Base Pay Administration and Pay for Performance - GR4/C4

What is the midpoint differential between grades for professional, professional management?

8% to 15%

What would be the Max of pay range if the midpoint differential is 20% of midpoint 70,000

84,000

What is the general increase?

An identical pay raise either in a flat rate or as a percentage of salary given to all eligible employees

Where does base pay fit within the organization's business strategy?

An organization must first understand its compensation strategy and philosophy

Why should market data be collected for market pricing?

Analyze pay competitiveness by collecting information on the going rate for benchmark jobs. Identify pay trends by watching movement of salaries in the labor market. Identify competitive pay practices by gathering information on practices, programs, policies and procedures.

What are the timing of increases?

Anniversary date and focal date

What is lag the market?

At the beginning of the year, the company will pay equal to current market level, then will lag the market as the year progresses.

What are performance measurement systems?

Balance scorecard, business excellence model, shareholder value added, activity based costing and cost of quality, competitive benchmarking

Which of the following is one of the performance management systems used today?

Balanced Scorecard

What is the definition of Base Pay?

Base pay is the fixed compensation paid to an employee for performing specific job responsibilities. It typically is paid as a salary, hourly or piece rate.

What are the elements of pay structure?

Base pay policy line, number of pay structures, number of grades, ranges spreads, overlap, midpoint-to-midpoint differentials

What are the three interrelated components of pay structure design considerations?

Base pay policy line, number of pay structures, number of pay grades or bands.

What are the components of base pay structure?

Base pay policy, Pay grade/bands, Midpoint differentials, pay range, Number of pay structures.

What is the data required for the market-based salary budget?

Benchmark job data, historical competitive pay movement, anticipated competitive pay movement, company pay policy, assume you want to pay 5% ahead of competition

Programs that any employer uses to supplement the cash compensation an employee receives, which element is this?

Benefits

What are the reason for geographic differential?

Better fit of pay to local markets, Most commonly used for hourly positions

What are the advantages of using a compensation philosophy?

Bounce new ideas, proactive evaluation, possible needs

What are the activities regarding the communication of compensation plan during a transaction HR professional will do?

Build, manage and participate on teams, perform due diligence, plan the integration process early

Cash provided by an employer to an employee for services rendered, which element is this?

Compensation

What is Salary?

Compensation paid on a weekly, biweekly or monthly basis rather than by the hours

Which program should be designed in a way that support the business strategy?

Compensation program

Which statement describe best the variable pay?

Compensation that is contingent on discretion, performance or results achieved

Who can conduct the salary audit?

HR and design team, senior management, operations management, employees, outside consultants

Who play the major role in the integration of total rewards plans and cultural alignment?

HR professionals

Why is it important for HR to be involved early in the M&A process?

HR professionals need to align process and activities to the new organization's business strategy.

What are the reason for Expatriate Pay?

Hardship for working outside of their home country.

When designing any pay structure, what do compensation professionals need to consider?

How an organization's compensation strategy will affect design elements and the competitiveness of midpoints or control points.

What features should be taken into consideration while conducting the perception audits?

Identify various interested parties, measure perceptions, analyse gaps, identify potential fixes to programs or policies

Why the communication is very important in merit pay?

If it is inadequate, employee will not understand what they are being measured against and what is important to the organization

What are the reasons to adopt broadbanding in pay structure?

Improve competitive advantage, support a new culture/climate, support flatter organizational structure, promote broader view of work, increase flexibility of pay practices.

Why is communicating pay actions critical to the success or failure of a base pay program?

It reinforce the decision to join and remain with an employer.

What is Broadbaning in pay structure?

It results in a pay structure that consolidates a large number of pay grades and salary ranges into much fewer broadbands with relatively wide salary ranges, typically with 100% differences between minimum and maximum or more.

What is the challenge in market pricing analysis?

Making a sound decisions about the data that needs to be extracted from a particular source and then interpret the data appropriately when comparing it to other sources.

What are the factors affect the merit pay?

Managerial factors, organizational factors individual employee factors

What component should be covered in compensation philosophy?

Market position, basis of job value, pay mix, reward focus, structure, administration

Which pay structure approach is responsive to market changes?

Market-based approach

Which method is job evaluation is used for management jobs?

Market-driven approach

Calculate Maximum and midpoint differential? Min 22186, mid 25515, midpoint upper grade 26791

Max 28844, Midpoint Diff 5%

What is the formula of midpoint?

Maximum+minimum/2

What is the formula of Range Spread?

Maximum-Minimum/minimum

What are the considerations of Single-rate Pay?

May not reflect skill level on job, Does not consider individual performance, Does not consider seniority

What are the individual factors affecting the success of merit pay?

Measurable difference in performance, Performance appraisal, Employee belief in fairness of appraisals and increases

What features should be taken into consideration while performing the technical audits?

Measure actual results against intended results, identify sources of malfunctioning, identify potential fixes, review program fairness and pay delivery

What is the formula of midpoint differential?

Midpoint of higher grade - midpoint of lower grade/midpoint of lower grade

What is the formula of minimum range?

Midpoint/1+0.5 range spread Or Maximum/1+range spread

Calculate minimum, midpoint and maximum: Midpoint higher to higher grade is 31248, Midpoint higher grade 28934, Midpoint differential 8%

Minimum 23297, Midpoint 26791, Max 30286

What is the formula of maximum range?

Minimum x (1+range spread)

What are the career stages?

New to role (does not fully meet standards), Emerging (meet standards), Established (exceeds standards), Expert (cosistently outstanding)

Does the market based approach to pay structure development require the job evaluation points?

No

Does the range penetration focus on the middle or midpoint of range?

No

If the cost of living is very high, should high wages be paid?

No

Does a job evaluation is required in Market-Based Approach?

No job evaluation points required

Define continuum approach?

No job grades and internal equity is the priority

How the Base Pay Policy Line is developed?

Plot internal value against current salaries, Plot internal value against market data, Compute the trend lines, Reconcile with compensation strategy

Which method is job evaluation is used for hourly office jobs?

Point factor plan

What does determines the compensation for the position in point factor approach?

Point value

What are the causes of demotions?

Poor employee performance, Recoganization or reengineering, employee request

What is essential while designing the compensation program?

Program should support the organization's business strategy

What are the examples of Pay Action?

Promotion, merit, general, market adjustment, demotion, reclassification

Why the communication is important in communicating pay actions?

Provide information, improves emotional environment, clarifies expectations, Increase awareness, Reinforce decision to join and remain with the company, Employee expect honest, thorough, understandable and relevant communication, management understanding

What are the suggested actions if employees are paid below the range minimum?

Raise pay to new minimum when range moves, raise pay to minimum, separate merit budget from adjustment to minimum, evaluate to see if position is properly graded

What is compensation philosophy?

Statement of what the organization believes about how people should be paid. It should support the business strategy and be a good fit with the organization's culture

What best describes an effective approach to reducing supervisor and subordinate pay compression?

include supervisors in an incentive plan

What is compensation strategy?

includes principles that guide the design, implementation, and administration of a compensation program. What programs will be used and how will the be administered.

Define Job Documentation?

includes written info about the job content or functions of the job and required knowledge, skills and abilities (KSA's)

What will you do if your projected merit budget is smaller than your actual merit budget?

increase the merit projections in the matrix

What are the causes that employee is paid below the range minimum?

recent promotion, then range moves, hired at minimum, then range moves, job re-evaluation, reorganization or acquisition

What is compression?

the difference between two grades or in certain instances when the pay difference between two employees is too small

What is the definition of Total Rewards?

the monetary and non-monetary returns provided to employees in exchange for their time, talents, efforts and results

What is market adjustment?

the percentage increase to organization, group or individual pay that is necessary to adjust to the estimated market level

What is base pay policy?

the policy should be consistent with the compensation strategy of the organization.

How the audit process is planned?

timetable, collect baseline information, measure results and review survey/other feedback, comprehensive, structured, detailed and planned according to schedule

What is the purpose of grades/bands?

to identify a compensation range within which multiple jobs are grouped that have similar value based on internal comparisons and external market data.

What is the percentage of job match data is considered good for benchmarking the jobs?

70%

what is the least percentage of job benchmark when using market pricing to build a base pay structure?

50%

What is the range spread in managerial and executive?

50% or more under certain circumtances

What is the first step in setting new hire rates?

Review market pay studies

What would be the Min of pay range if the midpoint differential is -20% of midpoint 70,000

56,000

Calculate Spread below midpoint? Max 69550, Mid 59615

-17%

Calculate the Range spread below midpoint. Example: Max 80,000, Min 50,000, and mid 65,000

-23.08%

What are the steps of strategy for determining merit payouts?

1) Anticipate distribution of performance rating 2) determine anticipated mean performance rating 3) develop two-dimensional matrix of increase 4) determine payout 5) revise if necessary

What are the steps for developing pay ranges when integrating market data

1) Incorporate market data, 2) Review market inconsistencies and reassign jobs; compute raw averages and percent differences by grades. 3) smooth out grade averages. 4) Review differences between midpoints and market data. 5) Resolve inconsistencies between internal and external competitiveness. 6) Develop pay ranges around the proposed midpoints.

What are the two main points must be considered while reviewing overall job evaluation point differentials by job family?

1) Note jobs that must preserve level distinctions within a family 2) Note jobs that have a supervisor/subordinate relationship.

Calculate Spread above midpoint? Max 27500, Mid 24300

13%

What is the midpoint differential between grades for supervisor and subordinates?

15% to 25%

Calculate Spread above midpoint? Max 69550, Mid 59615

17%

What is the range spread in service, production, and maintenance?

20% to 30%

What is the midpoint differential between grades for executive levels?

20% to 35%

Calculate the Range spread above midpoint. Example: Max 80,000, Min 50,000, and mid 65,000

23.08%

What is the range spread in Clerical , technical and administrative?

30% to 40%

What is the range spread in professional and supervisory?

40% to 50%

Calculate midpoint-to-midpoint differential, example: Grade 1 min 25000, Mid 27500, Max 30000. Grade 2 min 25700, Mid 28900, Max 32100

5%

What is the midpoint differential between grades for clericals/production?

5% to 12%

Calculate range penetration? Pay rates of 1000, Max 1200, Mid 1000, Min 800

50%

Calculate the Range spread. Example: Max 80,000, Min 50,000, and mid 65,000

60%

What is pay approaches?

A Pay approach is the method an organization's compensation program uses to deliver base pay.

What is turnaround situation?

A company may move back in the continuum, from maturity to growth by finding new products and new markets

What is Range Spread?

A range srpead is the width of a pay range from minimum to maximum.

What is a benchmark job?

A standard job used to make pay comparisons. The jobs selected should be easily defined and found in other organization. At least 50% jobs should be benchmarked and it is considered good when it matches 70% of job content.

What criteria should be selected for base pay program review and audit?

Acceptance by interested parties, compensation costs, impact on organization's performance, human resources effectiveness, goodness characteristics

Which of the following is an accurate statement regarding the job content approach to pay structure development?

After the point system is established, the continuum approach or pay structure approach can be used to develop the pay structure.

What is one advantage of delivering a pay action as a periodic increase?

Allows organization to establish a probationary period

What is cost of living adjustment?

An across-the-board wage and salary increase or supplemental payment designed to bring pay in line with cost of living to maintain real purchasing power

Which method is job evaluation is used for union negotiated production job?

An automatic step-rate structure

What other factors might need to be considered for salary budget?

Business plans of the company, management style, maturity of the company, industry practices, financial ability of the company, union contracts, past practices, inflation and the state of the economy

How to handle negative communications?

Business rationale, Earlier the better, make a comparison, explain process, performance related, merger/acquisition related, company wide

Which of the following strategy drives HR and Total rewards strategies?

Business strategy

Which strategy is key to development of HR strategy?

Business strategy

Once the compensation program review and audit are completed, to whom the essential findings to be shared with?

CEO, executive management, and compensation committee of the board

What are the disadvantages of Step rate - Automatic?

Cannot acknowledge different rates of process of sill attainment, cannot differentiate base on performance, can be discouraging to employees seeking pay awards, Utilize money that could be better spent.

In which element involve plans to help employees pursue their career goals?

Career Opportunities

What are the steps of market model analysis for market based budget?

Collect survey data, age survey data to start of plan year, develop a market model

Which calculation can show that where an employee is positioned in the range?

Compa-Ratio and control point

What are the basis for Hazard Pay?

Company compensation philosophy, Market data surveys, union specific contracts

What are the basis for differential determination?

Company compensation philosophy, Market data surveys, union specific contracts

What is lead the market?

Company will pay at anticipated market level. Then will lead the market until the start of the next year.

What is lead-lag?

Company will pay at mid-year anticipated market level. Then will lead the market for half of the year and lag the market for the second half.

What are the four steps of Market Pricing approach for thee development of pay structure?

Complete a competitive market pricing analysis, Develop a pay structure, Assign benchmark jobs to the pay structure, assign nonbanchmark jobs to the pay structure.

What are the steps for Market-Pricing Approach?

Complete a competitive market pricing analysis, Develop a pay structure, Assign benchmark jobs to the pay structure, assign nonbenchmark jobs to the pay structure.

What are the basis for General or COLA increase?

Consumer Price Index, Wage movement in market, Bargaining, part of collective bargaining agreement

What are the approaches can be used to develop the point factor approach?

Continuum approach and Pay structure approach

What are the two approaches can be used to develop the pay structure in Point Factor system?

Continuum approach and Pay structure approach

The total rewards design begins with which of the below process?

Corporate vision and mission

What are the two basis for geographic pay differentials?

Cost of living and Cost of labor

What are the organizational factors affecting the success of merit pay?

Cost of measuring performance, competitiveness of pay structures, width of pay ranges, equitable internal-pay relationship among jobs, organization's pay-performance linkage, organizational culture, effective communication.

What are the activities regarding the communication of compensation plan during a integration HR professional will do?

Create a sense of involvement and security, promote opportunities in the change, achieve cultural alignment, integrate employee total rewards programs

What are the objective of Base Pay Structure?

Create alignment between work and rewards, help achieve organizational objectives, reflect desired competitive position

The midpoint is typically estimated and referred to what?

Current market rate and referred to as the pay policy line, the level at which the organization chooses to set its pay against the external market.

What are the consideration in the amount of merit pay increase?

Current pay level/position in range, performance rating, merit increase guidelines, increase history, performance improvement, scarcity of particular skills, individual potential

What are the causes that employee is paid above the range maximum

Demotion, goldstar - high potential employee, reorganization or acquisition, ranges may need adjusting if many people are above maximum

Define pay structure approach?

Develop job grades, Based on job evaluation or internal value

Which element comprises learning experiences designed to enhance employees' skills and competencies?

Development

What is midpoint-to-midpoint differential?

Difference in wage rates paid in the midpoints of two adjacent grades

What is differential?

Different pay given for doing different things. It is also referred to as premium pay

What are the factors determine different pay structures are necessary for the organization?

Diversity of jobs, diversity in grading procedures, internal equity versus external competitiveness, culture.

Which of the following describes a characteristic of singe-rate pay?

Each job has a fixed pay rate (one rate for all employees)

What are the critical action for the ongoing success of base pay structure design once designed?

Effective implementation, communication, and maintenance.

What is the advantage of Performance only - increase as percent of base pay?

Employee with same performance receive same percent increase

Which of the following is one of the most common compensation program objective?

Ensuring external competitiveness

What are the stages of pay for performance?

Establish measures, communicate links between measures and assessment, Assess performance against measures

What are the managerial factors affecting the success of merit pay?

Executive support for the increase, managerial capabilities in planning and appraisal, supervisor/subordinate trust levels, managerial fortitude

In Market-driven approach, which takes the priority? External market competitiveness or Internal equity?

External market competitiveness

What does take priority in Market-Based approach to pay structure development?

External market pricing or competitiveness

What is one of the consideration of base pay program review and audit?

External/internal equity, job information/job descriptions, salary ranges and broadbands, pay policies

What are the features of Step Rate - Automatic?

Five to seven steps, three to five percentage points apart, prescribed time schedule, Structure updated to maintain competitive position.

What are the features of Step Rate - Variable?

Five to ten steps, 2% to 5% apart, Prescribed time schedule, Step structure updated for competitive position.

Which of the following best defines base pay?

Fixed compensation paid to an employee for performing specific job responsibilities

Which compensation is nondiscretionary that does not vary according to performance or results achieved?

Fixed pay or base pay

What are the features of Single-Rate Pay?

Fixed pay rate, May be a training rate, Changed based on market

How does an organization assess employees?

Formal, Informal, Performance appraisals, 360 feedback, coaching/mentoring

What are the suggested actions if employees are paid above the range maximum?

Freeze pay, less frequent increase, reduce base pay and make up differences with lumpsum, reduce salary, Promote employee to higher level job they can perform, give lump-sum increases in future.

What are the factors affect the base pay?

Frequency of review due to (inflation, government-imposed pay restraint, cost-of-living adjustment plus variable performance-related pay), Allowances, Government mandates

What are the means for communicating the compensation change organizationwide?

Group and individual meetings, FAQ handouts, and online information and ensure message consistency

When would Market adjustments be appropriate?

Incumbent base pay below market, company philosophy is to pay at/above market, Reclassification, addition of responsibilities to job

What are the approaches for geographic differential?

Individual pay adjustment and differentials, Salary structured differences

In order for a merit pay plan to be effective, what is one of the conditions?

Individual performance must be important and measurable.

What are the forms of assessment measures?

Individual, team, organization

What does take priority in Point Factor approach to pay structure development?

Internal equity is the priority

What are the most common objectives of compensation program?

Internally equitable & externally competitive

What are the compensation program objectives?

Internally equitable, externally competitive, affordable, understandable, legal/defensible, efficient to administer, capable of being reshaped for the future, appropriate for the organization, attract, retain, and motivate employees, create alignment of employee efforts and business objectives.

Why the job worth hierarchy is used?

It determines and ensure internal and or external equity both among positions and groups of positions.

Why is the job worth hierarchy is important?

It determines which jobs should be grouped together and it forms the foundation of the base pay system.

What is job worth hierarchy?

It indicates the perceived value of jobs in relationship to each other within an organization.

What is job-based pay?

It is base on the nature and level of a rigidly defined job. Job-based pay typically does not recognize employee skills or knowledge for grade assignment.

Why the range overlap is important in pay structure design?

It is important for the issue of internal promotion. Problems may occur if too much overlap is evident within the structure.

Which statement regarding communication of compensation plans during a transaction is most accurate?

It is important to communicate with individual as well as the whole organization

What are the components of Base Pay Structure Design?

Job Analysis, Job documentation, Job Evaluation, Job Worth Hierarchy - all parts of a base pay structure

What are the base pay structure design required to complete the job evaluation process?

Job analysis and job documentation

Which statement is most accurate regarding the market data approach to job evaluation?

Job descriptions are used to match survey data

Job analysis and job documentation provide the information needed to complete which process?

Job evaluation

Which are the base pay structure design lay the foundation for the base pay structure?

Job evaluation process and job worth hierarchy

What is the combination of integrating market data into point factor?

Job evaluation-based grades and market rates

What is Single-Rate Pay?

Job has a fixed or flat rate of pay.

What are the disadvantages of Broadbands?

Lack of structure, Just old salary ranges repositioned within new bands, Need for higher level of compensation expertise, Salary increases may be less structured.

What are the disadvantages of Performance only - increase as percent of base pay?

Larger amount got to people higher in the range for the same performance. Employee with same performance receive different amount

What is Broadbands?

Larger than typical range spreads (100% to 300%); consolidates a large number of pay grades and salary ranges into much fewer broadbands.

What are the midpoint differential considerations?

Level of refinement of job evaluation method, Market competitiveness, Cost of promotions, Midpoint differential guidelines.

What is the essential goal of a merit pay program?

Link pay to performance in a manner that is consistent with the mission of the organization

If a business cycle is at Start-up, what would be the base pay level?

Low

What are the type of Pay Increases?

Lump-sum increase, Periodic Increase and other

What is the alternative to base pay increases?

Lump-sum payments

What are the principles of merit pay programs?

Objective, size, timing, implementation

When the merit pay guidelines can be established?

Once he amount of increase and the timing are decided

What is evolution of employee role?

Organization invest in the potential of new employees in the hope that over time they will develop into valuable assets.

How are the base pay determined by?

Organization's philosophy and pay structure.

What are the two type of Job Change Promotions?

Organizational and growth

Define Pay Range?

Pay Range are established to offer competitive ranges of pay for job groupings.

Which of the following is not one of the three types of compensation philosophy?

Pay behind the market

What are the component of salary budget?

Pay policy, market-based salary increase budget, recommended salary increase budget

What is the calculation of range penetration?

Pay rate - Minimum / Maximum - Minimum

What is formula of range penetration?

Pay rate - minimum / Maximum - minimum

What are the components of market-based salary budget?

Percent necessary to match market as of Jan 01, Anticipated percent of next year's market movement, desired position above or below the market (pay policy)

Which element involves the alignment and subsequent assessment of organizational, team and individual efforts toward the achievement of business goals and organizational success?

Performance

What are the merit increase guidelines?

Performance Only, Increase as a percent of midpoint, Performance and position in range

What are the approaches for hazard pay?

Permanent base pay adjustments, temporary base pay adjustments

What is Range Overlap in pay structure design?

Range overlap allows for movement throughout a pay structure (grades and ranges) due to performance, promotion, reclassification, market adjustment, etc.

which of the following is the most effective method for maintaining a pay structure?

Re-evaluate jobs that have changed sufficiently to bring grades into question

Which element gives special attention to employees action, effort, behavior or performance?

Recognition

How the trend line is computed using the regression analysis in development of Base pay policy line?

Regress internal value with current salaries, regress internal value with market data

What are the disadvantages of Step rate - Variable?

Relatively few increase amount/timing choices, Requires justification of performance distinctions.

While assigning benchmark or non-benchmark jobs to the pay structure of market pricing approach, what are the two elements can modify grade assignment?

Reporting relationships and whole-job "value"

What measures should be taken into consideration while evaluating the measures for audit?

Results, process, compliance/alignment, documentation

What are the ways to maintain pay structures?

Review benchmark jobs, re-evaluate jobs, re-evaluate competitive posture, review internal equity and external competitiveness, adjust policy line, evaluate impact, management understanding

How can the salary structure be kept current?

Review compensation strategy and competitive posture, determine competitive pay movement, consider COLA or just market movement, determine the amount for adjustment

What are the steps for establishing job grades using the point factor evaluation approach?

Review overall job evaluation point differentials by job family, Rank order from high to low, look for logical grouping of jobs, develop point bands (absolute or percent-based), Check intrafamily and supervisor/subordinate relationships.

What is Step Rate - Variable?

Reward employee performance and /or skill acquisition by granting more than on step.

What are the best application of Step Rate?

Routine jobs without performance management, seniority basis, for stability and security, collective bargaining agreements, Public sector.

Where the single-rate pay can be best applicable?

Routine jobs/short learning time, Jobs with limited performance variability, Collective bargaining environments, Sales jobs where commission is significant, Summer intern/temporary jobs

How to calculate Percent to match market model as of Jan 1

Salaries - Total salaries / total salaries

What is the formula of Individual Compa-ratio (actual to structure)

Salary / Midpoint

What are the type of base pay?

Salary, Nonexempt/hour rate, piece rare

Is the process of building a new structure different from the process of updating an existing one?

Same or similar

Awarding an employee a 10% increase in base pay for all hours worked after 7:00 p.m. is an example of what type of pay differential?

Shift

What is the pay differential is paid for undesirable shifts?

Shift differentials

What are the type of differentials?

Shift, Geographic, Hazard pay, Expatriate

What are the characteristics of market pricing and slotting?

Simple to administer, easy to understand, no job evaluation points, responsive to market changes.

What are the examples of Job-based Pay?

Single rate pay, Step rate pay (automatic, variable)

What are the factors determine number of Pay Grades for the organization's pay structure?

Skill or responsibility distinctions, supervisor/subordinate relationships, career progression, administrative considerations

Which type of pay adjustment is based on longevity?

Step rate

What are the considerations of pay structure design?

Strategic issues, competitive practices, the organization's job and workplace design approach, the organization's administrative policies, the funds available for compensation plan, the value the program adds to the organization

What should be included in the executive summary once the compensation program review and audit are completed?

Summary of objectives and methods, executive interview themes / implications, focus group themes / implications, survey results, external analyses results, internal reviews of specific programs.

Who should communicate compensation information?

Supervisor, manager, HR manager, director

When developing a base pay policy line, it is most important to reconcile it with which of the following?

The compensation strategy

What does the midpoint or diddle-pay value for the range represent?

The competitive market value for a job or group of jobs.

Which statement is most accurate regarding the range penetration and progression for an employee who consistently "Outstanding standards"?

The employee's range penetration will typically be about 100%

Which statement is most accurate regarding the range penetration and progression for an employee who consistently "meet standards"?

The employee's range penetration will typically be about 50%

Which statement is most accurate regarding the range penetration and progression for an employee who consistently "Exceeds standards"?

The employee's range penetration will typically be about 75%

What is the minimum pay level determined to?

The lowest wage for the position

What is pay action?

The movement of any employee's base pay due to either external or internal pressures can be both company and employee generated. And can result in either an increase or a decrease in base pay.

What is a key component for determining the number of pay grades for a given organization?

The number of responsibility distinctions evident in the organization.

What are the drivers shape the total rewards mix?

The organizational culture, business and HR strategies

What is the definition of base pay structure?

The pay structure is a management tool that reflects the collection and organization of internal and external compensation data to support job values. It consists of a series of pay ranges that represent jobs of similar internal and or external worth.

What best describes the reason why the total rewards design model is circular?

The process should not become too far removed from the corporate mission

What information should be communicated while communicating compensation changes?

The reasons for the changes, decisions, time frames for changes, any one time pay adjustments, action on part of the employee

What is reclassification?

The reassignment of job to a higher or lower grade in the organization's job worth hierarchy due to a job content reevaluation and /or significant change in the going rate for comparable jobs in the external labor market

Why use caution when comparing data?

The same statistics must be used in order to ensure that the data will be valid and reliable for comparison.

What is other factor to achieve a particular range penetration?

Time

What is a reason for establishing a job worth hierarchy?

To determine equity among both positions and groups of positions

What best describes an objective of a base pay structure?

To help to achieve organizational objectives

What best describes an objective of a merit pay program?

To link pay to performance in a manner consistent with the mission

Which of the following is a reason to adop broadbanding?

To support a flatter organizational structure

Which of the following would raise a potential red flag during a merger or acquisition?

Unions

How to develop the pay structure?

Use all market rates from market pricing analysis, develop range midpoints to cover the entire hierarchy, use appropriate range spreads.

When the salary audit should be conducted?

Usually after a program cycle is completed

Define integration of market data into point factor?

Value both internal and external relationships, Uses for formal job evaluation system and market data

Which compensation is contingent on discretion, performance or result achieved?

Variable pay or pay at risk

What is the flow of activities when developing the total rewards design process?

Vision, mission, business strategy & HR strategy

What is the formula of Unit or Organizational Compa-ratio (Market Index actual to structure)

Weighted Avg. Salary / Weighted Market Avg.

Define Job Worth Hierarchy (JWH)?

illustrates where each job fits relative to other jobs

Organizational practices, policies, and programs, plus a philosophy to help employee achieve success at home and work, which of the element of total rewards is this?

Work-life

What data is needed to create a market-based salary budget?

company pay policy

What should be included in the criteria or performance standards used to evaluate compensation systems?

compensation costs

Define Base Pay Structure?

created after job evaluation process and JWH and utilized as framework for pay decisions

Define Job Evaluation?

creates a job worth hierarchy using a market data or job content approach

What will you do if your projected merit budget is larger than your actual merit budget?

decrease the merit projections in the matrix

Which of the following is a typical approach used to correct green circle rates?

granting 3% increase every four months until pay equals or exceeds the range minimum

What is the key component of compensation strategy?

how the organization intends to pay relative to its competitors for people . i.e. the desired market position

Job Evaluation Process

job analysis and documentation provide the information to do this

Which market rate should be taken to assign benchmark jobs to the pay structure?

midpoint rate

What causes compression?

new hire pay rates are higher, supervisor/subordinate total pay, midpoint differentials too close, automatic increase, merit pay inadequacies, unionized environment