Compensation Ch 3

Egalitarian pay structures are built using person-based criteria.

False

Supply and demand for labor, but not supply and demand for products and services affect internal structures.

False

Description of a pay structure:

Number of levels, differentials, criteria determining pay differences

Both external and organizational factors shape internal pay structures

True

Labor unions support small pay differentials.

True

Large pay differences in a top management team are associated with high turnover

True

Large raises that come with a promotion, increases effort and reduces absenteeism

True

Pay structures with more levels, though relatively small pay differences between levels, offer a sense of career progress

True

Self-managed work teams and outsourcing can affect the pay structure

True

The phenomena of engineers receiving salaries higher than longer tenure engineers in an organization, is consistent with the concept of internal labor markets.

True

Wage legislation affects the wage structure at both the minimum and the maximum pay level

True

Setting objectives is the first in

a strategic approach to pay

There is evidence that a relatively poor performing team member's performance will improve under a(n)

egalitarian pay structure.

The pay for the job of accountant in London, Los Angeles and Berlin is likely to be different due to

exchange value

Components of human capital:

experience, knowledge, and education

Egalitarian pay structures have

few levels, small differentials, and support equal treatment.

The number of job and pay levels in an organization is an example of

human resource policies

Tournament theory predicts

individual performance will be maximized when the pay differentials between job levels is large

Factors in defining equal work in The Equal Pay Act:

skill, effort, and working conditions

Unions prefer

small pay differences between jobs and seniority-based promotions

Organization factors that shape internal pay structures include

strategy, technology, human capital, HR policy, employee acceptance, and cost implications.

Characteristics of an aligned pay structure:

supports the way work gets done, fits the organization's business strategy, and is fair to employees.

Hierarchical pay structures have many levels, supports a close fit with the organization, is based upon

the job or person

A job-based structure focuses on the skills, knowledge and competencies employees possess.

False

A well-designed pay structure is the major factor affecting an organization's external competitiveness.

False

An organization's pay structure is affected more by the pay levels and benefits offered by competitors than its human capital.

False

CEOs of organizations with egalitarian pay structures usually have higher salaries than CEOs in hierarchical pay structures

False

Distributive justice is more important than procedural justice for employee acceptance of their pay.

False

Equity theory research shows that an egalitarian pay structure will be seen as more fair than a hierarchical structure.

False

Egalitarian pay structures may be characterized as de-layered or compressed.

True

Egalitarian structures are a better fit for executive groups that need to work closely as a team

True

Internal alignment is sometimes called internal equity

True

Teachers who pay is relatively low in their pay structure will feel their pay structure is fair if they work in a high-paying district.

True

Most job structures are best described as

both person- and job-based.

The well-defined jobs at McDonald's and their small differences in pay are an example of a(n)

closely tailored internal pay structure.

A problem faced by some organizations using an egalitarian pay structure is

difficulty in external recruitment.

Suzanne says, "I don't like it that those jobs that are a lot like mine pay more than my job." Suzanne is expressing concern about

distributive justice

External factors that shape internal pay structures include

economic pressure, government policies, laws, and regulations, stakeholders, and cultures and customs.

According to the text, when cooperation is important for successful organization performance, the best form of pay is

egalitarian

In firefighting and rescue squads and global software design teams, a(n) egalitarian structure is associated with

higher performance

When an employee can see the relationships between his/her work, the work of others and the organization's objectives, this is called

line-of-sight.

The institutional model refers to firms that copy innovative practices adopted by

other organizations

The most common bases for determining internal structures are

work content and its value.

Egalitarian pay structures send the message that the organization values differences in work content, individual skills and contributions to the organization.

False

Exchange value is always higher than use value.

False

Experienced workers judge the fairness of their pay by developing an intuitive sense of what is fair pay.

False

The content of a job refers to the relative contribution of skills, tasks and responsibilities to the organization's goals.

False

The institutional model predicts that it is best to wait for other organizations to adopt innovative practices.

False

There is little evidence that adding additional levels and titles to a career path without significant pay increases, motivates employees.

False

Tournament theory raises performance of the top performers but reduces motivation of poorer performers

False

When employees compare the fairness of their pay, they focus primarily on how their job compares with similar jobs in other organizations.

False

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

True

A potential problem in egalitarian pay structures is high performing employees may feel underpaid and quit.

True

Organizations are more likely to be successful when their pay structures are in internal alignment.

True

Pay differences between levels in an organization are called differentials.

True

Technology influences organization design, the work and ultimately, the pay structure.

True

The content and value of work are the most common bases for determining internal structures

True

Comparisons employees use to judge the fairness of their organization's pay structure:

comparing jobs similar to their own, comparing their pay to external pay levels, and comparing their job's pay to other jobs in their organizations.

Pay structure procedures that would increase perceptions of pay fairness:

consistency across all employees, use of accurate data, and including appeals procedures.

Organizations in a turbulent and unpredictable environment requiring flexibility in jobs and work processes are likely to be

more successful with a(n) loosely coupled internal pay structure.

The modern concept of a "living wage" is

most similar to just wage doctrine

The pay structure should support the

organization strategy, support the work flow and motivate behavior toward organization objectives.

Changes in organization design that may affect pay structures:

outsourcing, delayering, and temporary workers

Bill says, "I don't trust the way the company determines pay rates in my department." Bill is most concerned about

procedural justice.

Hierarchical:

related to greater performance when the work flow depends on individual contributors.

Intention of differentials is to motivate people to

strive for promotion to a higher-paying level

Three common bases for modern pay structures include

the content of the work, skills and knowledge required to perform the work, and relative value for achieving organizational objectives.

Pay for temporary workers is based upon

the internal structure of their home employer

Internal alignment is

the second issue to be decided - addresses relationships inside the organization.

Content refers to

the work performed in a job and how it gets done.

If a manager wants employees to accept the organization's pay structure, the best strategy is

to explain to them how pay was determined

A pay structure based upon the relative contribution of skills, tasks, and responsibilities to the organization's goals is called the

value approach.

The internal labor market concept best explains

why newly hired workers may be paid more than longer tenure workers performing very similar work