Compensation Exam 2

Which of the following statements about the two types of work is NOT true?

Employees may favor tacit work because it is less stressful

Economic theories of labor markets

Employers always seek to maximize profits People are homogeneous and therefore interchangeable The pay rates reflect all costs associated with employment The markets are competitive, so there is no advantage for a single employer to pay above or below the market rate

Competencies are derived from _____ beliefs about the organization and its strategic intent

Executive leadership's

Which of the following is NOT a common way that an organization may choose to define competencies?

Factors related to the cost-cutting goals of the company

An employer offering higher base pay with low bonuses is a likely signal that it is seeking risk-taking employees

False

If the supply of employees is higher than the demand for employees in a particular job, organizations will be less likely to utilize a lag pay-level policy

False

The degree of competition that an organization faces for its products/services is a key organization factor that will dictate pay decisions

False

Efficiency-wage theory

High wages may increase efficiency and actually lower labor costs if they • Attract higher-quality applicants, lower turnover, increase worker effort, reduce shirking behavior, and reduce the need for monitoring • The underlying assumption is that pay level determines effort

Which of the following highlights the correct ordering of the job evaluation procedure?

Job analysis- job description- job evaluation- structure

Most common traditional job evaluation methods

Ranking and classification

KayDen Corp., a small organization with 15 employees, conducts job evaluation using the cheapest method for the first time. In this case, KayDen is most likely to have used the

Ranking method

Which of the following is linked to high pay levels?

Reduced vacancy rates

Transactional work

Routine work

Key functions of a job evaluation

Set pay when market pay info is not available Match a job to a comparable job externally to identify market pay Set pay based on relative worth of the job to your specific company

Employees tend to like _____ because they can see the link between the work that they do the amount they are compensated

Skill-based pay plan

Five competencies

Skills, knowledge, self-concepts, traits, motives

Purpose of job evaluation

Supports organization strategy Supports work flow Is fair to employees

If Company A raises its pay rate by one dollar per hour to hire additional workers and competitors immediately match the increase, what will be the most likely result?

The labor costs for Company A will increase, but it will be unable to hire additional workers

The demand for an organization's products will impact the likelihood that they will use a lead pay-level policy

True

The supply of labor will impact the effectiveness of a lag pay-level policy

True

Classification

a series of classes covers the range of jobs. Class descriptions describe the kinds of jobs in that class

Pay-with-competition policy

an organization's wage costs are approximately equal to those of product competitors (most common policy)

The first decision of competency analysis

clarify the objective of the plan

A reliable evaluation

different evaluators produce the same results

Signaling theory

employers design pay levels and mix as a strategy that signals to prospective/current employees the behaviors sought

Structure

hierarchy of work

Skill-based structures

link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that are relevant to the work

Lead pay-level policy

maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay

Ranking

orders the job descriptions from highest to lowest based on a global definition of relative value to the organization's success

Lag pay-level policy

paying below-market rates may hinder a firm's ability to attract potential employees

job-based plan

pays employees for the job to which they are assigned, regardless of the skills they possess

The supply side looks at

potential employees

Job evaluation

process of systematically determining the relative worth of jobs to create a job structure for the organization

Benchmark (key) jobs

prototypical jobs (or groups of jobs) used as a reference point for making pay comparisons inside or outside of the organization

The demand side focuses on

the actions of employers

Pay level

the average of the array of rates paid by an employer

External competitiveness

the pay relationships among organizations—the organization's pay relative to its competitors

Value

the relative contribution of jobs to organizational goals and the value of the job in the external market

Pay mix

the various types of payments, or pay forms, that make up total compensation

Content

what work is performed and how it gets done

What percent of organizations tend to use the more traditional "in house" methods of job evaluation?

25%

Who among the following is most likely to be working for a company that uses a competency-based pay plan

Carlos, who focuses on obtaining certifications in her field to get a pay increase

Which of the following is a job evaluation method that can group a wide range of work together in one system but may leave too much room for manipulation?

Classification

Tacit work

Complex work

Breadth

Employees in a multi-skill system earn pay increases by acquiring new knowledge. (generalist)

Which of the following is an assumption held by the labor supply model about the behavior of potential employees?

Job seekers do not face barriers to mobility

Marie hired on with a tech company offering the usual benefits bur paying below market rates. She took the job because the company was promising generous stock options and hefty yearly bonuses if goals are met. Plus, they are paying her to relocate to Hawaii! Marie's new employer is using a

Lag pay-level policy

The behavior model (of potential employees) assumes:

Many people are seeking jobs They possess accurate information about all job openings No barriers to mobility exist

Primary method of job evaluation

Market pricing

Depth

Pay is based on the knowledge of the individual doing the job rather than on job content or output. (specialist)

Schemes for classifying competencies

Personal characteristics Visionary Organization specific

Which of the following is an example of the demand side of labor?

The pay level offered by an employer

Which of the following is a characteristic of benchmark jobs?

They employ a reasonable proportion of the workforce