Exam #2 Study Guide

Least expensive method for doing job evaluation is?

Job Ranking

Book definition of compensable factors

Job attributes that provide the basis for evaluating the relative worth of jobs inside an organization. A compensable factor must be work-related, business-related, and acceptable to the parties involved.

the majority of applications of skill-based pay have been in?

Manufacturing industries

Definition of the marginal product of labor and how it works

The additional output associated with the employment of one additional human resource unit, with other factors held constant.

What is a crucial factor that affects the perception of fairness of a skill-based plan?

The design of the certification process.

What happens if markets are incorrectly defined?

The estimates of competitors' pay rates will be incorrect and the pay level and pay mix inappropriately established.

First labor market theory assumption

is that employers seek to maximize profits. Therefore, the employer will continue to hire until the marginal revenue generated by the last hire is equal to the costs associated with employing that person.

Compensable factors, skill blocks, and competency sets are used for?

determining what to value

Recognize an example of a bourse

eBay, paying for a top athlete

Most factors have ___ number of degrees

four to eight

Major decisions in job evaluation

- To establish purpose of evaluation. - Decide whether to use single or multiple plans. - Choose among alternative approaches. - Obtain involvement of relevant stakeholders. - Evaluate plan's usefulness.

Steps and order in doing the point method

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 nonbenchmark jobs. 8: Develop online software support.

A ___________ approach controls costs by paying only as much as the work performed is worth

Job-based

Managers whose employees use ___________ plans focus on placing the right people in the right job

Job-based

regardless of any greater skills the employee may possess.

Job-based plans

What is linked to high pay levels?

Labor costs

A study of 400 compensation specialists reveal that:

Market data had a substantially larger effect on pay decisions than job evaluation data.

Recognize true/false comments about marginal revenue product model

Must do 1) Determine the pay level set by market forces; 2) determine the marginal revenue generated by each new hire. Oversimplifies the real world. It helps separate the contributions of labor from those of other resources.

External competitiveness

Refers to the pay relationships among organizations; the organization's pay relative to its competitors

Among pay-mix alternatives the percentage of base pay is highest in a __________

Security of commitment policy

An employee's focus in a job-based approach is to?

Seek promotions to earn more pay

Employees in a multi-skill system earn pay increases by?

acquiring new knowledge

Competency indicators

observable behaviors that indicate the level of competency within each set

Compensating differentials labor demand theory - what does it state?

predicts that work with negative characteristics requires higher pay to attract workers.

Premise Human Capital Theory is based on

the fact that higher earnings flow to those who improve their potential productivity by investing in themselves.

Exchange value

the price of labor (the wage) determined in a competitive market; in other words, labor's worth (the price) is whatever the buyer and seller agree upon. Its external market value.

Pay level - recognize true and false statements about

Four True statements,Pay level is directly proportional to labor costs; the more you pay the more it costs.Pay level is not the same across all organizations for the same job.The higher the pay level to what competitors pay, the higher their relative cost to provide relative products or services.Pay level is not independent of the number of employees in an organization

The roots of job-based pay structures are traced to?

Frederick Taylor

You need to recognize advantages of skill-based pay plans

- Generally well accepted by employees - Ease of communication and understanding - Higher productivity - more positive employee attitudes

Recognize true/false statements about the relationship between employer size and its ability to pay?

- Large organizations tend to pay more than small ones. - Talented individuals have a higher marginal value in larger organizations.

Know the groups of competencies and be able to recognize examples within a specific group

1: Skills (demonstration of expertise) 2: Knowledge (accumulated information) 3: Self-concepts (attitudes, values, self-image) 4: Traits (general disposition to behave in a certain way) 5: Motives (recurrent thoughts that drive behaviors)

How the alternation ranking method works

A job evaluation method that involves ordering the job description alternately at each extreme. All the jobs are considered. Agreement is reached on which is the most valuable and then the least valuable. Evaluators alternate between the next most valued and next least valued and so on until the jobs have been ordered.

Recognize true or false comments on a job evaluation plan

ALL TRUE - Developed using benchmark jobs, then applied to remaining nonbenchmark jobs. - Different job evaluation plans generate different pay structures. - Should be highly stable over time. -Provides a framework for exchange of views.

Shared choice policy

An external competitiveness policy that offers employees substantial choice among their pay forms

How marginal revenue and wage rate are connected

Because other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the marginal revenue os the last hire is equal to the wage rate for that hire.

Reason why skill-based plans have maximum flexibility

Because the work is often in teams and has multiskills, therefore requiring flexibility

Disadvantages of the point method according to the text

Can become bureaucratic and rule-bound.

The job evaluation system that most resembles a book case with many shelves?

Classification

A job description is compared to class descriptions in the ________ of job evaluation (which method?)

Classification Method

Which is least likely to be used in establishing skill-based certification methods?

College degree

Definition of policy capturing in the context of job evaluation

Compensable factor importance weights are inferred using statistical methods such as regression analysis.

Underlying assumption in the assessment of job content

Content has intrinsic value outside external market.

What are core competencies and what are they often linked to?

Core competencies: Basic knowledge and abilities employees must acquire or demonstrate in a competency-based plan in order to successfully perform the work, satisfy customers, and achieve business objectives. They are often linked to mission statements that express an orgs. philosophy, values, business strategies, and plans.

Skill-based pay plans work best in organizations using _____ strategy

Cost-cutter

The organization specific group for classifying competencies generally includes _________.

Customer orientation

Recognize true or false comments about the usage of multiple plans vs. single job evaluation plans' characteristics of benchmark jobs

NOT TRUE: A single universal plan is acceptable to employees if the work covered is highly diverse. TRUE: Employers rarely evaluate all jobs in the organization at one time. Many employers design different evaluation plans for different types of work. Typically, a related group of jobs is used for evaluation.

Lead policy

Organization intentionally sets pay structures and targets pay levels above the market rate

Recognize an example of the demand side of labor

Pay level offered by an employer

The most commonly used job evaluation method in the United States and Europe

Point Method

Which job evaluation method uses compensable factors?

Point Method

Evidence shows that in manufacturing _________ is positively correlated with hourly wage level

Productivity

If Company A raises its pay rate by one dollar per hour to hire additional workers and competitors immediately match the increase , what will be the most likely result?

The labor costs for Company A will increase, but it will be unable to hire additional workers.

Definition of Job Evaluation

The process of systematically determining the relative worth of jobs to create a job structure for the organization.

________ puts a lid on the maximum pay level and employer can set;

The product market

In what condition would product market competitor's data be given more weight than data from labor market competitors?

The supply of labor is responsive to price changes.

Connection of wage and revenue

Theory that workers will be hired up to the point when the marginal revenue product is equal to the wage rate???

What do competency sets do?

They translate each core competency into action.

___________ reason makes competencies a risk foundation for a pay system

Vagueness and subjectivity

Definition of pay level

refers to the average of the array of rates inside an organization.

Research shows that _______ factor(s) account(s) for 98 to 99 percent of the variance in job evaluation plans

three

Routine work is also termed?

transactional work

The pay mix alternative in which the percentage of benefits is likely to be the highest is known as _________.

work/life balance

The reliability of job evaluation techniques is measured by?

Determining if different evaluators produce the same results.

In the context of job evaluation the two common ways of ranking are?

Alternation ranking and paired comparison

The process of identifying competencies in person-based structures resembles identifying _______ as part of job evaluation in job-based structures

Compensable factors

Who is most likely to conduct job evaluations of senior management jobs?

Compensation managers

advantages of a lead policy-level

Competitive advantage. reduce turnover and absenteeism. higher performance

Definition of "scaling"

Determining the intervals on a measurement instrument.

According to Frito-Lay's list of competencies for managerial work, the behavior of modeling, teaching, and coaching company values is linked to the _______ competency dimension?

Doing it the right way

Wages tend to be lowest in which of the following industries?

Education and Healthcare

Definition of the term "camper" in a skill-based pay system

Essentially an employee who is not interested in giving up the job that they are doing.

Focus on information in the text on classification and its own evaluation of its pros and cons

Essentially labels jobs like books. Can be troublesome when jobs from several job families are covered by a single plan. Although greater specificity of the class definition improves the reliability of evaluation, it also limits the variety of jobs that can easily be classified.

Competencies are derived from the __________ beliefs about the organization and its strategic intent

Executive leadership's

Most widely used point method job evaluation

Hay Plan

From provided examples, be able to identify who among them is examining the validity of a job evaluation

He's gonna give us examples?

Disadvantages of the ranking method

In the long run results are difficult to defend and costly solutions may be required to overcome the problems created.

Types of markets like bourse and quoted market

Quoted price: EX) Stores that label each item's price Bourse: EX) Stock exchange, bidding (eBay)

Correct sequence of events in the context of internal alignment

Job description>Job evaluation>job structure

An assumption held by the labor supply model about the behavior of potential employees

Job seekers do not face barriers to mobility.