Topic 5

Question 1

Bad Data Challenge

Answer 1

Exists because the data a company obtains about market rates may not be an accurate representation of the market. It is often difficult to fully understand the quality of the data obtained from various sources, or how best to integrate this information, which adds error to any reward system based on that data.

Question 2

Benchmark Competitors

Answer 2

A selection of primary organizations that exemplify the labor and product/service markets in which the organization competes.

Question 3

Benchmark Jobs

Answer 3

Jobs that are representative of the type, content, and level of jobs in the organization.

Question 4

Central Tendency

Answer 4

Describes what’s typical for a set of data, usually measured by the arithmetic mean, median, or mode.

Question 5

Ethical Challenge

Answer 5

Can also exist in establishing market rates. For example, if a manager has an informal conversation about pay rates with a colleague at another organization and then uses this information to keep pay rates artificially low, is this ethical? Said another way, where does a “market survey” end and where does “price fixing” begin? These ethical issues illustrate the importance of having clear and transparent systems for establishing market rates and job matches to minimize the opportunity for biases to enter into the system.

Question 6

External Reward Positioning

Answer 6

Refers to how an organization’s Rewards compare to the Rewards offered for comparable work in other organizations.

Question 7

Job Matching Challenge

Answer 7

Results from difficulties in determining exactly which organizational jobs match up with each benchmark job in the wage surveys. By carefully choosing benchmark jobs and using sources with detailed descriptions, this challenge can be partially addressed.

Question 8

Labor-driven Job Market

Answer 8

When the demand for a particular set of KSAs (knowledge, skills and abilities) is high and the supply of these KSAs is low.

Question 9

Median

Answer 9

The middle number of a group of numbers when they are arranged from lowest to highest.

Question 10

Outliers

Answer 10

Numbers that are far above or below most of the other numbers.

Question 11

Product and Service Markets

Answer 11

Organizations compete to create value through the production of goods or the provision of services for customers in exchange for money and loyalty.

Question 12

Reward Surveys

Answer 12

Aggregations of reward information gathered from other market organizations.

Question 13

Weighted Mean

Answer 13

An average that takes into account the proportional relevance of each component.