Ch 13 Budgets and Administration *Done

Question 1

compa-ratio definition

Answer 1

ratio of average rates actually pain to range midpoint

Question 2

green circle rates

Answer 2

pay rates below the range minimum

Question 3

red circle rates

Answer 3

pay rates above the range maximum

Question 4

turnover effect

Answer 4

decreased budget required as lower paid workers replace employees who leave, calculated as
annual turnover rates X planned average increase

Question 5

What are the twos for managing labour costs?

Answer 5

• controlling employment: head counts and hours

- controlling average cash compensation costs

Question 6

What is the equation for managing labour costs?

Answer 6

Labour costs = employment X avg. cash comp X avg benefit cost

Question 7

Control salary level: Top Down, requires management of each organizational unit to…

Answer 7

estimate the pay increase budget for that unit and then allocate the total budget to each manager who plans how to distribute it among ee’s

Question 8

what factors influence top down budgeting?

Answer 8

Ability to pay
competitive market rates
turnover effect
cost of living 
consumer price index

Question 9

Control salary level: bottom-up, requires mangers to…

Answer 9

focus the pay increases they will recommend during the upcoming year, the forecasting cycle is a budget for the upcoming plan year for each org’s unit as well as estimated pay treatment for each ee

Question 10

Compensation Forecasting and budgeting cycle

Answer 10

1. instruct managers in compensation policies and techniques
2. distribute forecasting instructions and worksheets
3. provide consultation to managers
4. check data and compile reports
5. analyze forecasts
6. review and revise forecasts and budgets with mgmt
7. conduct feedback with mgmt
8. monitor budgeted vrs actual increases

Question 11

pay administration includes control of how managers decide ….?

Answer 11

individual employees pay and of overall costs of labour

Question 12

pay systems are tools that must be evaluated in terms of ____ in achieving an ____ _____

Answer 12

usefulness
organizations
objectives

Question 13

what are the compensation components that are used for communication to all audiences?

Answer 13

job descriptions
job evaluation
market data collection and analysis
pay structure development
incentive plan design
perf appraisal system
salary mgmt admin procedures
benefit plans

Question 14

the level of detail and emphasis varies depending on…

Answer 14

the audience

Question 15

who are the typical groups that count as the audience?

Answer 15

executives
managers
employees

Question 16

what level of detail is communicated to executives?

Answer 16

• components explained in a general way
• emphasis on strategic implications of the compensation system
• executive compensation explained in detail in one-one one meetings

Question 17

what level of detail is communicated to mangers?

Answer 17

• components thoroughly explained throughout the communication process; reviewed at the formal sessions
• emphasis on development and motivation of employees using salary mgmt, perf appraisal, and incentive plan

Question 18

level of detail communicated to employees

Answer 18

fairly detailed explanation of components

emphasis on both process and policy info

particular attention paid to the workings of the incentive plan

Question 19

What are the two organizational arrangements of compensation functions ?
(where the responsibility for the design and administration of pay systems should be located within the org)

Answer 19

centralization - decentralization

flexibility with corporate wide principles

re-engineering and outsourcing