Chapter 3

Question 1

The pay relationships among jobs or skill levels within a single
organization; focuses attention on employee and management acceptance
of those relationships. It involves establishing equal pay for jobs of equal
worth and acceptable pay differentials for jobs of unequal worth.

Answer 1

internal alignment

Question 2

The array of pay rates for different work or skills within a single organization; they focus attention on differential compensation paid for work of unequal worth

Answer 2

pay structure

Question 3

An employee’s ability to see how individual performance affects incentive payout

Answer 3

line of sight

Question 4

What can an internal pay structure be defined by?

Answer 4

1. number of levels of work
2. pay differentials
3. the criteria

Question 5

Pay differences among levels within the organization, such as the difference in
pay between adjacent levels in a career path, between supervisors and
subordinates, between union and nonunion employees, and between executives
and regular employees.

Answer 5

differentials

Question 6

The work performed in a job and how it gets done (tasks, behaviors,
knowledge required, etc.

Answer 6

content

Question 7

The worth of the work; its relative contribution to organization objectives.

Answer 7

value

Question 8

The price of labor (the wage) determined in a competitive market; in other words,
labor’s worth (the price) is whatever the buyer and seller agree upon

Answer 8

exchange value

Question 9

relies on work content—tasks, behaviors,
responsibilities.

Answer 9

job-based structure

Question 10

Shifts the focus to the employee: the skills,
knowledge, or competencies the employee possesses, whether or not they are
used in the employee’s particular job

Answer 10

person-based structure

Question 11

The difference between labor’s use and exchange values. According to Marx,
under capitalism wages are based on labor’s exchange value—which is lower
than its use value—and thus provide only a subsistence wage

Answer 11

surplus value

Question 12

In contrast to Marxist “surplus value” theory, a theory that focuses on
labor demand rather than supply and argues that employers will pay a
wage to a unit of labor that equals that unit’s use (not exchange) value.
That is, work is compensated in proportion to its contribution to the
organization’s production objectives

Answer 12

marginal productivity

Question 13

A theory of job value that posits a “just” or equitable wage for any
occupation based on that occupation’s place in the larger social hierarchy.
According to this doctrine, pay structures should be designed on the basis
of societal norms, customs, and tradition, not on the basis of economic
and market forces.

Answer 13

“just wage” doctrine

Question 14

The practice of hiring outside vendors to perform functions that do not directly contribute to business objectives and in which the organization does not have a comparative advantage.

Answer 14

outsourcing

Question 15

Eliminating some layers or job levels in the pay structure.

Answer 15

delayering

Question 16

Jobs that are filled from the external labor market and whose pay tends to reflect
external economic factors rather than an organization’s culture and traditions.

Answer 16

entry jobs

Question 17

Concept concerned with the process used to make and implement decisions
about pay. It suggests that the way pay decisions are made and implemented
may be as important to employees as the results of the decisions.

Answer 17

procedural justice

Question 18

Fairness in the amount of reward distributed to employees

Answer 18

distributive justice

Question 19

The notion that larger differences in pay are more motivating than smaller
differences

Answer 19

tournament theory

Question 20

Compensation approach that links pay to the depth and scope of
competencies that are relevant to doing the work. Typically used in
managerial and professional work where what is accomplished may be
difficult to identify.

Answer 20

competency-based pay system

Question 21

A progression f jobs within an organization.

Answer 21

career path

Question 22

The process by which goods and services are delivered to the customer

Answer 22

Work flow

Question 23

Reflects the value of goods or services an employee produces in a job

Answer 23

Use value

Question 24

Several levels of job titles are removed so that all employees at all levels become responsible for a broader range of tasks but also have greater freedom to determine how best to accomplish what is expected of them. (more egalitarian)

Answer 24

Delayered structure

Question 25

Has eight different levels, with relatively small between-level differentials in comparison to the delayered structure which has only three levels (more hierarchical)

Answer 25

Layered structure

Question 26

Have fewer levels and smaller differentials between adjacent levels and between the highest and lowest-paid workers

Answer 26

Eqalitarian structures

Question 27

Have many levels and larger differentials. Jobs ordered according to their relative content and value

Answer 27

Hierarchical structure