LER Chapter 3

Delayering

A major work change where entire levels of work are removed.

Which of the following is a difference between the layered and the delayered pay structure?

As opposed to the layered structure, employees are given more freedom and responsibility in the delayered structure.

How do most organizations motivate employees to apply for higher-level positions?

By associating promotions with money

How do employees judge the equity of their pay?

By making several comparisons

Which of the following are the aspects of the pay model that influence the impact of any internal structure on organization performance? (Check all that apply.)

Competitiveness Management Employee performance

Which of the following processes reflect the changes that are occurring in the design of organizations? (Check all that apply.)

Delayering Outsourcing

Identify the economic pressures that influence the internal structure of an organization. (Check all that apply.)

Differences in productivity Supply and demand for products and services Supply and demand for labor

External factors

Economic pressures and government policies, laws, and regulations

Which of the following requirements should be met by an organization's pay structure? (Check all that apply.)

Employees should be able to view the way in which their work is linked to the work of others and the organization's objectives. It should be fair to employees.

Which of the following is true according to tournament theory?

Greater differentials between employees' salary and the boss's salary motivate employees to work hard

Identify a drawback of egalitarian pay structures.

High-performing and more skilled employees may feel underpaid.

Identify the true statements about the impact of internal pay structures. (Check all that apply.)

High-performing employees resign less under hierarchical systems when they have knowledge of the pay structure. High-performing employees resign less under more hierarchical systems when their pay is based on performance rather than seniority.

Identify the strategic choices involved in tailoring a pay structure that is internally aligned. (Check all that apply.)

How specific the tailoring of the pay structure should be to the organization's design and work flow How pay should be distributed throughout the levels in the structure

According to research, under which of the following conditions are pay procedures more likely to be viewed as fair? (Check all that apply.)

If they are applied to all employees in a consistent manner If appeals procedures are included If accurate data are used If employees were involved in the process

Which theory sees organizations as responding or conforming to normative pressures in their environments in order to gain legitimacy and to minimize risk?

Institutional theory

Which of the following is true of an organization that has many levels?

It can offer more promotions than an organization with fewer levels.

Identify a true statement about the "change-and-congeal" process of establishing pay structures.

It does not yet support the continuous changes occurring in the present economy.

Identify the consequences of deviations from acceptable wage structures. (Check all that apply.)

More grievances Diminished motivation

Which of the following are forbidden by equal employment legislation in the United States from serving as the criteria for setting pay differentials? (Check all that apply.)

Race National Origin Gender Religion

What are the consequences of an internally aligned structure? (Check all that apply.)

Reduced pay-related work stoppages Increased experience Reduced pay-related grievances

Use Value

Refers to the value of goods or services produced by an employee in a job

Exchange value

Refers to the wage agreed upon by the employer and employee for a job

Which of the following do most unions demand as a way to promote solidarity among members? (Check all that apply.)

Seniority-based promotions Small pay differences among jobs

Which of the following statements highlights the influence of cultures and customs on internal pay structures?

Shared mind-sets may judge what size pay differential is fair.

Organization factors

Strategy, technology, and human capital

What did Matt Bloom discover about the effect of pay differences on performance based on eight years of data on major league baseball?

Teams with small differences in member salaries did better than those with large differentials.

Identify recent examples of "benchmarking" behavior by organizations. (Check all that apply.)

The emphasis on teams The rush to outsource jobs

Identify a difference between the layered and the delayered pay structure.

The layered structure is more hierarchical than the delayered structure

Which of the following are used to describe pay structure? (Check all that apply.)

The number of levels The criteria used to determine the differences in pay between different levels The differentials in pay between different levels

Which of the following are true of aligned pay structures? (Check all that apply.)

They are fair to employees. They support the way work gets done.

Mires Global Bank Corp. (MGBC) is an international financial institution. Investment bankers work for different branches of the bank across the world, including, Beijing, New Delhi, Berlin, and Chicago. Identify a true statement about the jobs of MGBC investment bankers in these four cities.

They have different exchange values.

Identify a true statement about the Equal Pay Act and the Civil Rights Act.

They require "equal pay for equal work."

True or false: In the real workplace, pay structures follow either a job-based structure or a person-based structure.

This is false. In the real workplace, pay structures include both job-based and person-based structures and not either one.

True or false: Pay is inversely proportional to the value added by skills and experience.

This is false. Pay is directly proportional to the value added by skills and experience. The greater the value added by the skills and experience, the more pay those skills will command.

Identify the most common basis for formulating a company's internal structure.

Work content and its value

The pay differences among levels are referred to as

differentials

Differentials are used to _____.

encourage people to work for promotion to a higher-paying level

Refers to the wage agreed upon by the employer and employee for a job

exchange value

A characteristic of any pay structure is its _____.

hierarchical nature

Internal alignment is often known as _____ _____.

internal equity

Marginal Productivity

is a theory that was put forth in the last half of the 19th century and that countered the views of Karl Max by stating that employers pay use value.

In the context of pay structures, a _____ focuses on the work content—tasks, behaviors, responsibilities.

job-based structure

In 14th-century western Europe, the Christian church endorsed a(n) _____ _____ _______ that denied market forces such as skills shortages as appropriate determinants of pay structures.

just wage doctrine

A study that used hockey teams to examine the influence of pay differences on performance found that _____.

larger differentials based on performance generated positive sorting effects

A company's pay structure should clarify the relationship between each job and the company's objectives. This is an example of _____.

line-of-sight

Tournament Theory

players will play better in a tournament where the prize differentials are large than in a tournament where the prize differentials are small.

Internal Labor Markets

refer to the rules and procedures that determine the pay for the different jobs within a single organization and allocate employees among those different jobs.

Pay Structure

refers to the array of pay rates for different work or skills within a single organization.

Internal Alignment

refers to the pay relationships among different jobs or skills or competencies within a single organization.

Pay structures undergo changes due to external factors such as _____.

skill shortages

Equity Theory

states that people compare the ratio of their own outcomes (e.g., pay, status, enjoyment) to inputs (e.g., effort, ability, performance) with the outcome to input ratio of others (internal, external, or themselves in a past or future situation).

As opposed to hierarchical pay structures, egalitarian pay structures support _____.

the equal treatment of employees

A contemporary U.S. example of legislation directed toward pay differentials is _____.

the living wage

The hierarchy of a pay structure refers to _____.

the number of levels and reporting relationships

True or false: A company's pay structure should support its work flow.

true

Refers to the value of goods or services produced by an employee in a job

use value

The process by which goods and services are delivered to the customer is referred to as

work flow

Human Capital

—the education, experience, knowledge, abilities, and skills required to perform the work—is a major influence on internal structures.

True or false: While referring to pay, the terms equity and equal can be used interchangeably.

This is false. The terms equity and equal are not interchangeable. Pay can be unequal across employees, but it can nevertheless be perceived as equitable or fair.

True or false: An organization's internal pay structure must comply with the laws and regulations of the country in which the organization operates.

This is true. Just like any pay decision, an organization's internal pay structure must comply with the regulations of the country in which the organization operates.

True or false: Unions, stockholders, and even political groups are involved in the determination of internal pay structures.

This is true. Unions, stockholders, and even political groups are involved in the determination of internal pay structures. Unions are the most obvious case.

A disadvantage of egalitarian pay structures is that they may result in a _____.

negative sorting effect