Ch 7: Creating Market Competitive Pay plans Flashcards

1
Q

What are the 4 building blocks of market competitive pay plans

A

Conducting Strategic Analysis

Assessing competitor’s pay practices with comp. Surveys

Aligning internal job structure with external rates

Determining pay policies

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2
Q

What is a strategic analysis?

A

Examination of company external context and internal factors

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3
Q

What are compensation surveys?

A

Process used to collect competitor compensation practices (wage/salary rates and benefits)

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4
Q

What are two preliminary considerations when doing a compensation survey

A

What companies hope to gain( comp practices, employee preference of benefit in ec. Downturn, comp mix practices)

Develop one from scratch or use established survey( development is ideal, but companies often choose not to as they dont have qualified staff, competitors dont want to give info, and it can be costly)

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5
Q

Give 3 sources of pi listed surveys

A

Society of Inductrial Psychologists

BLS

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6
Q

Give the 1 employee cost trends

A

Employee Cost Index - quarterly measure of labour costs

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7
Q

What is the NCS about?

A

National Comoensation Surveys

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8
Q

What are the two strategic consideration for compensation surveys

A

Defining the relevant labour market

Choosing benchmark jobs(jobs used to compare the value of other jobs- get understanding from ch 6)

*The contents are well known, relatively stable over time, and agreed upon by the employees involved.

*The jobs are common across a number of different employers.

*The jobs represent the entire range of jobs that are being evaluated within a company.

*The jobs are generally accepted in the labour market for the purposes of setting pay levels

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9
Q

Describe defining the relevant market

A

represent the fields of potentially qualified candidates for particular jobs

Relevant labor markets are defined on the basis of occupational classification(blue collar vs white), geography, and product or service market competitors

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10
Q

What are the 3 compensation data characteristics

A

Comp. Professionals should use statistics to describe large amounts of data efficiently

Survey data is outdated because of lag between when data collected and when employers implement their plan based on the data

Must use statistical analyses to integrate internal job structures(based on job evaluation points) with external market based on survey data

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11
Q

Using the appropriate statistics to summerize survey data and basic tabulation(converting data into tables)

A

Central Tendency: Mean(tells “typical salary”)and median-
gives undistorted values

Variation: amount of spread in data

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12
Q

Drawback of arithmetic mean

A

Gives distored values: so if there are wage rates that are too low, it will lower the mean which may cause setting salaries too low. Conversely, if there are high extremes, the mean will be too high and cause you to set salaries too high

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13
Q

What are the 3 most valuable measures of dispersion?

A

Standard deviation- lets us know whether individual salary departure below or above the mean is “typical” for the market (so basically if the internal deviations away from mean match market deviations

Also lets us know range for majority of salaries. Can use this range to judge their company ranges are similar to market ranges

Quartile- allows for description of the distribution of data (annual base pay amount for example) based on 4 groupings

Percentile- range within quartile

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14
Q

How often is CPI done?

A

Every month

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15
Q

How to integrate interal job structures with external market pay rates?

A

Regression analysis

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16
Q

What is a regression analysis?

A

statistic analysis technique that allows for establishing pay rates consistent with typical pay rates in the market

17
Q

What are pay level policies?

A

Market Lead- 3quartile
Market Lag- 1quartile
Market match- 2 quartile

18
Q

Pay mix policies

A

Combination of core compensation and employee benefits components that make up total compensation package

19
Q

Job leveling

A

Correcting differences between jobs and external benchmark jobs