p.37
Market-Based Job Evaluation
What happens to market inequities in a market-based pay structure?
Any market inequities are built into the pay program.
p.8
Factors Influencing Compensation
What is a key consideration when aligning a compensation system with a pay philosophy?
Balancing internal equity and external competitiveness.
p.8
Factors Influencing Compensation
What can happen if a company pays below the market rate?
It may risk losing valuable employees and incur higher costs for replacements.
p.17
Market Pricing Terminology
What is market pricing?
The process of analyzing external pay data to determine the prevailing rates of jobs in the market.
p.28
Base Pay Structure Design
What is the Job Worth Hierarchy?
The process of grouping or categorizing jobs relative to other jobs.
p.21
Market Pricing Terminology
What is a pay range?
The range of pay rates, from minimum to maximum, established for a pay grade or class.
p.11
Compensation Program Objectives
What can offset below-market pay for an organization?
Other reward elements such as benefits offerings, company culture, work flexibility, or career development opportunities.
p.13
Business Life Cycle and Compensation
What are the four stages of the business life cycle?
Start-up, Growth, Mature, and Decline.
p.36
Market-Based Job Evaluation
What makes market-based job evaluation responsive?
It uses market data as its criterion, making it responsive to changes in market pay levels.
p.16
Factors Influencing Compensation
How does employee development relate to compensation?
Internal employees should experience appropriate wage increases commensurate with their career progression.
p.36
Market-Based Job Evaluation
What is a notable feature of market-based job evaluation in terms of transparency?
It has a high degree of transparency compared to more complicated evaluation methods.
p.26
Base Pay Structure Design
What factors are considered in the job content approach?
Scope, responsibility, decision making, and overall impact.
p.17
Market Pricing Terminology
What does the term 'market rate' refer to?
The prevailing pay rate for a job, which can be an hourly rate or salary.
p.16
Compensation Philosophy and Strategy
How does the compensation function interact with other HR functions?
It affects and supports various HR functions, creating interdependencies among groups.
p.36
Market-Based Job Evaluation
Why is market-based job evaluation easy to explain?
It does not involve complicated comparisons or weighting of job content factors.
p.31
Market-Based Job Evaluation
What is the goal of job documentation in salary surveys?
To compare like organizations and jobs for the best match.
p.16
Market Pricing and Pay Competitiveness
What insight can recruiters provide regarding compensation?
Recruiters can offer valuable insights on compensation and the ability to attract viable candidates.
p.33
Market-Based Pay Structure Design Steps
What is the purpose of developing midpoints for each grade in the pay structure?
To reflect the organization’s pay policy and establish a range from lowest to highest.
p.27
Market-Based Job Evaluation
What is the purpose of job descriptions in market-based job evaluation?
To match appropriate jobs in survey data.
p.19
Market Pricing Terminology
What is a pay structure?
A grouping of job grades and pay ranges established for jobs within an organization.
p.27
Market-Based Job Evaluation
How is market data analyzed in job evaluation?
Benchmark jobs are arranged into a job worth hierarchy.
p.7
Factors Influencing Compensation
Why is retention important in the context of external equity?
It provides employees with a monetary reason to stay.
p.25
Base Pay Structure Design
How do job analysis and job documentation contribute to the pay structure?
They provide the necessary information to complete the job evaluation process.
p.11
Compensation Philosophy and Strategy
What does it mean for a company to lag the market in terms of pay?
The company sets its pay equal to current market levels at the beginning of the year but allows it to fall behind as the year progresses.
p.11
Factors Influencing Compensation
What challenges might a company face if it lags the market?
Greater difficulty in attracting and retaining qualified employees.
p.16
Total Rewards Design Process
How does compensation data relate to benefits packages?
Compensation data links with benefits packages from a total rewards perspective.
p.36
Market-Based Job Evaluation
How does market-based job evaluation compare in terms of time consumption?
It is not overly time-consuming compared to other methods.
p.8
Factors Influencing Compensation
What should a company ensure if it pays above the market rate?
There should be a corresponding gain in productivity and revenue to offset higher costs.
p.20
Market Pricing Terminology
What determines the number of pay grades in an organization?
Evaluating skill or responsibility distinctions, supervisor/subordinate relationships, career progression, and administrative considerations.
p.31
Market-Based Job Evaluation
What role do job descriptions play in identifying benchmark jobs?
They assist in matching to salary survey descriptions.
p.20
Market Pricing Terminology
What are skill or responsibility distinctions?
The evident differences in skills and responsibilities per job evaluation plan and internal value.
p.31
Market-Based Job Evaluation
Who should validate benchmark job matches?
The leadership team of the organization.
p.2
Compensation Philosophy and Strategy
What factors are included in a compensation philosophy?
Desired competitive pay level, definition of 'market', mix of reward elements, job valuation, and rewarded behaviors.
p.7
External vs. Internal Equity
Give an example of external equity.
An accounting manager in Tokyo would not be paid the same as one in Mexico City.
p.19
Market Pricing Terminology
What is a pay grade?
A numeric, alphanumeric or other label identifying the different levels within the pay structure.
p.1
Total Rewards Design Process
How does the human resources strategy relate to the business strategy?
It builds on the business strategy and guides the design of all HR programs.
p.1
Total Rewards Design Process
What does the total rewards strategy focus on?
The specific elements of total rewards within the broader HR strategy.
p.9
Compensation Philosophy and Strategy
What is a key decision organizations must make regarding compensation?
How to position their pay versus the market.
p.37
Internal vs. External Equity
How can market-based job evaluation affect internal equity?
It may not align with internal equity, as important jobs may not reflect high market rates.
p.13
Business Life Cycle and Compensation
What is the business life cycle?
The progression of steps an organization passes through from its creation to its decline.
p.7
External vs. Internal Equity
What is external equity in compensation?
It refers to pay levels compared to competitors.
p.28
Base Pay Structure Design
How does the Job Content Approach work?
It analyzes internal job evaluation results, such as ranking or job evaluation points, to determine groupings based on logical breaks in the data.
p.35
Compensation Philosophy and Strategy
What is the main difference between market-based pay structure and pure market pricing?
Market-based pay structure involves a structured approach, while pure market pricing does not place jobs into a pay structure.
What type of information does market pricing gather to identify pay practices?
Competitive compensation practices, programs, policies, and procedures.
p.23
Market Pricing Terminology
What is a midpoint differential?
The difference (usually stated as a percentage) between the midpoints of two adjacent grades.
p.3
Factors Influencing Compensation
How does social media influence pay competitiveness?
By informing and influencing a highly mobile and intelligent workforce.
p.8
Factors Influencing Compensation
What should organizations do if market rates do not reflect the value of certain jobs?
They may need to pay above market value.
p.34
Market-Based Pay Structure Design
What should be considered when slotting supervisor and subordinate jobs?
Ensure appropriate distance between them, typically 15% to 20%, and consider reporting relationships.
p.19
Market Pricing Terminology
Why are separate pay structures often created?
For different groups or families of jobs or for different geographic regions.
p.25
Base Pay Structure Design
How can the job evaluation process and job worth hierarchy be used internally?
As a communication tool for internal stakeholders.
p.6
Factors Influencing Compensation
How do employees make decisions regarding their contributions to the organization?
Based on their views of fairness.
p.1
Total Rewards Design Process
Why is alignment important in the design of a compensation program?
It creates synergy that helps ensure program success.
p.12
Compensation Philosophy and Strategy
What is the lead-lag pay strategy?
A strategy where a company sets its pay at mid-year anticipated market level, leading the market in the first half and lagging in the second half.
p.12
Compensation Philosophy and Strategy
What are the potential advantages of the lead-lag approach?
It can attract talent during the leading phase and manage costs during the lagging phase.
p.22
Market Pricing Terminology
What dictates the minimum pay level for a job?
The minimum of the range associated with the job's grade.
p.18
Market Pricing Terminology
What does 'whole job comparison' refer to?
A job evaluation process in which jobs are compared in their entirety against one another.
p.31
Market-Based Job Evaluation
What is the first step in the Market-Based Pay Structure Design process?
Analyze and document job content.
p.35
Factors Influencing Compensation
When is the pure market pricing approach typically used?
When the external pay market is volatile and any grade structure might rapidly become obsolete.
What does market pricing analyze to understand pay trends?
Year-to-year movement of salaries and cash compensation in the labor market.
p.10
Factors Influencing Compensation
What is a potential risk associated with leading the market in pay?
The company may face financial strain if market rates do not catch up or if it cannot sustain higher pay levels.
p.24
Market Pricing Terminology
What are benchmark jobs?
Jobs that are commonly found in many organizations and used to make pay comparisons.
p.16
Internal vs. External Equity
What other HR functions might be impacted by compensation?
Functions such as benefits, recruitment, and employee development may be impacted.
p.33
Market-Based Pay Structure Design Steps
What is the process for assigning benchmark jobs to the pay structure?
Assign each benchmark job to the grade with a midpoint closest to the market rate composite for that job.
p.14
Compensation Philosophy and Strategy
Is there a one-size-fits-all answer for compensation strategies in different business cycles?
No, each organization must determine what is most appropriate for their specific situation.
p.27
Market-Based Job Evaluation
What is considered after establishing a preliminary hierarchy?
Job content is considered to ensure internal equity.
p.4
Factors Influencing Compensation
What type of data is used for industry-specific jobs?
Industry-specific data, such as for petroleum engineers or pharmacists.
p.29
Base Pay Structure Design
What does the Job Points Hierarchy represent?
It represents the internal data used to evaluate job worth.
p.15
Compensation Program Objectives
What may happen between different objectives of a compensation program?
Some objectives may conflict with each other.
p.2
Compensation Philosophy and Strategy
What behaviors might be rewarded according to a compensation philosophy?
Pay for performance, teamwork, and innovation.
p.32
Market-Based Pay Structure Design
What types of salary survey sources can be chosen?
Published survey sources and custom surveys.
p.5
Factors Influencing Compensation
What are 'hot skills'?
Critical skills that are in short supply and high demand, driving up pay.
p.37
Market-Based Job Evaluation
Why is market-based job evaluation not defensible?
It does not consider job content to determine job worth hierarchy.
p.17
Market Pricing Terminology
What is a market rate composite?
It results from combining market rates for the same job from multiple survey sources.
p.25
Base Pay Structure Design
What is the first step in building a base pay program?
Job analysis, which provides key information about the nature and level of work performed.
p.14
Business Life Cycle and Compensation
What stages can a company be in during the business life cycle?
Start-up, growth, maturity, decline, and turnaround.
p.10
Compensation Philosophy and Strategy
What advantage does a company gain by leading the market in pay?
It may attract and retain more experienced and higher-performing employees by offering above-market pay.
p.25
Base Pay Structure Design
What is the purpose of job evaluation?
To determine the value of an organization’s positions relative to each other.
p.2
Compensation Philosophy and Strategy
What is a compensation philosophy?
A broad statement of what the organization believes about how people should be rewarded.
p.33
Market-Based Pay Structure Design Steps
How are range midpoints typically established?
From the lowest to highest jobs in the data set, starting with the lowest job as the midpoint of the lowest grade.
p.23
Market Pricing Terminology
How is a midpoint differential calculated?
By taking the difference between two adjacent midpoints as a percentage of the lower of the midpoints.
p.20
Market Pricing Terminology
How do supervisor/subordinate relationships influence pay grades?
By determining the levels of supervision and the number of grades between supervisors and subordinates.
p.33
Market-Based Pay Structure Design Steps
What is the method used to slot nonbenchmark jobs into the pay structure?
Compare nonpriced jobs to priced jobs and assign each to a grade with similar overall job worth.
p.6
Internal vs. External Equity
What does equity refer to in the context of employee compensation?
Employees’ perceptions of fairness and consistency.
p.32
Market-Based Pay Structure Design
What is the first step in Market-Based Pay Structure Design?
Identify/select relevant labor markets.
p.24
Market Pricing Terminology
Why are benchmark jobs important to an organization's internal hierarchy?
Because they ensure that core business employees are adequately represented.
p.6
Internal vs. External Equity
What does equal pay for jobs of equal worth involve?
Establishing equal rates of pay for jobs perceived to have equal worth.
p.32
Market-Based Pay Structure Design
What is the second step in Market-Based Pay Structure Design?
Identify salary survey sources.
p.22
Market Pricing Terminology
What does it mean if an employee is at the midpoint of the pay range?
They are fully competent to complete all tasks required for that job.
p.37
Market-Based Job Evaluation
What is a major challenge of market-based job evaluation?
It may be difficult to obtain sufficient data.
p.3
Factors Influencing Compensation
What is a primary objective for most companies regarding compensation?
To be externally competitive.
How does market pricing help organizations analyze pay competitiveness?
By collecting information on prevailing market rates for benchmark jobs.
p.25
Base Pay Structure Design
What does job documentation include?
Written information about job content, functions, and required knowledge, skills, and abilities (KSAs).
p.11
Compensation Philosophy and Strategy
When might an organization choose to lag the market?
During times of budget constraints or when focusing on other aspects of employee satisfaction.
p.4
Factors Influencing Compensation
What factors define the relevant labor market?
Organizational size, geographic location, and industry-specific jobs.
p.8
Factors Influencing Compensation
How should organizations determine job value?
By identifying which jobs are of higher value to the organization.
p.4
Factors Influencing Compensation
How can organizational size influence compensation?
It can be defined by revenue and the number of employees.
p.14
Compensation Philosophy and Strategy
What should organizations consider when determining their compensation approach?
Compensation philosophy and strategy, business conditions in each cycle, and cash availability for compensation expenses.
p.13
Business Life Cycle and Compensation
What defines the Mature stage of the business life cycle?
Maintaining/increasing market share, improving productivity, and reducing cost of sales.
p.20
Market Pricing Terminology
What role does career progression play in determining pay grades?
It reflects how the organization views an employee's career advancement.
p.33
Market-Based Pay Structure Design Steps
What is the significance of market data in developing pay range midpoints?
It helps to reflect the organization’s pay policy relative to the market.
p.24
Market Pricing Terminology
What is a general rule regarding the percentage of jobs that should be benchmarked?
At least 50% of jobs in the organization should be benchmarked.
p.24
Market Pricing Terminology
What characteristics should be considered when selecting benchmark jobs?
They should be easily defined, representative of breadth and depth, and important to internal hierarchy.
p.1
Market Pricing and Pay Competitiveness
What role does market pricing play in compensation strategy?
It provides competitive information on how compensation levels compare to the market.
p.30
Market-Based Pay Structure Design
What is the first step in building a job worth hierarchy and pay structure using market data?
Analyze and document job content.
p.30
Market-Based Job Evaluation
What is the purpose of identifying and selecting benchmark jobs?
To establish a basis for comparison in the pay structure.
p.32
Market-Based Pay Structure Design
What is the purpose of assessing competitiveness?
To evaluate the organization's current pay levels for benchmark jobs against market rates.
p.22
Market Pricing Terminology
Who typically falls at or close to the minimum of the pay range?
Employees who are new to the position or job responsibilities.
p.18
Market Pricing Terminology
How does whole job comparison differ from other job evaluation methods?
It evaluates jobs in their entirety rather than breaking them down into components.
p.10
Market Pricing and Pay Competitiveness
What does it mean for a company to 'lead the market' in terms of pay?
The company sets its pay at anticipated market levels for the year-end, ahead of current market levels.
p.31
Market-Based Job Evaluation
Why is job documentation important in job evaluation methods?
It helps accurately match jobs to salary surveys.
p.8
Factors Influencing Compensation
What should organizations do to meet their overall pay objectives?
Blend and balance internal equity with external competitiveness.
p.4
Factors Influencing Compensation
What does the relevant labor market refer to?
An organization’s competitive labor market from which it draws or loses employees.
p.21
Market Pricing Terminology
What happens when an employee reaches the maximum of a pay range?
The employee typically is no longer eligible for pay increases unless the range is adjusted or they are promoted.
p.26
Base Pay Structure Design
What is the job content approach in job evaluation?
It determines the internal value of jobs based on the nature and level of work and the organization’s value system related to jobs.
p.25
Base Pay Structure Design
What is a job worth hierarchy?
A system to group or categorize jobs relative to other jobs, such as pay grades or bands.
p.2
Compensation Philosophy and Strategy
How should a compensation philosophy align with the organization?
It should support the business strategy and fit with the organization’s culture.
p.4
Factors Influencing Compensation
What geographic locations can affect the relevant labor market?
Local, regional, national, and international.
p.31
Market-Based Job Evaluation
What is the purpose of validating benchmark job matches?
To ensure alignment with the organization’s culture and job descriptions.
p.26
Base Pay Structure Design
What is the market-based approach in job evaluation?
Jobs are priced using market data to determine relative value.
p.15
Compensation Program Objectives
What are the two most common objectives of an effective compensation program?
To be internally equitable and externally competitive.
p.15
Compensation Program Objectives
Why is it essential to design a compensation program that meets specific objectives?
To support the organization’s business strategy.
p.2
Compensation Philosophy and Strategy
What is the significance of defining 'market' in compensation philosophy?
It identifies who the organization's competitors for talent are.
p.32
Market-Based Pay Structure Design
What should be considered when identifying labor markets?
Where you recruit and where employees go when they resign.
p.15
Compensation Program Objectives
What is one of the goals of a compensation program related to employees?
To attract, motivate, engage, and retain employees.
p.30
Market-Based Pay Structure Design
What is the importance of collaboration between HR and line management?
To achieve validation around the process and the selection of benchmark jobs.
p.12
Compensation Philosophy and Strategy
What does it mean for a company to 'lag' the market?
It means the company pays lower than the market average in the second half of the year.
p.22
Market Pricing Terminology
What does the midpoint in a pay range represent?
The competitive market value for a job or group of jobs.
p.18
Market Pricing Terminology
What is 'slotting' in market pricing terminology?
The act of placing a job into a job worth hierarchy established by a method other than the organization’s primary job evaluation method.
p.35
Market-Based Job Evaluation
What is a market-based pay structure?
A structure developed by specific steps addressed in the module.
p.35
Market Pricing Terminology
What is the pure market pricing approach?
Benchmark jobs are priced but not placed into a pay structure.
p.13
Business Life Cycle and Compensation
How does an organization's focus change throughout the business life cycle?
It changes based on the phase of the life cycle, impacting pay programs and organizational objectives.
p.21
Market Pricing Terminology
What does the maximum pay level indicate?
It indicates the highest amount an organization is willing to pay for a specific job.
p.27
Market-Based Job Evaluation
What are market rate composites?
Determined based on the company's use of appropriate salary surveys to estimate prevailing wage rates.
p.7
External vs. Internal Equity
How is external equity achieved?
When employees believe their compensation is equal to what they would receive in a similar job at another company.
p.14
Business Life Cycle and Compensation
What is a 'turnaround' situation in the context of the business life cycle?
A situation where a company moves from decline back to growth.
p.7
Factors Influencing Compensation
What geographic factor influences external equity comparisons?
Employees tend to make comparisons within their own geographic area.
p.24
Market Pricing Terminology
How can benchmark jobs be categorized?
They can be common within one industry or across many industries.
p.26
Base Pay Structure Design
What are some methods used in the job content approach?
Ranking (simple, paired comparison), classification method, and point method.
p.4
Factors Influencing Compensation
How do job groups differ in terms of relevant labor market data?
Scope-sensitive jobs may use national data, while clerical jobs may use local data.
p.1
Total Rewards Design Process
What is the starting point of the Total Rewards Design Process?
The corporate vision and mission.
p.33
Market-Based Pay Structure Design Steps
What is the first step in the Market-Based Pay Structure Design process?
Develop midpoints for each grade in the pay structure based on market data analysis.
p.1
Factors Influencing Compensation
Why is it important to establish strong business partnerships with functions like finance?
To contribute to overall success and work within the organization’s cost structure.
p.1
Compensation Program Objectives
What must compensation professionals determine to attract the right talent?
The right mix of reward components that meet organizational goals while staying within budget.
p.30
Market-Based Pay Structure Design
What is the purpose of collecting and analyzing data for benchmark jobs?
To inform the development of the pay structure.
p.5
Factors Influencing Compensation
What influences an organization's compensation decisions?
Philosophy, culture, value system, competitive positioning, internal and external influences, labor pool, and financial resources.
p.9
Factors Influencing Compensation
What factors influence the decision on pay positioning?
Current conditions, forecasts, and the organization’s compensation philosophy and strategy.
p.36
Market-Based Job Evaluation
What is a key advantage of market-based job evaluation regarding administration?
It is simple to administer and update for currency.
p.28
Base Pay Structure Design
What are the two approaches to establish a Job Worth Hierarchy?
Job content approach and market-based approach.
p.27
Market-Based Job Evaluation
How are rates set in market-based job evaluation?
Based on the use of relevant salary surveys for benchmark jobs.
p.34
Market-Based Pay Structure Design
What is the purpose of job slotting?
To place and price unique jobs for which there is little or no market data.
p.28
Base Pay Structure Design
What does the Market-Based Approach involve?
It analyzes market pricing data to determine groupings based on logical breaks in the market data.
p.13
Business Life Cycle and Compensation
What characterizes the Start-up stage of the business life cycle?
The organization is new, focusing on obtaining capital, marketing, initial sales growth, and cash conservation.
p.21
Market Pricing Terminology
Why do some organizations reserve the area near the maximum of the pay range?
For high performers or highly-qualified employees.
p.34
Market-Based Pay Structure Design
How should jobs be compared within a job family during slotting?
By ensuring appropriate distance between jobs, typically 7% to 10% for nonexempt jobs and 12% to 15% for exempt jobs.
p.25
Base Pay Structure Design
What is created after establishing a job worth hierarchy?
A base pay structure, which serves as a framework for pay decisions.
p.23
Market Pricing Terminology
What is the formula for calculating midpoint differential?
Midpoint of higher grade – Midpoint of lower grade / Midpoint of lower grade.
p.34
Market-Based Pay Structure Design
How can jobs in different functions be compared during slotting?
By looking horizontally at other functional areas, such as slotted positions between an accounting clerk and a receptionist.
p.29
Base Pay Structure Design
What are the two approaches mentioned for establishing job worth hierarchy?
Job content approach (internal data) and market-based approach (external data).
p.20
Market Pricing Terminology
What cultural factors might influence the number of pay grades?
Various organizational cultural factors can impact the determination of pay grades.
p.29
Base Pay Structure Design
What does the Market Data Hierarchy represent?
It represents the external data used to evaluate job worth.
p.15
Compensation Program Objectives
What is an important aspect of a compensation program regarding its future?
It should be capable of being reshaped for the future.
p.6
Internal vs. External Equity
What can happen if an employee values a job differently than the organization does?
The employee might perceive the situation as unfair.
p.12
Compensation Philosophy and Strategy
What are the potential disadvantages of the lead-lag approach?
It may create inconsistencies in employee satisfaction and retention.
p.5
Factors Influencing Compensation
Why must companies monitor competitor pay practices?
To attract and retain in-demand employees with critical skills.
p.10
Market Pricing and Pay Competitiveness
How does a company maintain its position as a 'pay leader'?
By starting the year with pay levels above its competition and remaining there until market rates catch up.
p.7
Market Pricing and Pay Competitiveness
What do prevailing external rates imply?
They imply that the employer pays wages corresponding to prevailing market rates.
p.14
Business Life Cycle and Compensation
Can a company move back and forth in the business life cycle?
Yes, a company can move from maturity or decline to growth by finding new products and markets.
p.34
Market-Based Pay Structure Design
What criteria are typically used to define jobs for slotting?
Skill, effort, responsibilities, and working conditions.
p.13
Business Life Cycle and Compensation
What is the primary focus during the Growth stage?
Growing sales, increasing distribution capability, and efficiently producing products or services.
p.21
Market Pricing Terminology
What are the three key components of a pay range?
Minimum, midpoint, and maximum.
p.27
Market-Based Job Evaluation
What happens to other jobs in the hierarchy?
They are slotted based on whole job comparison.
p.13
Business Life Cycle and Compensation
What challenges does an organization face in the Decline stage?
Deciding whether to reinvest in current products, create new products, or maximize profits with existing products.
p.20
Market Pricing Terminology
What is a consideration regarding administration in pay grade structures?
More grades generally result in more administration.
p.19
Market Pricing Terminology
What does a pay range represent?
The range of pay rates, from minimum to maximum, established for a pay grade.
p.19
Market Pricing Terminology
What is a midpoint differential?
The difference between the midpoints of two adjacent grades.
p.15
Compensation Program Objectives
List three objectives that a compensation program should aim to achieve.
Affordable, understandable, and legal/defensible.
p.6
Factors Influencing Compensation
What might a company do to reflect the perceived importance of a vital job?
Pay that job more than comparable jobs within the organization.
p.32
Market-Based Pay Structure Design
What is the third step in Market-Based Pay Structure Design?
Collect and analyze data for benchmark jobs.
p.1
Compensation Philosophy and Strategy
How does effective compensation design contribute to an organization?
It positions compensation professionals as valuable contributors to the organization’s mission to succeed.
p.22
Market Pricing Terminology
Why is it important to adjust salaries of employees at the minimum pay level?
To prevent their pay from falling below the minimum during upward adjustments.
p.19
Market Pricing Terminology
What might organizations have regarding pay structures?
Some organizations may have only one pay structure while others may have many.
p.24
Market Pricing Terminology
Why is pay data for benchmark jobs readily available?
Because it is published in surveys.
p.2
Compensation Philosophy and Strategy
What does the compensation strategy guide?
The design, implementation, and administration of a compensation program.
p.2
Compensation Philosophy and Strategy
Why is it recommended for organizations to create a written compensation philosophy?
To provide clarity and guidance for compensation practices.
p.2
Compensation Philosophy and Strategy
What is meant by 'mix of reward elements' in compensation?
The balance between base pay and variable pay, as well as short-term versus long-term rewards.
p.32
Market-Based Pay Structure Design
Why is it important to identify relevant labor markets?
Labor markets vary based on type or group of job and influence recruitment and retention.
p.12
Compensation Philosophy and Strategy
What is required for a company to successfully implement a lead-lag pay strategy?
Organizational flexibility and broad awareness of business strategy.
p.12
Compensation Philosophy and Strategy
What does it mean for a company to 'lead' the market?
It means the company pays higher than the market average in the first half of the year.
p.22
Market Pricing Terminology
How is the midpoint established?
As an estimate of the prevailing market rate.
p.22
Market Pricing Terminology
What are the three components of a pay range?
Minimum, midpoint, and maximum.
p.5
Factors Influencing Compensation
How does market supply and demand affect compensation?
It dictates the availability and retention of specialized talents and can escalate market pay.
p.26
Base Pay Structure Design
What happens to jobs without market data in the market-based approach?
They are slotted into the hierarchy using job content comparisons.
p.26
Base Pay Structure Design
Why is job evaluation important?
It establishes the value of jobs relative to other jobs and is used to develop a job worth hierarchy.
p.6
Internal vs. External Equity
What is internal equity?
Each job’s relative value that drives an employer to establish pay rates.
p.6
Internal vs. External Equity
Why might there be a discrepancy in perceptions of equal worth between employees and employers?
Because equal worth is a perception issue.
p.15
Compensation Program Objectives
How should a compensation program align with organizational goals?
By creating alignment of employee efforts and business objectives.
p.5
Factors Influencing Compensation
What must organizations be willing and able to do to remain competitive?
Pay wages at particular levels.
p.5
Internal vs. External Equity
What challenges can arise from internal vs. external equity?
Conflicts between perceived fairness of internal compensation and external competitiveness.
p.30
Market-Based Job Evaluation
What role do compensation philosophy and strategy play in market pricing?
They influence pay determination based on current market data gathered on jobs.
p.29
Base Pay Structure Design
Which position has the lowest job point value in the hierarchy?
Accounts Payable Specialist with 193 job points.
p.30
Base Pay Structure Design
What is done with non-benchmark jobs in the pay structure?
They are slotted into the structure.
