8.2: Identify the various factors that influence the setting of pay levels.

Question 1

What is the first step in an effective performance management system?

Answer 1

Clarifying the work to be done – define expected results and how they will be measured.

Question 2

What must goals be linked to for the performance plan to be effective?

Answer 2

Overall business objectives.

Question 3

Why is providing frequent coaching important?

Answer 3

It supports employee development, helps identify and correct issues, and reduces the need for termination.

Question 4

What is the purpose of a formal performance review?

Answer 4

To assess accomplishments, development areas, and set new goals.

Question 5

How can performance be improved if expectations aren’t met?

Answer 5

By creating an action plan with clear expectations, timelines, and available supports.

Question 6

What are three categories of reasons for ineffective performance?

Answer 6

Organizational factors, job factors, and personal factors.

Question 7

Give two examples of organizational factors that cause poor performance.

Answer 7

Poor selection decisions and lack of accountability.

Question 8

What is the manager’s role in improving ineffective performance?

Answer 8

Understand root causes and implement supportive actions (e.g., counseling, feedback).

Question 9

What are two common reasons why performance management systems fail?

Answer 9

1) They are too complex and unclear.
2) Managers lack training and understanding.

Question 10

What is a major cultural factor for system success?

Answer 10

Organization-wide buy-in and support from top management.

Question 11

What issue arises when the system focuses only on the annual review?

Answer 11

It ignores the importance of ongoing coaching and integrated development.

Question 12

What are five main sources of performance information?

Answer 12

Manager, self, subordinates, peers, and customers.

Question 13

What is a potential downside of peer reviews?

Answer 13

Bias, pressure, and confidentiality concerns.

Question 14

What are customer reviews used for?

Answer 14

To evaluate service quality and ensure procedures are followed.

Question 15

What is a 360-degree review?

Answer 15

A feedback system combining input from multiple sources (manager, peers, self, etc.).

Question 16

What are trait methods of performance review?

Answer 16

Methods based on rating personal characteristics like dependability and enthusiasm.

Question 17

What is a graphic rating scale?

Answer 17

A numerical rating system used in trait-based evaluation.

Question 18

What is the behavioural checklist method?

Answer 18

A checklist where managers mark displayed behaviours.

Question 19

What is BARS?

Answer 19

Behaviourally Anchored Rating Scale – combines behaviour descriptions with numerical ratings.

Question 20

What is Management by Objectives (MBO)?

Answer 20

A results-based method where employee goals align with organizational goals.

Question 21

What is the Balanced Scorecard?

Answer 21

A framework linking strategic goals to performance in areas like finance, customer service, and internal processes.

Question 22

What are examples of internal compensation factors?

Answer 22

Compensation strategy, job worth, performance, ability to pay.

Question 23

What are examples of external compensation factors?

Answer 23

Economy, cost of living, legal requirements, labor market.

Question 24

What is pay-for-performance?

Answer 24

A system linking pay to employee or organizational results.

Question 25

Name a benefit and a drawback of pay-for-performance systems.

Answer 25

Benefit – motivates performance. Drawback – may not link well to long-term goals.

Question 26

What is a common reason organizations link motivation to pay?

Answer 26

To increase employee performance and align it with organizational success.

Question 27

What do studies suggest about the relationship between compensation and motivation?

Answer 27

The answer is mixed—"yes," "no," or "it all depends" on factors like economic conditions and workforce expectations.

Question 28

What percentage of employers have implemented a pay-for-performance system?

Answer 28

75%

Question 29

What is a key challenge with pay-for-performance systems?

Answer 29

Metrics used may not always reflect true performance or corporate objectives, and correlation between pay and motivation can be overstated.

Question 30

What non-monetary factor can also improve motivation?

Answer 30

Recognition of achievement.

Question 31

What should be considered when designing pay-for-performance plans?

Answer 31

The plan should fit the organization, include performance thresholds, and ensure cost-effectiveness.

Question 32

What can limit an employer's ability to offer competitive pay in the public sector?

Answer 32

Government budgets and public perception.

Question 33

How can pay freezes impact employees and public image?

Answer 33

They may lead to dissatisfaction and debates over fairness and employer reputation.

Question 34

What are key external factors affecting wage rates?

Answer 34

Economy, labour-market conditions, wage rates in geographic areas, cost of living, collective bargaining, and legal requirements.

Question 35

Why must Canadian businesses be sensitive to economic projections?

Answer 35

Because Canada is an export-driven economy.

Question 36

What are some approaches companies use to manage economic challenges?

Answer 36

Variable pay, transparency, non-cash benefits, improved well-being, aligning rewards with business strategy.

Question 37

What impact did COVID-19 have on wage increases in Canada?

Answer 37

36% of companies froze salaries in 2020 vs. a pre-COVID forecast of 2% growth.

Question 38

What influences labour-market conditions?

Answer 38

Demand for and supply of qualified employees.

Question 39

What challenge exists even during employee oversupply?

Answer 39

Employers may still be unable to offer lower wages due to union agreements or minimum wage laws.

Question 40

Why do employers examine wage rates in specific geographic areas?

Answer 40

To remain competitive for similar jobs within those regions.

Question 41

How do employers gather geographic wage data?

Answer 41

Through surveys from consulting firms, governments, local boards, or professional associations.

Question 42

Why are wages adjusted for cost of living?

Answer 42

To maintain employee purchasing power amid inflation.

Question 43

What tool is commonly used to adjust for cost of living?

Answer 43

Consumer Price Index (CPI).

Question 44

What is a potential issue with CPI-based pay adjustments?

Answer 44

Can create inequity between employees earning different base wages.

Question 45

What is a key focus of collective bargaining?

Answer 45

Compensation, especially securing real wage increases.

Question 46

What are real wages?

Answer 46

Wage increases that outpace CPI growth, increasing actual purchasing power.

Question 47

What does Canadian law generally require regarding minimum wage?

Answer 47

Employers must pay no less than the legislated minimum hourly rate.

Question 48

What is pay equity legislation?

Answer 48

Requires equal pay for jobs of comparable value, even if performed mostly by different genders.

Question 49

What system must be used under pay equity?

Answer 49

A gender-neutral system assessing skill, effort, responsibility, and job conditions.

Question 50

Who sets and enforces minimum wage in Canada?

Answer 50

Each province and territory.

Question 51

What factors influence changes to minimum wage?

Answer 51

Inflation, unemployment, and political decisions.

Question 52

What was a controversial outcome of wage increases in Ontario?

Answer 52

Tim Hortons franchisees reduced employee benefits, leading to political backlash and public debate.

Question 53

What percentage of Canadian workers earned minimum wage in 2019?

Answer 53

10%

Question 54

Which groups are overrepresented in minimum wage jobs?

Answer 54

Youths aged 15–24 and women.