All Modules (Textbook PowerPoints) Flashcards

Question

What is the management strategic policy?

Answer 1

 Making sure that the right people get the right pay for achieving the right objectives in the right way.

Answer 2

> Techniques tie the four basic policies to the pay objectives. > Techniques refer to the tools and mechanisms that are used to achieve the strategic objectives. > Many variations of pay techniques exist.

Answer 3

> the fundamental business directions that an organization has made in order to achieve its strategic objectives

Answer 4

> A strategic perspective focuses on those compensation decisions that help the organization gain and sustain competitive advantage.

Answer 5

> The greater the alignment, or fit, between the organizational strategy and the compensation system, the more effective the organization.

Answer 6

 different strategies within the same industry, e.g. Google, Microsoft, and SAS;  different strategies within the same company, e.g. SK Holdings.

Answer 7

> Pay systems should align with the organization's business strategy > When business strategies change, pay systems should also change

Answer 8

> A supporting compensation strategy for an innovator, places more emphasis on incentives encouraging innovations.

Answer 9

> Compensation in a cost cutter strategy encourages productivity increases

Answer 10

> The customer-focused strategy uses customer satisfaction incentives in the compensation strategy

Answer 11

 Pay systems should align with the organization's overall HR strategy and systems which include hiring, training and development.  Compensation is key to attracting, retaining, and motivating employees with the abilities necessary to execute the business strategy.

Answer 12

1) Assess total compensation implications 2) map a total compensation strategy 3) implement strategy 4) reassess the fit

Answer 13

Assess Total Compensation Implications:  Business strategy and competitive dynamics – understand the business.  HR strategy – pay as a supporting player or catalyst for change?  Culture/values – pay system mirror image and reputation..  Social and political context – affects compensation choices.  Employee preferences – wide-ranging, choice is good, up to a certain point.  Union preferences – adapt pay strategies to union-management relationship.

Answer 14

 Map a total compensation strategy using the five elements of the pay model.  Decisions in the pay model work in concert and the totality of decisions form the compensation strategy.

Answer 15

 Step 3 involves implementing the strategy through the design and execution of the compensation system.  Step 4 recognizes that the strategy must change to fit changing conditions, and involves periodic reassessment. Periodic reassessment is needed to continuously learn, adapt, and improve.

Answer 16

1) Is it aligned?  Is the compensation strategy aligned with the business strategy, economic and sociopolitical conditions, and the overall HR system? 2) Does it differentiate?  Is the compensation strategy different and difficult to imitate? 3) Does it add value?  Does the compensation strategy add value by providing a return on investment?

Answer 17

> “Best fit” approach suggests that a company is more likely to achieve competitive advantage if pay practices are aligned with business and overall HR strategies. reflects the company’s strategies and values.

Answer 18

> "Best practices” approach suggests that there exists a set of best-pay practices, which can be applied universally across all situations, results in better performance with almost any business strategy.

Answer 19

Need to identify what practices pay off best under what conditions.

Answer 20

 Internal alignment: Both small and large internal pay differences can be a best practice.  External competitiveness: Paying higher than the average paid by competitors can affect results.  Employee contributions: Performance-based pay can affect results.  Managing compensation: All dimensions of the pay strategy need to be considered.  Compensation strategy: Embedding compensation strategy within the broader HR strategy affects results.

Answer 21

> pay works best when there is shared success. > Shared success improves employee attitudes, behaviours, and performance when coupled with other “high performance” practices. > This is a virtuous circle

Answer 22

> when organization performance decreases

Answer 23

> refers to the relationships among different jobs/skills/competencies within a single organization → job structure. Often referred to as internal equity

Answer 24

 Supports organization strategy  Supports work flow  Motivates behavior  “line-of-sight” – relationship between each job and the organization’s objectives.

Answer 25

> is the process by which good and services are delivered to the customer.

Answer 26

 the number of levels,  the pay differentials between the levels, and  the criteria or bases used to determine those levels and differentials.

Answer 27

> Refers to the array of pay rates for different work or skills within a single organization

Answer 28

> The pay differences among levels are differentials.

Answer 29

 requiring more skill/knowledge,  performed in unpleasant work conditions, or  work that adds more value to the company.

Answer 30

> To motivate people to strive for promotion to higher-paying levels

Answer 31

> A structure based on content ranks jobs based on skills required, complexity of tasks, problem solving, and/or responsibility

Answer 32

> A structure based on value focused on the relative contribution of the skills, tasks, and responsibilities of a job to the organization’s goals

Answer 33

> Work performed in a job and how it gets done

Answer 34

> The worth of the work.

Answer 35

> A job-based structure relies on the work content – tasks, behaviours, responsibilities.

Answer 36

> A person-based structure shifts the focus to the employee.  The skills, knowledge, or competencies the employee possesses and if they are used in the job

Answer 37

* Economic Pressures * Government Policies, Laws and Regulations * Stakeholders * Cultures and Custom

Answer 38

* Strategy * Technology * Human Capital * HR Policy * Employee Acceptance * Cost Implications

Answer 39

Refer to the rules and procedures that:  determine the pay for the different jobs within a single organization, and  allocate employees among those different jobs

Answer 40

> Adapted by organizations with a low-cost, customer-focused strategy. > Has well-defined jobs with detailed steps or tasks. > Has well-defined pay structure > Examples: McDonald’s, Walmar

Answer 41

> Adapted by organizations that require constant innovation. > Jobs are flexible, adaptable and changing > Pay structures are more loosely linked to the organization to provide flexibility. > Example: 3M

Answer 42

> Fewer levels and smaller differentials. > Equal treatment can mean knowledgeable employees feel underpaid, who may quit or change their behaviours. > Results in higher performance when collaboration is required.

Answer 43

 Have multiple levels  Have detailed job description  Results in higher performance when work flow depends on individual effort.

Answer 44

Levels: Hierarchical: many Egalitarian: fewer Differentials: Hierarchical: Large Egalitarian: Small Both: Criteria: Same (Person or job) Supports: Hierarchical: Close fit Egalitarian: Loose fit Work organization: Hierarchical: Individual Performers Egalitarian: Teams Fairness: Hierarchical: Performance Egalitarian: Equal Treatment Behaviours: Hierarchical: Opportunities for promotion Egalitarian: Cooperation

Answer 45

 to jobs similar to their own,  their job to others at the same employer, or  their pay against external pay levels

Answer 46

> People compare the ratio of their own outcomes to inputs with that of others.

Answer 47

 Relationship between motivation and performance.  Example: players perform better where prize differentials are sizeable.  Works best in situations where individual performance matters most.

Answer 48

 Copy others and conform  Organizations use “best practices”, and are simply copied  What aligns with the strategy of one organization may not align with that of another.  It may not be possible to have “competitive advantage” by simply imitating practices.

Answer 49

* Undertake training * Increase experience * Reduce turnover * Facilitate career progression * Facilitate performance * Reduce pay-related grievances * Reduce pay-related work stoppages

Answer 50

 Efficiency > Aligned structures lead to better performance.  Fairness > Fair differentials motivate. > Small differentials facilitate cooperation and commitment.  Compliance > Comply with regulations of the country.

Answer 51

 Job-based structures: look at what people are doing and the expected outcomes  Skill- and competency-based structures: look at the person

Answer 52

 Collect and summarize work content information that identifies similarities and differences.  Determine what to value.  Assess the relative value.  Translate the relative value into an internal structure.

Answer 53

> the systematic process of collecting information about the nature of jobs.

Answer 54

> Involves the identification and description of what is happening on the job  required tasks, duties and responsibilities  required knowledge and skills  working conditions

Answer 55

 Job analysis potentially aids every HR function.  An internal structure based on job-related information provides a work- related rationale for pay differences.  In compensation, job analysis has two critical uses:  it establishes similarities and differences in the work contents of the jobs, and  it helps establish an internally fair and aligned job structure.

Answer 56

job analysis > job descriptions > job evaluation > job structure

Answer 57

> summaries reports that identify, define, and describe the job as it is actually performed.

Answer 58

> the comparison of jobs within an organization

Answer 59

> an ordering of jobs on the basis of their content or relative value

Answer 60

Groupings of related jobs with broadly similar content, i.e. marketing, engineering, office support, technical.

Answer 61

> groups of tasks performed by one person that make up the total work assignment of that person, i.e. customer support representative

Answer 62

> smallest unit of analysis, a specific statement of what a person does i.e., answer the telephone > similar tasks can be grouped into a task dimension , i.e. responsible for ensuring that accurate information is provided to the customer.

Answer 63

 Job Identification – includes job titles, departments, and the number of people who hold the job  Job content – elemental tasks or units of work, with emphasis on the purpose of each task

Answer 64

> Employee characteristics > internal relationships > external relationships

Answer 65

 Interviews  Focus Groups  Questionnaires  Observation  Journals and Diaries

Answer 66

 Human resource generalists and supervisors.  Someone thoroughly familiar with the organization and its job.

Answer 67

 Jobholders and supervisors.  Subordinates and employees in other jobs that interface with the job under study.  Number of incumbents from which to collect data varies with the stability of the job and ease of collecting the information

Answer 68

 Collect more data and discuss discrepancies, asking for sign off on revised results.  Disagreements can:  clarify expectations, learn a better way to do a job, and document how the job is performed.  Support of top management, and union officials, is critical.

Answer 69

> job description > job specification

Answer 70

 A written record of the tasks, duties, and responsibilities that make up a job.  Identifies and describes the job title, job summary, relationships to other jobs.

Answer 71

 Specifies the knowledge, skills, and abilities necessary to perform the job.

Answer 72

 Use generic job descriptions to avoid starting from scratch or to cross- check externally.  Descriptions of managerial/professional jobs are often more detailed – the job, its scope and accountability.  It is very important to verify the description with jobholders and supervisors to make sure it is accurate and complete, note needed clarifications.

Answer 73

 Work-related information is needed to determine pay  differences in work determine pay differences.

Answer 74

 The real issue should be: How much detail is needed to make these pay decisions?  enough to set pay levels, encourage continuous learning, increase the experience / skill of the work force, and minimize the risk of pay-related grievances.

Answer 75

 Employers are reducing jobs, cross-training employees so they can do a wider variety of tasks in order to increase productivity and reduce cost  Traditional job analysis makes distinctions among levels of jobs and increases rigidity.  Generic job descriptions can increase flexibility

Answer 76

> Refers to the movement of jobs to locations beyond a country’s borders.

Answer 77

 Hourly compensation and productivity differ across countries.  Availability of qualified workers and proximity to customers are considerations.  Both low-skill jobs and white-collar jobs are at risk for offshoring.  Managerial jobs and positions where local knowledge is essential are not as susceptible.

Answer 78

> Reliability: A measure of the consistency of results among various analysts/methods/ sources of data, or over time

Answer 79

> Validity: Examines the convergence of results among sources of data and methods.

Answer 80

> Acceptability: Data and process must be acceptable to job holders and managers.

Answer 81

The job information must be current

Answer 82

> Usefulness: Refers to the practicality of the information collected, e.g. Can it be used for multiple purposes?

Answer 83

 process of systematically determining the relative worth of jobs to create a job structure within an organization.

Answer 84

 The evaluation is based on a combination of job content, skills required, value to the organization, organizational culture, and the external market.

Answer 85

This potential to blend organizational forces and external market forces is both a strength and a challenge of job evaluation.

Answer 86

 Establish purpose of evaluation  Decide whether to use single or multiple plans.  Choose among alternative approaches.  Obtain involvement of relevant stakeholders.  Evaluate the usefulness of the plan.

Answer 87

 supports organization strategy,  supports work flow,  is fair to employees, and  motivates behavior toward organization objectives

Answer 88

> Establishing a purpose helps ensure the evaluation is a useful systematic process.

Answer 89

 Many employers may design different evaluation plans for different types of work.  The number of job evaluation plans hinges on how detailed it needs to be to make pay decisions, and how much it will cost.

Answer 90

1) Job ranking 2) Job classification 3) Point method

Answer 91

> Raters examine job description and arrange jobs according to their value to the company > Types: Simple, Alternation & Paired Comparison

Answer 92

> Classes or grades are defined to describe a group of jobs

Answer 93

> Numerical values (points) are assigned to specific job components; sum of values provides quantitative assessment of the job’s worth

Answer 94

> Orders job descriptions from highest to lowest based on relative value

Answer 95

> Simple, fast, and easy to understand and explain to employees; least expensive, initially.

Answer 96

 If ranking criteria is poorly defined, evaluations become biased.  Evaluators must be knowledgeable about every job.  Results are difficult to defend and costly solutions may be required.

Answer 97

 Orders job descriptions alternately at each extreme.  Evaluators agree on which jobs are the most and least valuable, then the next, etc.

Answer 98

 Uses a matrix to compare all possible pairs of jobs.  When all comparisons are completed, the job judged “more valuable” becomes the highest ranked job, and so on

Answer 99

1) A series of classes covers the range of jobs. 2) Class descriptions are the labels which capture general nature of work. 3) Job descriptions are compared to class descriptions to determine class level. 4) Greater specificity of the class definition improves the reliability of the evaluation. 5) To determine the number of classes and to write class descriptions, define boundaries between each class. 6) The end result is a job structure made up of a series of classes with a number of jobs in each class.

Answer 100

 This method allows the assignment of a numeric score to each job in an organization, through the identification of factors that are valued by the organization.  This procedure results in a relative ordering of jobs based on the number of points that each job “scores”

Answer 101

1) Conduct job analysis 2) Determine compensable factors 3) Scale the factors 4) Weight factors by importance 5) Communicate and train users 6) Apply to remaining jobs

Answer 102

 Benchmark jobs:  Its contents are well known and relatively stable over time.  The job is common across employers.  A reasonable proportion of the work force holds this job.  Should capture the diversity of work

Answer 103

> Characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives.

Answer 104

 based on the strategy and values of the organization,  based on the work performed, and  acceptable to the stakeholders affected by the resulting pay structure.

Answer 105

> The four universal compensable factors are: Skill, Effort, Responsibility and Working Conditions

Answer 106

1) Some factors may overlap or fail to account for unique criteria.  The belief that factors capture divergent aspects of a job. 2) Another challenge is called “small numbers”.  If even one job has a certain characteristic, it is used in the entire work domain

Answer 107

 Factors are scaled for presence  Most factor scales have 4 to 8 degrees.

Answer 108

 Criteria for scaling factors:  ensure the number of degrees is necessary to distinguish jobs,  use understandable terminology,  anchor degree definitions with benchmark job titles and/or work behaviors, and  make it apparent how the degree applies to the job.

Answer 109

 Factors are weighted for importance  Factor weights reflect the relative importance of each factor  Weights are often determined through an advisory committee – a priori judgment approach  Statistical modeling techniques determine the weight for each factor – this statistical approach is called policy capturing

Answer 110

 Step 5: Communicate the plan and train users  Prepare a manual and train users.  An appeals process may be included for employee recourse.  Employee acceptance is crucial.  Step 6: Apply to remaining jobs

Answer 111

 Design should involve managers and employees with a stake in the results.  A common approach is to use committees, task forces, or teams that include:  Employees from key operating functions  Union representatives  Compensation professionals  Consultants

Answer 112

 Fairness of the design process helps achieve:  employee and management commitment, trust, and acceptance of results.  Appeals/review procedures are required.  This ensures procedural fairness.  Procedures should be judged for their susceptibility to political influences.

Answer 113

> The final result of the job evaluation process is a hierarchy of work, or a job structure

Answer 114

 Although the point method allows an organization to develop one job evaluation plan for all jobs in the organization, most times it is difficult to identify one set of compensable factors that is applicable for all jobs.  Hence, organizations commonly have multiple structures, derived from different approaches, and applicable to different functional groups or units.

Answer 115

1) Job evaluation 2) Competency-based 3) Skill-based 4) Job evaluation

Answer 116

 Complex procedures and bureaucracy can cause users to lose sight of the objectives.  Allow flexibility to adapt to changing condition.  Flexibility without guidelines increases chaos.  Balanced guidelines ensure employees are treated fairly.

Answer 117

> Link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that is relevant to the work. > pay individuals for all the relevant skills for which employees have been certified regardless of whether the work they are doing requires all or just a few of those particular skill – the wage attaches to the person.

Answer 118

> In contrast, a job-based plan pays employees for the job to which they are assigned, regardless of the skills they possess.

Answer 119

> An advantage is higher flexibility as multi-skilled employees can be better matched to the work flow.

Answer 120

1) Specialist Depth 2) Generalist Breadth

Answer 121

 Pay is based on knowledge of the person doing the job, rather than on job content or output.  Basic responsibilities do not vary on a day-to-day basis

Answer 122

 Pay increases by acquiring new knowledge.  Higher pay from certification of new skills.  Responsibilities can change over a short time.

Answer 123

 Supports organization’s strategy  Supports work flow: A main advantage is matching people to changing workflow  Fair to employees: Skill-based plans may give workers more control over their work life but favoritism and bias may be a problem.  Motivates behaviours toward organization objectives

Answer 124

> Suited for continuous-flow technologies where employees work in teams.

Answer 125

> A systematic process to identify and collect information about skills required to perform work in an organization

Answer 126

 Defining the skills  Arranging them into a hierarchy  Bundling them into skill blocks

Answer 127

 Peer review, on-the-job demonstrations, or tests  Scheduled fixed review points and recertification

Answer 128

Employees and managers

Answer 129

> Need to monitor removal of certification when a skill is deemed obsolete

Answer 130

 Well accepted by employees and provide strong motivation for individuals to increase their skills.  Become increasingly expensive – when workers top-out  Unless flexibility permits a leaner staff, labor costs will be higher  A plan’s success is determined by how well it aligns with the organization’s strategy.

Answer 131

 Research showed 60% of companies starting a skill-based plan continued using the plan after seven years.  These plans may be a better fit in industries where labor costs are a small share of total costs.  These plans have an estimated 10-15% higher labor costs.  Are jack-of-all-trades really a master of none?  Greater increments of flexibility achieve fewer improvements.  There may be an optimal number of skills per individual.

Answer 132

 Supports organization’s strategy  Supports work flow: Competencies may require more tacit knowledge  Motivates behaviours toward achieving organization objectives

Answer 133

 Advocates say they can empower employees.  Critics worry about basing pay on personal characteristics.  Justifying pay differences may create risks that need managed

Answer 134

Competencies are underlying, broadly applicable knowledge, skills, and behaviours that form the foundation for successful work performance (exhibited by excellent performers more consistently than average performers)

Answer 135

 Core competencies are often linked to the mission statement.  Competency sets translate each core competency into action.  Competency indicators are the observable behaviors that indicate competency.

Answer 136

 A systematic process to identify and collect information about the competencies required for successful work performance

Answer 137

 Core competencies are not unique for each company.  What differs is how each company applies their competencies.  Competencies derive from leadership’s beliefs about the organization and its strategic intent

Answer 138

> Not all employees understand the connection.  If people are paid based on competencies, there must be a way to certify their possession of that competency.  There seems to be no objective way of certifying competency.

Answer 139

Competency-based structures have relatively few levels and wide differentials for increased flexibility.

Answer 140

 Competencies may identify outstanding performance but there is debate on whether they can be measurable and objective.  Competencies often morph into compensable factors.  Is it appropriate to pay for what a person is believe capable of doing versus what they are doing?  Are competency-based systems susceptible to discrimination?

Answer 141

> is to design and manage a pay structure that aids success

Answer 142

> by reassessing work/skills/competencies as necessary.

Answer 143

In practice, when evaluating higher-value, nonroutine work, the distinction between job- and person-based approaches blurs.

Answer 144

 Fairness in the plan’s administration.  Availability of sufficient information to apply the plan.  Adequate communication and employee involvement are critical for acceptance.

Answer 145

 A reliable evaluation is one where different evaluators produce the same results.  Validity refers to the degree the evaluation assesses relative job worth. (needs to be broadened to include the impact on pay decisions)

Answer 146

 Improve reliability by using evaluators familiar with the work and trained in job evaluation.  Some organizations use group consensus.

Answer 147

 formal appeals process allows a request for reanalysis and/or skills reevaluation.  employee attitude surveys assess perceptions of how useful evaluation is as a management tool.

Answer 148

>  Job evaluation may be susceptible to gender bias. These issues also apply to skill- and competency-based plans.

Answer 149

 Define the compensable factors and scales to include the content of jobs held predominantly by women.  Ensure that factor weights are not consistently biased against jobs held predominantly by women. Are factors usually associated with these jobs always given less weight?  Apply the plan in as bias free a manner as feasible. Ensure that the job descriptions are bias free, exclude incumbent names from the job evaluation process, and train diverse evaluators.

Answer 150

 The best approach to pay structures depends on the situation.  Provide sufficient ambiguity to afford flexibility The best approach to pay structures depends on the situation.  Provide sufficient ambiguity to afford flexibility

Answer 151

> Help determine pay for the wide variety of work and ensure that pay influences attitudes and behaviors and directs toward objectives.

Answer 152

> External competitiveness refers to the pay relationships among organizations—the organization’s pay relative to its competitors.

Answer 153

 Setting a pay level that is above, below, or equal to that of competitors.  Determining the mix of pay forms relative to those of competitors.

Answer 154

> Pay level refers to the average of the array of pay rates paid by an employer

Answer 155

Pay mix refers to various types of payments, or pay forms, that make up total compensation

Answer 156

 control costs and increase revenues, and  attract and retain employees.

Answer 157

> Have impact on labour costs – as pay level increases, labor costs increase. > Specifically, labour cost = # of employees x pay level

Answer 158

> Also have impact on organization’s ability to attract and retain talent.

Answer 159

1) Labour market factors 2) Product market factors 3) Organizational factors

Answer 160

> nature of supply and demand

Answer 161

> level of product demand and degree of competition.

Answer 162

> industry and technology > employer size > employee preferences > organizational strategy

Answer 163

> The market rate is where the lines for labor demand and labor supply cross.

Answer 164

 Employers always seek to maximize profits.  People are homogeneous and therefore interchangeable.  Pay rates reflect all costs associated with employment.  Markets faced by employers are competitive.

Answer 165

 Many people are seeking jobs,  they possess accurate information about all job openings, and  there are no barriers to mobility.  The assumptions about the behavior of potential employees are oversimplified...

Answer 166

> Analysis of labor demand indicates how many employees will be hired by an employer

Answer 167

 In the short run, an employer cannot change any factor of production except human resources  An employer’s level of production can change only if it changes the level of human resources  A single employer’s demand for labour coincides with the marginal product of labour

Answer 168

> is the additional output associated with the employment of one additional person, with other production factors held constant.

Answer 169

> Diminishing marginal productivity results when each additional employee has a progressively smaller share of production factors to work with, e.g., office space, number of computers, telephone lines and hours of clerical support.  Until these factors change, each new hire produces less than the previous hire.  The amount each hire produces is the marginal product.

Answer 170

> The marginal revenue of labor is the money generated by the sale of the marginal product (the additional output from one additional person) with other production factors held constant.

Answer 171

 As employers seek to maximize profits, each employer will hire until the marginal revenue equals the costs associated with the most recent hire.  The level of demand that maximizes profits is that level where marginal revenue is equal to the wage rate for that hire.  The model provides an analytical framework, but it oversimplifies

Answer 172

 Compensating Differentials  Efficiency Wage  Signalling

Answer 173

> Higher wages > Job evaluation and compensable factors must capture these negative characteristics.

Answer 174

This theory holds that high wages may increase efficiency and lower labor costs. But: > attracts higher quality applicants > lowers turnover > increases worker effort > reduces "shrinking" > reduces the need for supervision

Answer 175

> The underlying assumption is that pay level determines effort > Employers must have capability to select best employees. > Work must be structured to take advantage of greater effort.

Answer 176

> Signaling holds that employers design pay levels and mix to a signal of kinds of behaviors they seek.

Answer 177

> Employee signals include better training, education, and work experience.

Answer 178

Pay practices must match desired characteristics with the right kind and level of compensation.

Answer 179

1) Reservation Wage  Job seekers have a wage level below which they will not accept a job, no matter how attractive the other attributes. 2) Human Capital  Those who improve their potential productivity by investing in themselves receive higher earnings

Answer 180

> Other factors include geographic barriers, union requirements, lack of information, the risk involved and the unemployment rate.

Answer 181

 Labour-intensive industries tend to pay lower than technology-intensive industries  New technology within an industry influences pay levels

Answer 182

> Large organizations tend to pay more than small ones

Answer 183

> Better understanding employee preferences of pay forms is important in determining external competitiveness

Answer 184

 A variety of pay-level and pay-mix strategies exist  Higher pay levels may be well-suited to particular strategies such as higher value-added segments

Answer 185

> Product market conditions determine what an organization can afford to pay

Answer 186

Product demand – sets maximum pay level  Degree of competition  In highly competitive markets, employers are less able to raise prices without loss of revenues  Single sellers are able to set whatever price they choose

Answer 187

> Other factors include the productivity of labor, the technology employed, and the level of production relative to capacity

Answer 188

 Occupation: skills and knowledge required and their importance to organizational success  Geography: where the business is located, willingness to relocate, commute, or become a virtual employee  Competitors: Depending on its location and size, a company may be a relevant comparison even if it is not a product market competitor

Answer 189

 Employee skills are specific to the product market  Labour costs are a large share of total costs  Product demand is responsive to price changes  Supply of labour is not responsive to changes in pay

Answer 190

 To lead  To meet (match)  To follow competition (lag)

Answer 191

> may affect the organization’s ability to achieve its compensation objectives, and in turn, affect employees’ performance.

Answer 192

> Pay-level research focuses on base pay and ignores bonuses, incentives, options, employment security, benefits, or other forms of pay.

Answer 193

 The most common policy is to match rates paid by competitors.

Answer 194

 A pay-with-competition policy tries to match wage rates paid by competitors.  A match policy ensures employer’s ability to attract applicants will be approximately equal to its labor market competitors.  While it avoids placing the employer at a disadvantage in pricing products, it may not provide a competitive advantage in its labor markets.

Answer 195

 Maximizes the ability to attract and retain quality employees, and minimize dissatisfaction with pay.  Higher wages eased attraction, reduced turnover and absenteeism, reduced vacancy rates and training time, and better-quality employees.  Negative effects include the need to increase wages of current employees and it may mask negative job attributes that contribute to high turnover

Answer 196

 Paying below market rates may hinder an organization’s ability to attract potential employees unless coupled with higher future returns.  The combination may:  increase employee commitment, and  foster teamwork,  which may increase productivity.  Unmet expectations can have negative effects.  It is possible to lag on pay-level but lead on other work returns.

Answer 197

 Vary the policy for different occupational families.  Vary the policy for different forms of pay.  Adopt different policies for different business units facing different competitive conditions.

Answer 198

“Employer of choice” corresponds to the brand the company projects as an employer

Answer 199

> Shared choice begins with traditional options of lead, meet, or lag  Also offers employees choices in the pay mix

Answer 200

Risks:  Employees will make “wrong” choices  Offering too many choices may lead to confusion, mistakes, and dissatisfaction

Answer 201

> These are particularly clear when the value of stock is volatile

Answer 202

> Some companies prefer to report the mix using a “dashboard.” > Changes the focus to comparing each component by itself to the market.

Answer 203

> the internal structure?

Answer 204

> While percentages vary, greater emphasis on performance at higher levels is common practice among organizations.

Answer 205

1) contains operating expenses, 2) such as increasing the pool of qualified applicants, 3) increases quality experience, reduces, 4) voluntary turnover, 5) increases profitability of union free status, 6) reduces pay related work stoppages

Answer 206

 No research suggests under what circumstances managers should choose which pay-mix.  Pay level may not be a source of competitive advantage.  Wrong pay level may be a serious disadvantage

Answer 207

 Satisfaction with pay is directly related to pay level.  Sense of fairness is related to how others are paid.

Answer 208

 Employers must pay at or above the legal minimum wage  Prevailing wage laws, equal rights and other legislation must be met.

Answer 209

 Specify the employer’s competitive pay policy  Define the purpose of the survey  Select relevant market competitors  Design the survey  Interpret survey results and construct the market line  Construct a pay policy line that reflects the external pay policy  Balance competitiveness with internal alignment through the use of pay ranges, flat rates and, or bands

Answer 210

 Translating an external pay policy into practice requires information on the external market.  Surveys provide the data for translating that policy into pay levels, pay mix, and structures.  A survey is the systematic process of collecting and making judgments about the compensation paid by other employers

Answer 211

1) Adjust pay level—how much to pay?  Based on the changing rates paid by competitors 2) Adjust pay mix—what forms?  Base, bonus, stock, benefits relative to that offered by competitors 3) Adjust pay structure?  validate job evaluation results; establish internal structures 4) Study special situations  To analyze specific pay-related problems 5) Estimate competitors’ labour costs  “competitive intelligence”

Answer 212

 the same occupations or skills,  hiring employees within the same geographic area, or  the same products and services.

Answer 213

> new organizations and/or organizations with unique jobs may fuse diverse factors making relevant markets fuzzy

Answer 214

1) Identification 2) Financial performance 3) size 4) structure

Answer 215

 Cash forms used: base pay, pay increase schedules, long- and short-term incentives, bonuses, cost of living adjustments, overtime and shift differentials  Non-cash forms used: composition of benefits and services, particularly the degree of coverage and contributions to medical and health insurance and pensions

Answer 216

> the job, the individual, the pay?

Answer 217

1) productivity 2) total labour costs 3) attraction 4) retention 5) employee views

Answer 218

1) Verify accuracy of match  If a company job is similar, but not identical, use the benchmark conversion / survey leveling approach.  Multiply the survey data by some factor judges to be the difference between the company job and the survey job 2) Verify anomalies  Does any one company dominate?  Do all employers show similar patterns?  Are there outliers?

Answer 219

 Employers with widely divergent pay rates  Anomalies or outliers

Answer 220

> measure to describe a set of date  mode, mean, median and weighted mean

Answer 221

> Variation – degree of dispersion of data  standard deviation, quartiles and percentiles

Answer 222

 Wages paid by competitors is constantly changing, so a survey is outdated before it is available.  Aging or trending refers to the process of updating pay data to forecast the competitive rates for the future when pay decisions are implemented

Answer 223

> A market pay line links a company’s benchmark jobs on the horizontal axis with market rates paid by competitors on the vertical axis.

Answer 224

 Free hand approach  Regression Analysis

Answer 225

> Can then be used to set pay rates for non-benchmark jobs

Answer 226

 Internally aligned structure - Horizontal axis  External competitive data - Vertical axis

Answer 227

 Two aspects of pay structure:  Pay-policy line  Pay ranges

Answer 228

 Choice of measure: a company can use a specific percentile for base pay and another percentile for total compensation.  Specify a percent above or below market line an employer intends to “lead” or “lag”, or simply “match

Answer 229

 The first step is to group different jobs considered substantially equal for pay purposes into grades. The objective is for all jobs similar for pay purposes to be in one grade.  Grades enhance an organization's ability to move people among jobs with no change in pay  All the jobs within a single grade will have the same pay range.  If evaluation points are close and fall on either side of grade boundaries, the difference in salary may be out of proportion to the difference in the value of the job content

Answer 230

A midpoint where the pay-policy line crosses the center of the grade, a minimum and a maximum

Answer 231

1) The size of the range is a judgment about how the range supports career paths, promotions, etc. 2) Larger ranges in the managerial jobs reflect the greater opportunity for performance variations in the work. 3) Some firms use percentiles as maximums and minimums while other establish them separately.

Answer 232

Internal and external pressures?

Answer 233

 Recognize individual performance differences with pay,  Meet employees' expectations that their pay will increase over time, even in the same job, and  Encourage employees to remain with the organization

Answer 234

 Differences in quality among individuals applying for work,  Differences in the productivity or value of these quality variations, and  Differences in the mix of pay forms competitors use.

Answer 235

1) High grade overlap and low midpoint differentials indicate small differences in the value of jobs in adjoining grades.

Answer 236

> The size of differentials between grades should support career movement through the structure.

Answer 237

> Overlap ought to be large enough to induce employees to seek promotions.

Answer 238

 Skill-based plans establish a single flat rate for each skill level, regardless of performance or seniority.  Many collective bargaining contracts establish flat rates per job.  Increasingly, broad bands are being adopted for greater flexibility

Answer 239

Involves collapsing salary grades into a few broad bands, each with a minimum and a maximum

Answer 240

 Provide flexibility to manage career growth and administer pay – broad banding encourages employees to seek growth by moving cross- functionally;  Support organizations that have eliminated layers of managerial jobs;  They foster cross-functional growth and development; and  Helps manage the reality of fewer promotions in flat organizations.

Answer 241

> Broad bands may be combined with traditional practices by using midpoints, zones, or other control points.

Answer 242

A job structure orders jobs on the basis of internal factors  Reflected in job evaluation or skill certification

Answer 243

 Pay structure is anchored by the organization’s external competitive position  Reflected in its pay-policy line

Answer 244

 May entail a review of : job analysis, job evaluation and market data  Differences may arise due to shortage of a particular skill, driving up market rate.

Answer 245

 Market pricing emphasizes external competitiveness and deemphasize internal alignment.  Sets pay structures almost exclusively on external market rates. Pure market pricing at its extreme ignores internal alignment

Answer 246

 Unique or difficult-to-imitate aspects of the pay structure are deemphasized.

Answer 247

> Fairness is presumed to be reflected by market rates.

Answer 248

That part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments

Answer 249

> Examples include: life insurance, pension plan, workers’ compensation, vacation

Answer 250

1) Cost-effectiveness of benefits 2) Employer impetus 3) Unions 4) Government impetus

Answer 251

1. relationship to total compensation costs 2. costs relative to benefits 3. Competitor offerings 4. Role of benefits in attractions, retention, motivation 5. Legal requirements

Answer 252

1. Fairness in relationship to what others receive 2. Personal needs linked to age, gender, martial status, and number of dependants

Answer 253

 ensuring external competitiveness: Know what your competitors offer  adequacy of benefits: there is no magic formula for defining adequacy.  The answer may be a relationship between benefit adequacy and cost effectiveness.  Are employee benefits cost justified?

Answer 254

 Who should be protected?  How much choice should employees have among an array of benefits?  How should benefits be financed?

Answer 255

 There are a variety of employees and statuses.  Are there probationary periods?  Which dependents are covered?  Should retirees be covered?  How about survivors of deceased employees?  Should coverage be limited to full-time workers?

Answer 256

 One extreme is standard benefit package that offers no choice.  The other extreme is “cafeteria-style”, or flexible benefit plans.  Most companies are offering some choices.  Flexible plans may increase employee recognition of benefit value.

Answer 257

 Non-contributory - employer pays total costs  Contributory - costs shared between employer and employee  Employee-financed - employee pays total costs for some benefits

Answer 258

 Workers’ Compensation  Canada/Quebec Pension Plan  Employment Insurance  Pay for time not worked

Answer 259

 Pensions  Life Insurance  Extended Healthcare  Income Security  Pay for time not worked  EAP and other benefits

Answer 260

> a mandatory, government-sponsored, employer-paid no-fault insurance plan that provides compensation for injuries and diseases that arise out of, and while in the course of, employment

Answer 261

 Lost earnings due to temporary/permanent disability  Health care expenses  Survivor benefits after fatalities

Answer 262

 compensation varies from 75 to 90 percent of net earnings (two jurisdictions provide 75 percent of gross earnings)

Answer 263

> cost control is an ongoing concern

Answer 264

 a mandatory, government-sponsored pension plan for all employed Canadians  funded equally by employers and employees  provides benefits upon  retirement  disability  death

Answer 265

 a mandatory government-sponsored plan for all employed Canadians that provides workers with temporary income replacement as a result of employment interruptions due to circumstances beyond their control  funded by employer and employee contributions  basic benefit is 55 percent of insurable earnings

Answer 266

Vacation  minimum amount of paid vacation must be provided to employees Holidays  varies by jurisdiction Paid breaks  uninterrupted break within a work day  e.g. 30 minute break on a shift over 5 hours

Answer 267

> does not apply to those on short-term contract or fired for just cause

Answer 268

 amount of payment varies according to jurisdiction and circumstances:  pay in lieu of reasonable notice  severance pay  pay for mass layoffs

Answer 269

 plans that provide income to an employee at retirement as compensation for work performed now: 1) Defined benefit plans 2) Defined contribution plans

Answer 270

> employer agrees to provide a specific level of retirement pension, the exact cost of which is unknown

Answer 271

> employer agrees to provide specific contributions but the final benefit is unknown

Answer 272

 group life insurance  accidental death and dismemberment insurance  dependent life insurance  optional, employee-paid insurance  retiree life insurance

Answer 273

 cover expenses not payable under provincial/territorial plans  prescription drug coverage considered most important benefits by employees  medical cost control is biggest issue facing benefits managers today

Answer 274

 preventive health care/wellness programs  deductibles, coinsurance...  flex benefits

Answer 275

1) Sick leave plans 2) STD plans 3) LTD plans

Answer 276

> provide specified number of paid sick days per month or per year

Answer 277

> provide continuation of part or all of earnings during absence due to non-work related illness or injury

Answer 278

 provide continuation of part of earnings during long-term absence due to non-work related illness or injury  claims and costs rising sharply  psychiatric disabilities fastest-growing

Answer 279

 Paid rest periods, coffee breaks, travel time...  Vacations  Holidays  Leaves  Bereavement  Jury duty  Community volunteering  sabbaticals

Answer 280

 credit unions  counselling services  employee assistance programs (EAPs)  other personal services (Social and Recreational)

Answer 281

 subsidized childcare  eldercare  subsidized employee transportation  food services  educational subsidies  family-friendly benefits

Answer 282

 communicating the benefits program  revolves around four issues: what is communicated, to whom, how it is communicated, and how frequently.  Effective communication involves repetition and consistency.

Answer 283

> a claims processor determines eligible benefits and ensures coordination of benefits > cost containment

Answer 284

 Deductibles and coinsurance  Probationary periods  Benefit limitations  Administrative cost containment  Outsourcing is a common cost containment strategy – hiring vendors to administer the benefit program  Preventive health programs

Answer 285

> Employers want employees to perform in ways that lead to better organizational performance

Answer 286

 Ensure compensation is sufficiently attractive to make recruiting and hiring good potential employees possible (attraction)  Make sure the good employees stay with the company (retention)  Build further knowledge and skills (development)  Find ways to motivate employees to perform well on their jobs (motivation)

Answer 287

= f (A,M,E) where: A = Ability, M = Motivation to perform and E = Supportive Environment

Answer 288

 What is important to a person?  Offering it in exchange for some  Desired behavior

Answer 289

1) Content Theories (what is important to a person)  Maslow’s Need Hierarchy and Herzberg’s Two-Factor Theory 2) Process Theories (the nature of the exchange)  Expectancy Theory, Equity Theory and Agency Theory 3) Reinforcement Theories (desired behaviour)  Reinforcement Theory and Goal Setting Theory

Answer 290

Level of pay and pay system characteristics

Answer 291

 Materialistic – concerned about pay level.  Low self-esteem – want little pay for performance.  Risk takers – want pay based on performance.  Risk-averse – want less performance-based pay.  Individualist – want pay based on individual performance

Answer 292

> Reward systems should be designed to attract people with desired personalities and values

Answer 293

 Pay based on individual or group performance  Level of employee satisfaction with pay  How organizations pay

Answer 294

 Work variety and challenge  Development opportunity  Social  Status recognition  Work importance

Answer 295

 New skills will help employees on current and future job demands  Skill-based pay is intended to pay employees for learning new skills

Answer 296

> Evidence indicates that pay for skill may not increase productivity, but it does focus people on believing in the importance of quality and in turning out significantly higher quality products

Answer 297

> results in better individual and organizational performance.

Answer 298

> performance

Answer 299

> employees may exhibit rewarded behaviors to the exclusion of other desired behaviors.

Answer 300

 Performance appraisal is the process of evaluating or appraising an employee’s performance on the job.  Performance must be accurately measured in order to assess if compensation efforts are working .  Performance reviews are used in a wide variety of decision in organizations: one is to guide allocation of merit increases.

Answer 301

> The biggest complaint from employees and managers is they are too subjective. There lurks the possibility of unfair treatment by supervisors

Answer 302

 Improve appraisal formats  Select the right raters  Understand how raters process information  Train raters to rate more accurately

Answer 303

ranking and rating

Answer 304

 The rater compare employees against each other  Methods include straight ranking, alternation ranking, and paired-comparison ranking

Answer 305

 Requires evaluating employees on some absolute standard rather than relative to other employees  Each performance standard is measured on a scale whereby appraisers can check the point that best represents the employee’s performance.  Examples: standard rating scale; Behaviorally anchored rating scales (BARS); management by objectives (MBO)

Answer 306

360-degree feedback is rare in appraisals or pay decisions.  Supervisor as Rater: more than 80% of input but prone to halo and leniency errors.  Peer as Rater: undistorted perspective but may have no appraisal experience, creating group tension or yields to leniency.  Self as Rater: ratings may be too lenient and unreliable.  Customer as Rater: may be surveyed, or rated by the customer service process.  Subordinate as Rater: more reliable if anonymous.  Focus on who might conduct the performance reviews and which of these sources is more likely to be accurate

Answer 307

 Assesses employee performance from five points of view: supervisor, peer, self, customer, subordinate  Improves employee understanding and self-awareness  Promotes communication between supervisors and staff  Promotes better performance and results

Answer 308

 Observes the behavior of a ratee  Encodes ratee behavior  Stores information in  Information is reconsidered and integrated with other available information as rater decides on final ratings

Answer 309

 Reviews performance dimensions  Retrieves stored observations to determine relevance to performance dimensions

Answer 310

 Errors in the rating process  Errors in observation (attention)  Errors in storage and recall  Errors in the actual evaluation

Answer 311

 Guilt  Embarrassment about giving praise  Taking things for granted  Not noticing good or poor performance  The halo effect  Dislike of confrontation  Too little time spent on preparation

Answer 312

 general appearance – gender and race.  patterns and variability of performance.  improved/declining performance

Answer 313

> Raters store and retrieve information in traits, regardless of accuracy.  Memory decay – raters forget things.

Answer 314

 Can send a political message.  If the purpose divides a fixed pot of merit increases, ratings are less accurate.  Providing face-to-face feedback to subordinates is daunting, leading to inaccuracies.  When required in writing, ratings are more accurate

Answer 315

> Goal is to reduce psychometric errors (leniency, severity, central tendency, halo), by familiarizing raters with their existence

Answer 316

> Exposes supervisors to the performance dimensions to be used in rating (e.g., quality of work, job knowledge), thus clarifying dimensions.

Answer 317

> Provides raters with a standard of comparison or frame of reference for making appraisals (what constitutes good, average, and bad).

Answer 318

 Provide a sound basis for establishing performance appraisal dimensions and scales associated with each dimension  Involve employees in every stage of developing performance dimensions and building scales  Ensure that raters are trained in use of appraisal system and that all employees understand how the system operates  Ensure that raters are motivated to rate accurately  Raters should maintain a diary of employee performance  Raters should attempt a performance diagnosis to determine in advance if performance problems arise because of motivation, skill deficiency, or external environmental constraints  Feedback to employees should be timel

Answer 319

Efficiency, Fairness and Compliance

Answer 320

1) Strategy:  The plan must support corporate objectives, should link well with HR strategy/objectives, and how much increase makes a difference? 2) Structure:  Is organization structure decentralized, allowing flexible variations on a general plan? 3) Standards:  The key rests on standards. Concerns include objectives, measures, eligibility, and funding.

Answer 321

 Distributive justice – fairness in the amount that is distributed to employees.  Procedural justice – fairness of the procedures used to determine the amount of rewards.  A key element in fairness is communications.

Answer 322

 Across-the-board increase  Cost-of-living adjustments  Increases based on seniority

Answer 323

 Behaviors  Competencies  Traits

Answer 324

 A definition of performance.  A continuum showing levels from low to high.  Awarded merit increase at each level

Answer 325

> is a promotion accompanied by a salary increase

Answer 326

 Size of increment is approximately double a normal merit increase  Represent a reward to employees for commitment and exemplary performance

Answer 327

> pay that varies with some measure of individual, team or organizational performance > these plans can have a positive impact on performance if they are designed well > also called variable pay plans

Answer 328

 Signals a movement away from entitlement toward pay that varies with performance

Answer 329

 increasing competition from foreign producers, and  a fast-paced business environment requires workers adapt quickly to change.

Answer 330

 Merit pay  Lump-sum bonuses  Individual spot awards  Individual incentive plans

Answer 331

 A merit pay system links increases in base pay to how highly employees are rated on a performance evaluation.  Employee achievements are rewarded every year the employee remains on the job.  Merit pay is expensive.  Many argue it does not achieve the desired goal of improving employee and corporate performance.  Merit pay does have a small, but significant, impact on performance.

Answer 332

 Improve accuracy of performance ratings  Allocate enough money to truly reward performance  Make sure size of merit increase differentiates across performance levels

Answer 333

 Specify a continuum describing different levels from low to high on performance measure  Decide how much of a merit increase is given for different levels of performance  A more complex guideline ties pay not only to performance but also to position in the pay range

Answer 334

 Used as a substitute for merit pay.  Based on performance and received as an end-of-year bonus. Not built into base pay.  Viewed as less of an entitlement than merit pay.  Less expensive than merit pay over the long run

Answer 335

 Viewed as highly or moderately effective  Usually awarded for exceptional performance.  Larger companies use formal mechanisms while smaller companies may be more casual.

Answer 336

 Offer a promise of pay for some objective, pre-established level of performance.  All plans use an established standard for comparing worker performance to determine magnitude of the incentive pay.  There are advantages and disadvantages.  The most frequently implemented is a straight piecework system. Others include the Taylor plan and the Merrick system.

Answer 337

 A standard is established against which team performance is compared to determine the magnitude of the incentive pay.  Performance measures can be: customer-focused, financially focused, capability focused, internal process focused

Answer 338

 All team incentive plans can be described by common features:  The size of the group that participates in the plan.  The standard against which performance is compared.  The payout schedule.

Answer 339

1) Gain-sharing plans 2) Profit sharing plans 3) earnings at risk plans

Answer 340

 employees share in cost-savings or productivity gains  Examples: Scanlon, Rucker, Improshare

Answer 341

 variable pay plans requiring a corporate profit target to be met before any payouts occur

Answer 342

> incentive plans sharing profits in successful years and reducing base pay in unsuccessful years

Answer 343

 Strength of reinforcement  Productivity standards – usually historical standards  Sharing the gains  Scope of the formula  Perceived fairness of the formula  Ease of administration  Production variability

Answer 344

> Incentives are derived as a function of the ratio between labor costs and sales value of production (SVOP) which includes sales revenue and value of goods in inventory

Answer 345

> A ratio is calculated that expresses the value of production required for each dollar of total wage bill

Answer 346

> Any savings arising from production of agreed-upon output in fewer than expected hours is shared by firm and workers

Answer 347

1) A productivity norm  Requires effective measurement of base-year data, and  acceptance by workers and management of this standard for calculating bonuses. 2) Effective worker committees  Their primary function is reviewing suggestions on how to improve productivity or reduce costs.

Answer 348

 Focus on a predetermined index of profitability.  However, most employees do not feel their jobs have a direct impact on profits.  The trend is to combine the best of gain-sharing and profit-sharing plans.  A company specifies a funding formula for any variable payout linked to some profit measure

Answer 349

 Employee base pay is constant  Variable pay increases in successful years  No reduction in base pay and no variable pay in poorly-performing years

Answer 350

 Base pay is reduced by some amount relative to the level that would be offered in a success-sharing plan  These plans shift part of the risk from the company to the employee.  May result in decreased employee satisfaction and higher turnover

Answer 351

 Focus on performance beyond one-year.  Recent growth in LTI plans is spurred by a desire to motivate longer-term value creation.  There is very little evidence that stock ownership leads to better corporate performance.  Some evidence that stock ownership increases internal growth

Answer 352

 Most common type of long-term incentive  Right to purchase stock at a specified price for a fix time period.

Answer 353

 stock options are granted to a wide variety of employees and not just to senior executives.  Can reinforce strong emphasis on performance or inspire greater commitment and retention.

Answer 354

 Generate long-term effects.  Foster employee willingness to participate in the decision-making process.  Have little impact on productivity or profit

Answer 355

> they are strategically important to the company, and their positions hold built in conflict

Answer 356

They include: Supervisors, Corporate Directors, Executives, Professional Employees, Salespeople and Contingent Workers

Answer 357

 In the form of add-on packages not received by other employees  Or as compensation components entirely unique in the organization

Answer 358

 Key base salaries of supervisors to an amount exceeding the top-paid subordinate in the unit  Pay supervisors for scheduled overtime

Answer 359

> A trend in supervisory compensation is increased use of variable pay

Answer 360

> Stock options have gained prominence in the corporate directors’ package

Answer 361

 The disconnect between pay and performance of executives has been a source of contention for decades.  Compensation committees are important in determining executive base pay.

Answer 362

 Components include base salary, annual bonuses, long-term incentives, benefits and perquisites

Answer 363

A common committee approach is setting compensation in the middle of best/worst major competitors.  Higher compensation for those likely to be raided.  Larger companies tend to pay higher

Answer 364

 Salary plateaus due to knowledge obsolescence of mature professionals  Dual-career ladder shows two different ways of progressing in an organization

Answer 365

 Performance-based incentives, e.g. profit sharing, stock ownership  Bonuses: linked to company profits or personal performance; incentives linked to completion of projects on or before deadlines  Perks based on unique needs  Management ladder versus technical ladderWhat

Answer 366

 Growing trend toward linking sales compensation to customer satisfaction measures  This profession requires high initiative and low supervision.  Standard compensation might not work  More reliance on incentive payments tied to individual performance  Sales jobs do not fit with either straight salary or straight commission packages. Combination plans are often used.  High demand products rely more on base pay while incentives increase with sales ability.

Answer 367

1) the nature of people who enter sales 2) Organizational strategy 3) Market maturity 4) competitor practices 5) economic environment 6) product to be sold

Answer 368

 Defined as anyone hired  through a temporary help agency,  on an on-call basis, or  as an independent contractor

Answer 369

 Workers hired through temporary-help agency and on-call basis often earn less  As the employee status is temporary and benefits are less or nonexistent

Answer 370

 One way is to view contingent workers as a pool of candidates for future permanent hire.  A second way is to champion the idea of boundary-less careers.  Here, contingent status is viewed as part of a fast-track developmental sequence.  Lower wages are offset by opportunities for rapid development of skills.

Answer 371

Governments’ interests include:  procedures for determining pay are fair (no pay discrimination)  safety nets for the unemployed and disadvantaged are sufficient (minimum wage, employment insurance)  employees are protected from exploitation (human rights, pay equity)  Compliance and fairness are continuing compensation objectives.

Answer 372

 Governments (federal, provincial/territorial and municipal) employ a lot of workers  Indirectly affects labor demand through its purchases and financial policy decisions

Answer 373

 Affects labor supply through legislation  Licensing requirements restricts labor supply.  Immigration policy and how rigorously it is enforced is an important factor in labor supply

Answer 374

 minimum wage  paid vacation  paid holidays  standard hours of work and overtime pay  pay on termination of employment  minimum age of employment  equal pay for equal work by men and women

Answer 375

 based on Charter of Human Rights and Freedoms in Canadian Constitution  equal treatment in employment and opportunity for employment regardless of race, colour, religion, sex...

Answer 376

 issue relating to the gender wage gap  gender wage gap is the amount by which the average pay for female workers is less than the average pay for male workers

Answer 377

 skill: experience, training, education, and ability as measured by job performance requirements  effort: mental or physical, the degree of effort actually performed on the job  responsibility: the degree of accountability required in the job performance  working conditions: the physical surroundings and hazards of a job; inside/outside, heat/cold, and poor ventilation

Answer 378

 differences in occupational attainment; women historically segregated in small number of occupations e.g., sales, nursing  differences in number of hours worked  differences in industries and firms  differences in union membership  presence of discrimination

Answer 379

 General wage and benefit levels  The structure of wages  On non-unionized firms (also known as spillover effect)  Wage and salary policies and practices in unionized firm

Answer 380

 union workers earn about 10 percent more than non-union workers  size of the gap varies from year to year  union impact higher during periods of higher unemployment and slow economy  union impact smaller during strong economy  union benefits 20 to 30 percent higher than non-union

Answer 381

 Two-tier wage pay plans differentiate pay based on hiring date.

Answer 382

 as a cost control strategy to allow expansion or investment, or  as a cost-cutting device to allow economic survival.

Answer 383

 employers avoid unionization by offering wages, benefits, and conditions won in unionized firms.  Management avoids union ‘interference’ in decision making and workers enjoy rewards.  Occurs less often as union power diminishes.

Answer 384

> Collective agreements specify: basis of pay, occupation-wage differentials, experience/merit differentials, vacations and holidays, and wage adjustment provisions

Answer 385

> Unions are receptive to alternative reward systems linking pay to performance as employers face extreme competitive pressures, e.g. competitor’s lower labour costs

Answer 386

n unionized firms that experiment with alternative reward systems, the union usually insists on safeguards that protect both the union and its workers:  Group-based performance measures with equal payouts to members.  Use of objective performance measures  Use of measures based on past performance

Answer 387

 controlling employment: number of employees and hours  controlling average cash compensation costs

Answer 388

> through layoffs or exit incentives

Answer 389

 Reduces benefit costs.  Opportunity to reshape the workforce.  However, regulations make cuts difficult.  May harm employee relations, increase turnover.  Increases unemployment insurance tax rates and administrative costs and disrupts workflow.  May harm future business if cut too deep

Answer 390

> plan changes and controlling health care benefits

Answer 391

The four factors in the labor cost model are not independent.  Number of employees  Hours worked  Cash compensation  Benefit costs

Answer 392

> Top management sets an estimated pay increase budget for the whole organization

Answer 393

> A typical approach is planned pay-level rise,  the percentage increase in average pay.  factors influencing size of increase:  current year’s rise  ability to pay  competitive market rates  turnover effects, and  cost of living

Answer 394

1) Instruct managers in compensation policies 2) distribute forecasting instructions and worksheets 3) Provide consultation to managers 4) Check data and compile reports 5) analyze forecasts 6) review and revise forecasts and budgets with management 7) conduct feedback with management 8) monitor budgeted vs. actual increaseds

Answer 395

 Range maximums and minimums  Broad bands  Compa-ratios  Variable pay  Analyzing costs  Analyzing value added

Answer 396

 Broad bands offer managers flexibility  Bands may be more about career management than pay decisions.

Answer 397

 Range midpoints reflect the pay policy line in relation to external competition.  To assess how pay relates to the midpoint, an index called a compa-ratio is often used  Compa-ratio = actual rate paid divided by the range midpoint

Answer 398

 Variable pay must be re-earned each period.  The financial insecurity may affect employees.  Costing out wage proposals is done prior to recommending pay increases.  Compensation drives future revenues.  Companies analyze the value added of pay decisions and influence on revenues.  Requires a shift in viewing compensation as an investment as well as an expense  Employers must keep compensation current and competitive.  To retain high performing employees

Answer 399

 Can be a leading catalyst for change, or  A follower of change.

Answer 400

Compensation communicates what is important and what is not.

Answer 401

 Understanding is shaped indirectly by paycheck.  Shaped directly through formal communication.

Answer 402

 Attract, retain, and motivate performance.  Employees misperceive the pay system.  Especially helpful for benefit information.

Answer 403

Step 1 Define the objectives of the communication program. Step 2 Collect information from executives, managers, and employees to assess current perceptions, attitudes and understanding. Step 3 Design a communication program that will convey the information needed to accomplish the original objectives.  A marketing approach includes surveys, advertising, and websites.  A communication approach focuses on explaining how pay is determined. Steps 4 & 5 Determine the most effective media for the campaign. Step 6 Evaluation of the campaign.

Answer 404

 decentralized – business units design and administer their own system.  centralized – headquarters designs and administers the compensation system.

Answer 405

Controlling decentralization problems  Develop corporate-wide guidelines  May differ for each major pay technique  Outsourcing is a viable alternative  May save money and increase quality  May lose responsiveness to problems, have less control over decisions critical to all employees, and risk information leaked to competitors

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