Econ 448 exam 1

List the three criteria for evaluating the approach for establishing internal structures.

1. reliability 2. validity 3. acceptability

What are the three steps needed to determine a skill-based structure?

1. Analysis of skills - this is a systematic process to identify and collect information about the skills required to perform a job in a company 2. Grouping skills into skills blocks- related skills will be grouped into a skill block 3. Certification process- making sure employees possess certain skills and are able to apply them to the job

List FOUR categories of external factors that shape internal pay structures.

1. Economic pressures 2. Government policies, laws, and regulations 3. External Stakeholders 4. Cultures and Customs

List FOUR organizational factors that shape internal pay structures.

1. Human Capitol 2. Organization Work Design 3. Overall HR policies 4. Employee acceptance

Why are skill-based pay plans generally well accepted by employees? Please list TWO reasons.

1. It is easy for employees to see the connection between the plan, the work, and how they are getting paid. 2. It provides strong motivation for employees to increase their skills.

List the four generic compensable factors that you learned from the lecture.

1. Skill 2. Effort 3. Responsibility 4. Working Conditions

What are the three major characteristics of a benchmark job?

1. The contents of a benchmark job are well known and relatively stable over time. 2. The job is common across different employers. It is not unique to one particular employer 3. A reasonable proportion of the workforce is employed in a benchmark job.

What are the two criteria or bases for determining the levels and differentials in an internal structure?

1. content- Work performed in a job and how it gets done 2. value- The worth of the work

List three characteristics of organizations that are most likely adopting a closely tailored pay structure.

1. organization has a low-cost strategy 2. has well-designed jobs with detailed steps or tasks. 3. very small pay differentials among jobs.

What are the three key elements in an internal pay structure?

1. the number of levels of work 2. the pay differential between the levels 3. the criteria used the determine the level and differential

What is competency-based approach to develop internal structures?

Competency-based approach considers the underlying, broadly applicable knowledge, skills, and behaviors that form the foundation for success at any level of job in the organization. These are known as core competencies and are often linked to the mission statement

Under each of the three types of internal structures (job-based, skill-based, and competency-based), how can employees gain pay raises?

Job- based- employees will need to get a promotion to get a pay raise under this approach Skill-based- employees will need to acquire more skills to get a pay raise under this approach Competency-based- employees will need to develop more competency to get a pay raise under this approach

One of the more readily accessible sources for generic job descriptions is the ________.

O*NET

What is the major distinction between a skill-based structure and a job-based structure?

Skill-based structure pays employees for all the skills there are certified for, regardless if the work they are doing for the company requires all or just some of those skills. Whereas job-based structure pays employees for the job they are doing at the company, regardless of the skills they have.

Which of the following is NOT one of the three basic building blocks in a pay model?

The internal job structure of an organization

How many job evaluation methods we have learned in this week's lectures? What is the major advantage of point method compared to the other methods for job evaluation?

We learned about 3 job evaluation methods in this week's lectures. These three methods are ranking, classification, and point method. One major advantage of the point method compared to the other method is by making an explicit criteria for evaluating jobs, which is called compensable factors. Compensable factors are characteristics that helps the organization pursue its values and achieve its objectives.

The job evaluation method that orders job descriptions alternatively at each extreme is called ______ method.

alternation ranking

Common characteristics of the point method include all of the following EXCEPT:

benchmark factor classes

Skill-based structures link pay to the ______or ______ of the skills a person acquires that are relevant to their work.

depth; breadth

"________ value" refers to the wage rate agreed upon by the employer and employee for a job.

exchange

"Use value" refers to the wage rate agreed upon by the employer and employee for a job.

false

Companies that pay higher level compensation compared to their competitors always achieve better performance in the competition.

false

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

false

Examples of "relational returns from work" include merit increases that employees receive because of their good job performance.

false

It is impossible for a firm to engage in both cost leadership strategy and differentiation strategy; instead, a firm can only choose one of the two.

false

Job evaluation based on job content or job value always generate the same result.

false

Skill-based pay plans pay employees only for the skills that employees are actually using in their current jobs.

false

The validity of job evaluation refers to that whether different evaluators produce the same results using the approach.

false

Typical job information collected for a job analysis does not include external relationships with suppliers or customers.

false

Job evaluation can be based on ______ or ______.

job content; job value

A compensation system focusing on narrow work specifications and production efficiency is most closely associated with a(n) _____ strategy.

low cost

The majority of applications of skill-based pay has been applied in _________, where the work involves teams, multiskills, and flexibility.

manufacturing

James says, "I don't trust the way the company determines pay rates in my department." If James feels this way despite being satisfied with his current salary, he is most likely concerned about __.

procedural justice

James says, "I don't trust the way the company determines pay rates in my department." If James feels this way despite being happy with his current salary, he is most likely concerned about _____.

procedural justice

An egalitarian pay structure is suitable for the organizations where employee cooperation is important for achieving successful performance.

true

Companies with a differentiation strategy are more likely to have a compensation system focusing on market-based pay.

true

Competency-based pay systems may be more susceptible to discrimination compared to job-based pay system.

true

Job analysis is one of the major steps in developing a job-based internal structure of an organization.

true

One disadvantage of traditional job analysis that makes fine distinctions among levels of jobs is that it may reinforce rigidity in organizations.

true

Organizations commonly have multiple job structures derived through multiple job evaluation approaches that apply to different functional groups or units.

true

Relational returns from work refers to the nonfinancial returns from work such as employment security, challenging work, and opportunities to learn.

true

Skill-based pay plans are generally well accepted by employees because it is easy to see the connection between the plan and how much they get paid.

true

The Americans with Disability Act requires that essential elements of a job must be specified for jobs covered by the legislation.

true

The incentive effect of pay refers to the degree to which pay influences individual and aggregate motivation.

true

The major disadvantage of using ranking method in job evaluation is that the evaluations may be subjective because the criteria for comparisons are not called out.

true

The point method of job evaluation is the most commonly used method in the United States.

true

Total compensation is one type of returns people receive from work, and it is transactional.

true

When a company's business strategy changes, its pay system should change accordingly.

true

The most common basis for determining internal structures are ______.

work content and its value