CHAPTER 3

Identify the aspects of the pay model that influence the impact of any internal structure on organization performance. - Compliance - Contributions - Evaluations - Management - Competitiveness

Contributions Competitiveness Management

The pay differences among levels are referred to as _____.

Differentials

Addresses the acceptability of the actual pay differences among employees

Distributive justice

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.

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

Use Value

Entry jobs

external factors

The hierarchy of a pay structure refers to _____. A. the number of levels and reporting relationships B. the types of jobs and their descriptions C. the alignment of pay structure with business strategy D. the equitable distribution of pay

the number of levels and reporting relationships

Content refers to the A. worth of the work B. work performed in a job and how it gets done C. relative contribution of the work to the organization objectives D. Different pay level polices

work performed in a job and how it gets done

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

Identify the consequences of deviations from acceptable wage structures - Diminished motivation - Fewer evaluations - More grievances - Minimized turnover

- Diminished motivation - More grievances

Which of the following requirements should be met by an organization's pay structure? - Organizations should incorporate their employees' individual needs and preferences regarding forms of payment into the structure - It should be fair to employees - It should be similar to that of other organizations in the same industry - Employees should be able to view the way in which their work is linked to the work of others and the organization's objectives

- 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 are forbidden by equal employment legislation in the United States from serving as the criteria for setting pay differentials? - Race - National origin - Education qualifications - Skill - Gender - Religion

- Race - National Origin - Gender - Religion

Identify the economic pressures that influence the internal structure of an organization - Supply and demand for labor - differences in productivity - government policies, laws, and regulations - external stakeholders and organization strategy - supply and demand for products and services

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

Which of the following are true of aligned pay structures? - They support the way work gets done - They are insensitive to external market rates - They are fair to employees - They help establish a business strategy

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

Identify recent examples of "benchmarking" behavior by organizations. - the shift away from a competency-based pay system - the outsourcing of jobs - the emphasis on individual contributions - the emphasis on teams

- the outsourcing of jobs - the emphasis on teams

How do most organizations motivate employees to apply for higher-level positions? A. By associating promotions with money B. by reducing CEO pay in relation to that of the average worker C. by offering significant stock programs D. by emphasizing relational returns from work over cash benefits

By associating promotions with money

Differentials are used to _____. A. Conduct job evaluations B. Encourage people to work for promotion to a higher-paying level C. keep labor costs in check D. Ensure compliance with government laws and regulations

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

_____ states that people compare the ratio of their own outcomes (e.g. pay, status, enjoyment) to inputs (e.g. effort, ability, performance) with the outcomes to input ratio of others (internal, external, or themselves in a past or future situation). A. Agency theory B. Institutional theory C. Equity theory D. Drive theory

Equity theory

Economic pressures and government policies, laws and regulations

External factors

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

Marginal Productivity

Addresses the way in which design and administration decisions are made and whether measures are applied in a consistent manner

Procedural justice

Nonentry jobs

internal factors

A study that used hockey teams to examine the influence of pay differences on performance found that _____. A. smaller differentials based on performance improved team performance B. egalitarian structures helped improve the performance of mediocre players C. larger differentials based on performance generated positive sorting effects D. hierarchical structures motivated played to perform well individually but reduced cooperation among the players

larger differentials based on performance generated positive sorting effects

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

Change value

Fewer, small, loose fit, teams, equal treatment, cooperation

Egalitarian

Many, Large, close fit, individual performers, performance, opportunities for promotion

Hierarchical

Identify a drawback of egalitarian pay structures A. Entry-level and average employees may resent the huge difference between their pay and CEO pay B. Close supervision may hinder innovation and initiate on the part of employees C. Pay for performance may encourage unnecessary and harmful risk-taking D. High-performing and more skilled employees may feel underpaid

High-performing and more skilled employees may feel underpaid

_____ _____-- the education, experience, knowledge, abilities, and skills required to perform the work -- is a major influencer on internal structures.

Human Capital

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

Internal alignment

Which of the following is NOT true? A. greateer pay dispersion is related to higher turnover among executives B. egalitarian structures are a better fit for executive groups that need to work closely as a team c. D. employees judge the fairness of their pay structures by making multiple pay comparisons

Large raises with a promotion decrease effort and increase absenteeism

Strategy, technology, and human capital

Organization factors

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

Pay Structure

In the context of pay structures, a(n) _____-_____ _____ focuses on the skills, knowledge, or competencies possessed by an employee, whether or not they are utilized in the employee's particular job.

Person-based structure

The problem that is most likely to be faced by organizations using an egalitarian pay structure is _____. A. The difficulty in external recruitment B. in maintaining cooperation among employees C. the perception of excessive CEO pay D. The difficulty in performing teamwork

The difficulty in external recruitment

As opposed to hierarchical pay structures, egalitarian pay structures support _____. A. large pay differentials over small ones B. the equal treatment of employees C. A close fit between business and pay strategies D. individual performances over team performances

The equal treatment of employees

Identify a difference between layered and delayered pay structures. A. The layered structure gives employees more autonomy than the delayered structure B. The layered structure is more efficient than the delayered structure C. The layered structure is more egalitarian in terms of number of levels than the delayered structure D. The layered structure is more hierarchical than the delayered structure

The layered structure is more hierarchical than the delayered structure

Identify a true statement about the employees who are supplied by outsourcing specialists. A. their pay is based on the internal structure of their home employer B. Their pay is based on the internal structure of the workplace to which they have been outsourced C. Their skills are usually much more diverse than those of the workplace's own employees D. Their work usually has a lower exchange value than the work of the workplace's own employees

Their pay is based on the internal structure of their home employer

Which of the following is NOT a characteristic of aligned pay structures? A. They support the way they work gets done B. they fit an organization's business strategy C. They are fair to employees D. They are designed to increase the turnover rate

They are designed to increase the turnover rate

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

Tournament theory

T/F: Unions, stockholders, and even political groups are involved in the determination of internal pay structures

True

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

Work Flow

Identify the most common basis for formulating a company's internal structure A. Work content and its value B. External market rates C. Government laws and regulations D. Employee preferences

Work content and its value

Most job structures are best described as A. job-based structures B. person-based structures C. both person and job based structures D. Competency-based structures

both person and job based structures

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 _____. A. procedural justice B. distributive justice C. internal equity D. external equity

procedural justice

Hierarchical pay structures have all BUT which of the following characteristics? A. support a close fit with the organization B. prefer team performance over individual performance C. many levels D. based upon the job or person

support a close fit with the organization

Common bases for modern pay structures include all BUT which of the following? a. the content of the work B. the skills and knowledge required to perform the work C. the extent of external competitiveness and equity D. The work's relative value for achieving organizational objectives

the extent of external competitiveness and equity

Which of the following is NOT one of the factors that define an internal pay structure? a. the pay differentials between the levels B. the criteria used to determine pay differentials C. the number of times the pay structure has been changed D. the number of levels of work

the number of times the pay structure has been changed

Which theory predicts that individual performance will be maximized when the pay differentials between job levels is large? a. tournament theory B. equity theory C. marginal productivity theory D. reinforcement theory

tournament theory