internally fair and aligned job structure
To make decisions about pay level, mix, and structures, a relevant labor market must be defined that includes employers who compete in one or more of the following areas:
1. the same occupation or skills 2. employees within the same geographic areas 3. the same products or services
There are three points "so whats"?
1.reality is complex and theories are abstract. It is not that our theories are useless. They simply abstract away detail, clarifying the underlying factors that help us understand how reality works. Theores of market dynamics, the interaction of supply and demand, form a useful foundation; 2. The segmented sources of labor means hat determining pay levels and pay mix increasingly requires understanding market conditions in different, even world wide locations. 3. managers also need to know the jobs required to do the work, the tasks to be performed, and the knowledge and behaviors required to perform them (sound like job analysis?) so that they can bundle the various tasks to send to different locations
Pay levels at more profitable firms were about ____ percent greater than at firms with lower profits.
15
________ holds that employers deliberately design pay levels and pay mix as part of a strategy that signals to both prospective and current employees the kinds of behaviors that are sought.
Signaling theory
The results from these comparisons depend in part on the ________- of employee knowledge of other employees' jobs, internal structures, and external pay levels.
accuracy
______ tells us that companies must devote resources to systems that monitor worker effort or output
agency theory
The pay data are usually updated (a process often called ______ or ______) to forecast the competitive rates for the future data when the pay decisions will be implemented.
aging; trending
how people are paid affects their _____ at work, which affects an organization's _______.
behaviors; sucess
If the purpose of the survey is to price the entire structure, then __________ jobs can be selected to include the entire job structure - all key functions and all levels, just as in job evaluation.
benchmark
__________ is one way for matching benchmark jobs and is used for jobs in different organizations can be compared on their job evaluation points and the distribution of points among the compensable factors. Other surveys may just ask for a degree of match
benchmark conversion
Typically, a job evaluation plan is developed using _______, and then the plan is applied to the remaining _________.
benchmark jobs; non benchmark jobs
EBay allows haggling over the terms and conditions until an agreement is reached; Ebay would be considered as a _______
bourse
The_______ performed in some multinational conglomerates such as GE mirrors the occupations in the entire nations - like different industries.
breadth of work (horizontal)
_____ consolidates as many as four or five traditional grades into a single band with one min and one max; because the band encompasses so many jobs of differing values a range midpoint is usually not used
broad banding
_______ refers to the work performed in a job and how it gets done (tasks, behaviors, knowledge required) --> skills required, complexibity of tasks, problems solving and or responsiblity
content
_____ refers to a wide range of factors, including legal and regulatory requirements, cultural differences, changing workforce demographics, expectations, and the like.
context
Different people have different perceptions, which may result in ___________________________.
differences in interpretation or emphasis
The pay differences among levels are referred to as ____________
differentials
those that seek to provide a unique and/or innovative product or service at a premium price are said to follow a ______ strategy
differentiation
_______ _______ (i.e., a lack of pay for performance, either through within-grade or between-grade pay growth) can mean the more knowledgeable and high - performing employees - the stars- feel underpaid.
equal treatment
____ means the organization cares about how its results are achieved.
ethics
map a total compensation strategy
objectives, alignment, competitiveness, contributions, management
The ______ on the other hand. is anchored by the organization's external competitive position and reflected in its pay-policy line
pay structure
A _____________ tries to ensure that an organzation's wage costs are approximately equal to those of it is product competitors, and that its ability to attract applicants will be approximately equal to its labor market competitors.
pay-with-competition policy
The statistical approach is often labeled as the _____ to differentiate it from the _____________.
policy capturing; committee a priori judgement approach
Reducing the number of titles may reduce the opportunities to reinforce ______ employee behavior.
positive
____-____ _____ shifts the comparison of today's initial offers to consideration of future bonuses, merit increases, and promotions.
present-value perspectives
Since conventional method is opened to bias and favoritism, and the huge amount of time the process takes, conventional methods have given way to more ________________ (and __________) data collection.
quantitative; systematic
according to the ________ employees who are more central to strategy execution in terms of their criticality in obtaining resources from the environment would be expected to be paid better relative to the market than would other employees.
resource dependency theory
Employees may see compensation as a ___ __ __ _____ between their employer and themselves, as an _____ for being an employee of the company, as an incentive to decide to take/stay in a job and invest in performing well in that job, or as a reward for having done so.
return in an exchange; entitlement
management means ensuring that the ____ _____ get the ____ ____ for ________________________.
right people; right pay; achieving the right objectives in the right way
____ is how tightly all the rates are clustered around the mean
standard deviation
Some alternative in building pay-mix is a focus on _______ from work (beyond financial returns) and offering people choices among these returns. It would be considered more a fuzzy policy.
total returns
Reliability is a necessary, but not sufficient condition for_____.
validiity
_______ refers to the worst of the work: its relative contribution to the organization objectives --> relative contribution of these skills, tasks, and responsiblities to the organzation's goals
value
Because incentives are one-time payments, they do not permanently increase labor costs. When performance delinces, incentive pay automatically declines, too. Consequently, incentives (and sometimes merit bonuses also) are frequently referred to as _____ ____.
variable pay
Several studies have found that the use of ______ is related to an organization's improved financial performance but that pay level is not.
variable pay
The distribution of rates around a measure of central tendency is called _________.
variation
Final step in the job analysis process is to _____ the accuracy of the resulting job descriptions
verify
_____ ____ _____ programs that help employees better integrate their work and life responsibilities include time away from work (vacations, jury duty), access to services to meet specific needs (, and flexible work arrangements.
work/life balance
The majority of uninsured in the US are from _____ ____.
working families
