2 - Establishing Internal Alignment Flashcards
the _________ among different jobs inside an organization make up its internal pay structure. the relationships form a pay structure that should support the organization strategy, support the work flow and motivate behavior toward organization objectives.
relationships
__________, often called internal equity, refers to the pay relationships among different jobs/skills/competencies within a single organization.
internal alignment
_________ refers to the array of pay rates for different work or skills within a single organization.
Pay structure
the number of levels, differentials in pay between the levels and the ________ used to determine those differences describe the structure.
criteria
briefly explain each of the following attributes of an internally aligned pay structure.
(a) Supports organization ________.
(b) Supports _______.
(c) Motivates _______.
strategy
work flow
behavior
An internal pay structure can be defined by
(a) the number of _____ of work,
(b) the pay ______ between the levels and
(c) the ______ or bases used to determine those levels and differentials.
One feature of any pay structure is its _______ nature: the number of levels and reporting relationships. Some are more hierarchical, with multiple levels; others are compressed, with few levels. The pay differences among levels are referred to as differentials.
Work that requires more knowledge or skills, is performed under unpleasant working conditions, or adds more value is usually paid more. One intention of these differentials is to motivate people to strive for promotion to a higher paying level.
Work ______ and its value are the most common bases for determining internal structures. This refers to the work performed in a job and how it gets done (tasks, behaviors, knowledge required, etc.). Value refers to the worth of the work: its relative contribution to the organization objectives. A structure based on content typically ranks jobs on skills required, complexity of tasks, problem solving and/or responsibility. In contrast, a structure based on the value of the work focuses on the relative contribution of these skills, tasks and responsibilities to the organization’s goals.
levels
differentials
criteria
hierarchical
content
_______ reflects the value of goods or services an employee produces in a job.
______ value is whatever wage the employer and employee agree on for a job.
Use value
Exchange
the criteria used to determine the number of levels and size of the pay differentials can be categorized as either job based or person based.
- A job-based structure looks at what ____ are done, what ______ are expected and what responsibilities are expected.
- Person-based structures shift the focus on the _____, ______ or competencies the employee possesses, whether or not they are used on the particular job the employee is doing.
tasks
behaviors
skills
knowledge
Four external factors that in influence internal structures are:
- Economic pressures
- Government policies, laws and regulations
- External stakeholders
- Cultures and customs
Four organization factors that shape internal structures of organizations are:
- (1) Organization ________—Structures that are not aligned with the this may become obstacles to the organization’s success. However, aligned structures today may become an obstacle tomorrow. So aligned, yet adaptable, may be required.
- (2) Organization ________—A major influence on internal structures. These are things such as education, experience, knowledge, abilities and skills that people possess. The stronger those skills and experience are linked with an organization’s strategic objective, the more pay they will command.
- (3) Organization _________—Technology is another critical organization factor influencing the design of pay structures. The technology used to produce goods and services influences an organization’s design, work to be performed, and skills and knowledge required to perform the work.
- (4) Overall ________ —An organization’s other ___ policies also influence internal pay structures. The amount of pay to tie to a promotion, the nature of promotions and pay differences must be consistent with what the organization is trying to accomplish.
strategy
human capital
work design
HR policies
An internal labor market refers to the rules and procedures that determine the _____ for different jobs within a single organization and allocate employees among those different jobs. For instance, if an organization only recruits externally for entry-level jobs, external market factors only dominate the pay of specific entry-level jobs since the pay of nonentry jobs is influenced primarily by internal factors such as the organization’s strategy, technology, human capital required and other HR systems. Some argue that the model of an internal labor market is ________, that today’s external market also dominates pay decisions of non-entry- level jobs for many organizations.
pay
no longer useful
An important factor influencing the internal pay structure is its _______ to the employees involved. Employees make multiple pay comparisons to assess the fairness of an internal pay structure. two measures of fairness are concerned with:
- (1) __________—how design and administration decisions are made and whether procedures are applied in a consistent manner; and
- (2) __________—whether the actual pay differences among employees are acceptable.
acceptability
procedural justice
distributive justice
Internal structures may be closely tailored or loosely coupled in their approach.
A closely tailored structure contains a high degree of specified detail in the tasks to be performed. This type of structure works well in businesses such as McDonald’s and Walmart where jobs are _________ with detailed tasks or steps to follow.
The loosely coupled approach is more appropriate in businesses such as 3M that require constant ________ and short product-to-market cycle times and that encourage constant innovation and agility. Pay structures tailored to be aligned must support the way the work gets done, fit the organization’s business and be fair to employees.
well defined
product innovation
Pay structures can range from egalitarian to hierarchical with the egalitarian structure having ______ levels and smaller differentials between adjacent levels, and between the highest and lowest paid workers.
- The multiple levels of hierarchical structures typically include detailed descriptions of work done at that level and delineate who is responsible for what. Hierarchical structures are consistent with a belief in the motivational effects of _________. Hierarchies value the differences in work content, individual employee skills, responsibilities and contributions to the organization.
- In an egalitarian structure, levels of responsibility and supervision are ________ 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. An egalitarian structure implies a belief that more _______ will improve employee satisfaction, support cooperation and therefore affect workers’ performance.
An important point concerning these two types of structure is that when choosing a structure, the decision normally is not between one and the other. Instead the differences are a matter of ________. So that levels can range from many to few, differentials can be large or small, and the criteria can be based on the job, the person or some combination of the two.
fewer
frequent promotions
removed
equal treatment
degree`
Equity theory—This theory suggests that employees judge equity (fairness) on the basis of comparisons:
(1) between the work requirements and pay for their own job with the work requirements and pay for _____ jobs in the organization; and
(2) their jobs’ pay against ______ pay levels.
These pay comparisons made by employees demand that organizations not only design a compensation system that supports its objectives but that the organization is able to explain to employees on a regular and ongoing basis the ______ for the compensation system choices.
other
external
rationale
