5. external competitiveness

Question 1

what is external competitiveness?

Answer 1

ensuring that the company is competitive to relevant and successful companies

Question 2

how is external competitiveness expressed?

Answer 2

setting a pay level that is above, below or equal to that of the competitors and determining the pay mix relative to the competitors

Question 3

what shapes external competitiveness?

Answer 3

1. labour market factors
2. product market factors
3. organization factors

Question 4

what are the labour market factors?

Answer 4

• supply vs demand

- full employment vs recession

Question 5

what are the product market factors?

Answer 5

• degree of competition
• companies in the same industry competing for the same type of labour
• level of product demand

Question 6

what are the organization factors?

Answer 6

• business strategy
• industry size
• individual manager

Question 7

how does the labour market work?

Answer 7

• type of employees matter
• people are homogeneous and interchangeable
• markets faced by employers are competitive

Question 8

what is product-market factors?

Answer 8

product market conditions determine what an organization can afford to pay

Question 9

how can we compare an organization to the market?

Answer 9

• salaries in an organization varies
• organization vs market
• many jobholders in a particular job/job grade
• organization has an establish salary structure

Question 10

what are the 5 questions when doing benchmarking?

Answer 10

• which location, industry, job family, percentile and abs, atc or ats

Question 11

what is compensation survey?

Answer 11

the systematic process of collecting and making judgements about the compensation paid by other employers

Question 12

what is the purpose of a compensation survey?

Answer 12

• adjust pay level relative to the competitors
• set the mix of pay form relative to competitors
• establish or price a pay structure
• analyze pay-related structure
• estimate the labour cost of competitors

Question 13

how do you select relevant market competitors?

Answer 13

relevant labour markets include employers who compete in; same occupations or skills/employee within the same geographic area/same product and services

Question 14

what is market percentile?

Answer 14

measures the location of the company’s salary with respect to the market data

Question 15

what are the basic percentile terms?

Answer 15

25th, 50th and 75th