Chapter 11 Flashcards
pay structure
Relative pay of different jobs and how much is paid e
Pay Structure
Average pay
pay level
People evaluate fairness of their situations by comparing them with those of other people
Equity theory and fairness
People compare their ratio of perceived outcomes to percieved inputs to the ratio comparison of others
Equity theory and fairness
Focus on what employees in other organizations are paid for doing the same job
External equity
Focus on what employees within same organization are paid
internal equity
selling goods and services at a quantity and price that brings a sufficient return on investment
Product market competition
Number of workers available relative to number of jobs available
Labor market competition
view employees as a resource not a cost
competitive environment influences range of pay
2 ways to develop pay levels
If employer pays employee more than they would receive anywhere else, then they would put forth effort to retain a good job
Efficiency Wage Theory
comparing an organization’s practices against those of the competition-product market, labor market, or both
Benchmarking
revenue/employee or revenue/ labor costs
Ratios to determine employee return on investment
Benchmark jobs; stable, content, common to many organizations
Key Jobs
Unique to a specific organization; cannot be directly valued or compared through market surveys
Non-key jobs
Administrative procedure to measure internal job worth
Job evaluation
Job characteristics that are values by employers and will pay for them
Compensable factors
Assign priori weights
empirically determine weights
two-point factor system
3 ways to develop a pay structure:
Greatest emphasis on external comparisons- especially key jobs
Market survey data
3 ways to develop a pay structure:
external and internal comparisons- both key and non-key jobs
greater internal consistency based on job evaluation points
pay policy line
grouping jobs of similar worth or content into pay classes
pay grades
usually seen in jobs whose average pay falls significantly above or below the policy line
- supply and demand
Conflicts between market pay surveys and job evaluation
compare actual pay to intended pay
Divide actual pay by midpoint of pay range
Compa-ratio
Citizen of one country, but working for employer in another country
Expatriate
Responsible for making pay policies work and communicating to employees
should be involved in all changes to pay practices
Line manager participation in compensation
