identifying the market competitive pay rates.

QUIZ

1. The quality check developed for FES compares levels of all factors with rating of factor (Points : 1) Know-How

Accountability

Knowledge Required

Supervision Given

Question 2. 2. The main purpose for conducting a compensation survey is to collect data which will assist a company in (Points : 1)
establishing internal equity in its compensation program

establishing minimum job requirements

identifying the market competitive pay rates

identifying its key or benchmark jobs

Question 3. 3. Which of the following is not one of the three major factors to be considered when determining whether or not to conduct a compensation survey? (Points : 1)
promoting worker productivity

hiring and retaining competent employees

developing an adequate and acceptable pay structure

identifying the labor market that organizations hire from

Question 4. 4. Normally the best technique for collecting compensation survey data, considering time required, costs, and accuracy, is (Points : 1)
telephone survey

completion of a questionnaire during a personal interview

mailed questionnaire

a conference with a group of compensation specialists

Question 5. 5. In designing a compensation survey, different kinds of pay data may be obtained. The most useful kind of pay data to collect is (Points : 1)
average pay and number of employees

the actual pay for each employee

the median pay

the pay range and midpoint of a particular job

Question 6. 6. For which one of the following groups of employees would it not be unusual to see a range that is less than 25%? (Points : 1)
clerical

unskilled workers

technicians

first-level managers

Question 7. 7. Which of the following job evaluation systems is the easiest to implement but potentially the most discriminating? (Points : 1)
ranking

market guideline

point factors

classification

Question 8. 8. Pay grade 1 has a minimum of $1000 and a maximum of $1600, while pay grade 2 has a minimum of $1400 and a maximum of $2400. What is the overlap between pay grade 1 and pay grade 2? (Points : 1)
10%

20%

33%

60%

Question 9. 9. A possible solution to market pay demands for the job in high demand where the internally evaluated worth of the job is out of line with the market demand rate is to establish (Points : 1)
an overlapping pay structure

multiple pay structures

a bimodal distribution

a shadow range

Question 10. 10. Many specialists who make extensive use of survey data believe that _______ values provide valuable information for establishing minimum and maximum pay values for a job or a grade. (Points : 1)
first and second quartile

first and third quartile

second and third quartile

first and fourth quartile

Information

Remember, a salary range structure is a group of jobs and salary ranges in an organization. The salary range is the span between the maximum and minimum for a job or job group. There are dozens of models in the text and in other sources. The important issue is that, in my view, should not be an inflexible tool used to limit managerial decision making or creativity. One should consider in advance how the salary structure design will impact the organization through its flexibility, philosophy, control, and ability to adapt to business needs as they emerge.

A well-designed salary structure also creates flexibility for managers. The salary structure allows managers to reward performance, skill development, and critical skills without employees leaving the pay range for their position or the need to promote them just for money’s sake. A poorly designed structure limits managers ability to make decisions, limits promotions from within, creates dissatisfaction among high performing employees, and, as a results, increases turnover and ultimately increases labor costs.

It’s important to note here that nearly 55% of organizations use multiple pay structures as a part of a purposed design to meet organizational objectives. This phenomenon is often due the employment size of the organization and the length of the scalar chain. It can also be the result of a geographically diverse organization, one with many divisions, or one with a union or even several unions.

What is clear in our study of pay structures and system architecture is that the designers cannot operate without concern for the entire organization, its place in the market, and its response to the flow of business strategy. Typically, the narrower the system’s view of the employee’s ability to move through the system and the greater the limit of managerial discretion, the greater the potential of employee dissatisfaction and job turnover. On the other hand, the more flexible a pay system is in meeting the discretionary actions of managers in meeting employee expectations, the less capable the system is in containing labor costs. Pay system architects then must be able to strike a balance for the organizations they serve so as to meet the business goals while appropriately integrating the organization’s philosophy. No easy job it is.

As you think about the paper due this week (Foundations of a Compensation Strategy), consider the “micro” elements in developing an entire pay strategy. Think of the connections address in the question itself and how you would use those relationships to craft a strategy. Use sources available to you on your job and in the text. Remember that you do not have to create an entire system or strategy; only one job or classification and the elements and relationships.

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