3 - Salary Flashcards
Salary is the cornerstone of the compensation program. it is the base upon which the other elements of compensation are built. this justifies its other name, which is ______. some refer to base salary, which would suggest that there are other parts of salary. However, with the possible exception of lump-sum merit increases and geographical differences, the term is redundant. salary is the base.
typically, the amount of salary an executive is paid is a function of the value of the individual’s responsibilities to the organization and how well the individual is discharging these responsibilities. the value of an individual’s responsibilities generally is determined by job _____, job _____, salary surveys and the resulting salary structure adjustments
base pay
analysis
evaluation
The purpose of any job analysis is to gather specific information about a job and summarize it in a manner that sets the job apart from other jobs within an organization. For executive positions, this information can be obtained through an interview with the executive or a questionnaire completed by a job incumbent. The focus of the job analysis should be on ________ responsibilities and also on _______ relationships within the organization structure.
principal
reporting
_______ is a nonquantitative method of arraying jobs in order of importance and is the simplest job evaluation approach. The array begins by comparing two jobs to determine which is more important. Then a third job is compared with the first two, and its position with respect to them is determined. The process is repeated until all jobs have been placed in the array.
Ranking
The simplicity of the ranking approach to job evaluation is its biggest advantage. Little preparation is required and it works well when only a few jobs are involved. Its simplicity is also its greatest disadvantage. Because of the difficulty of taking into consideration all of the individual _____ of each job, it is a natural tendency to rate each job on the basis of its dominant characteristic.
With regard to using the ranking system to evaluate executive positions, one dif culty would be in deciding whether a group executive with four different divisions, each with, say, $50 million in sales, should be worth more than a division head with $200 million of sales.
Another problem is that the array reflects ______ rather than relative differences. For example, there would be no way of knowing whether the difference between the jobs of vice president of human resources and director of compensation and bene ts is equal to, greater than or less than the difference between the jobs of director of compensation and bene ts and the manager of compensation. The ranking method simply reports the sequence in the ascending order. It does not give the relative differences among the various jobs.
tasks
absolute
The ________ method compares each job with a set of written standards. In this approach grade levels are predetermined, and identifying the grade for a job simply requires matching the most appropriate descriptors. However, determining the grade levels, which must be sufficiently generic to be usable with any type of job and yet suf ciently speci c to allow direct comparison with a particular position, takes signi cant time and effort.
Another problem with this method is the number of grades used. As organizations mature and more levels of management are introduced, it may not be possible to categorize all the levels into existing grades, and additional grades may need to be added, or the standards may need to be completely rewritten.
classification
________plans are similar to the classification method in that they require the comparison of a job to a predetermined measure rather than directly to other jobs. Unlike the classification method, instead of using grade-level standards as the benchmark, the method indicates the separate tasks (compensable factors) that make up the job and assigns each a number of points depending on its importance.
Most factor plans focus on ______ and the _______ needed to perform each task. Within these two major categories, a number of separate factors can be constructed. Such plans typically have five to ten factors. The more factors, the more suspect the evaluation plan, as it is very likely that several factors are measuring the same value in only a slightly different manner.
Point factor
responsibilities
knowledge
By examining a job factor by factor and assigning the correct number of points to the most appropriate degree statement within the factor, it is possible to sum the points assigned and array the jobs on their point value. These point totals, along with the current pay of each person in that job, are typically displayed in a scattergram using an X axis, which is job points, and a Y axis, which is a pay axis.
This data is then converted into ______ by first identifying the cutoffs on the X axis, which would seem consistent given any clustering of similarly valued jobs.
Next, a _______ analysis is performed on the data to describe the line of best fit. This may be either a linear formula or a nonlinear formula. A nonlinear formula will result in a straight line only if all the plots truly describe a straight line.
The formula for a linear regression analysis is Y = a + bX. The a is the value on the vertical or Y axis when X equals zero. The b describes the _____ of the curve; in other words, the extent of increase in the Y axis, for example, compensation, resulting from a stated change in the value of the X axis, in this case job points.
The nonlinear formula is Y = a + bX + cX2. The value of c indicates the rate of change in the slope of the curve. A positive value indicates an increasing rate of change. A negative or minus c indicates a decreasing rate of change.
The difference between the plot points and the curve line is measured vertically and is identified as the ______. The line of best fit will, by definition, minimize the degree of deviation existing. The sum of the squares of these deviations will not only be equal above and below the line, but the sum of the squares of these deviations will be the lowest possible value. This is called the least squares method.
While ranges of plus and minus 15% from the midpoint might be appropriate to construct the range minimum and maximum at the bottom of the structure, ranges of plus or minus ___% may be appropriate at the top. Ranges of plus and minus 33.3% or more may be necessary in the absence of short- and long-term incentives. Thus, a plus and minus deviation from the midpoint of 16.7% will construct a range with a maximum over minimum spread
of 40%.
grades
regression
slope
deviation
25
Similar to the point factor approach, the _______ method of job evaluation uses only one measurement of value—time. Thus, the X axis is defined as time. This method of job evaluation is rarely used for executives, since its greatest appeal is in those instances where there are a large number of employees who are performing essentially the same work, and it is almost impossible to draw lines of distinction establishing separate jobs. Frequently, this method is used for _____ and _______, with separate curves for each discipline as well as separate curves for supervisors and nonsupervisors.
maturity
engineers and chemists
In the market pricing method, the _______ is used as the basis for evaluating jobs. Jobs for which no survey data exists are then evaluated by the _______ method. It can be argued that more precision and accuracy exists in classifying jobs using this method at the lower end of the structure where there is a greater likelihood of similar jobs existing in other companies. A problem in market pricing executive positions is that, with the possible exception of functional division heads, there is a great divergence in specific ________. While this may make job matching more suspect, it may be possible to obtain meaningful data through multiple ________ studies. After the initial structuring, the need for extensive surveys is minimized, since the structure is adjusted periodically on assessment of the rate of compensation growth over the previous period. Therefore, only those jobs that have not moved at the same rate would be regraded, probably by not more than a grade.
labor market
ranking
responsibilities
regression
unfortunately, not all jobs can be surveyed due to a combination of magnitude of ______ and lack of _______. However, a careful attempt should be made to ensure that the survey has a good balance of horizontal and vertical representation.
Horizontal representation requires the inclusion of the various organization functions.
the vertical requirement focuses on _______ career paths within a particular function. the number of jobs to be surveyed is a function of availability and the extent of cooperation of the surveyed companies as well as the method of evaluation.
________ plans require surveying only a few key jobs representing the various levels, whereas _______ requires surveying as many jobs as possible.
effort
comparability
promotional
point factor
market pricing
_________is the most common method of ensuring comparability of data. It requires matching jobs to ensure that similar responsibilities exist. This is important because job content can vary signi cantly between two organizations even though the jobs may have the same title. For this reason, organization charts showing reporting relationships along with job descriptions are included to maximize good job matches.
Job matching
Another technique that may be employed in job matching is adjusting for degree of deviation. This technique is typically called __________. A variation is to adjust the reported compensation based on the match. Some job evaluation plans have built values around ___% multiples, believing that the difference in responsibilities between two jobs is recognizable in multiples of __%.
survey leveling
15%
15%
A technique that may be employed to test the possible existence of lack of comparability is the _______. This is simply the division of the lowest salary reported for a position into the highest. If this value is much above ___, it is appropriate to examine the data more closely, since it indicates that there is over a 50% difference in the amount being paid to individuals allegedly performing the same job. Another refinement in job matching is to stratify the data based on a meaningful measurement of _______. Whenever this is done, it is important to be certain the measurement is essentially meaningful. An extension of the stratified example is where the actual data are given along with the compensation data.
survey ratio
1.5
scope
A variation to determining what companies pay for comparable jobs is to determine what they would pay if they had jobs similar to the ones in the survey. this requires identifying those positions most similar to the survey for each company and then evaluating these positions using a common job evaluation plan, probably a version of the _______ plan. this is simply a more refined version of the ______ process described in job matching.
point factor
leveling
The power of the _________ has made possible the use of multiple regression analysis. Instead of simply comparing compensation to one independent variable, it is possible to compare to two or more. While single regression results can be plotted using typical X and Y axes, it is not possible to plot three or more. It is even more dif cult attempting to visualize more than a three-dimensional chart.
By employing a step progression analysis, the computer orders the independent variables studied in terms of single regression analysis values and picks the one which, when combined with the first analysis, will produce the highest two measurement predictions. This is not simply the single regression analysis with the second highest value, since it could be accounting essentially for the same values as the rst if they are strongly related. Some suspect that this approach brings a level of analysis to the issue far greater than the data warrants or than the executive is interested in attempting to absorb.
computer
