Chapter 8 Flashcards
The pay rates from minimum to maximum set for a pay grade or
class. It puts limits on the rates an employer will pay for a particular job
ranges
the systematic process of collecting and making judgements about the compensation paid by other employers
survey
The collection and analysis of information about external conditions and
competitors that will enable an organization to be more competitive.
competitive intelligence
A major source of publicly available pay data. It also calculates the
consumer price index
bureau of labor statistics
Process of matching survey jobs by applying the employer’s plan to the
external jobs and then comparing the worth of the external job with its
internal “match.”
benchmark conversation
The extras bestowed on top management, such as private dining rooms,
company cars, and first-class airfare
perquisites
Using key/benchmark jobs, it shows external market pay survey data as a function of internal job
evaluation points. In many cases, the it is obtained
by using regression analysis, determining the predicted pay for each job can be obtained.
market pay line
An extreme value that may distort some measures of central tendency.
outliers
A statistical technique for relating present-pay differentials to some criterion, that is, pay rates in the external market, rates for jobs held predominantly by men, or factor weights that duplicate present rates for all jobs in the
organization
regression
A midpoint in a group of measures.
central tendency
how tightly all the rates are clustered around the mean
standard deviation
order all the data points from lowest to highest then convert into percentages
quartiles and percentiles
total of all rates divided by total number of employees
weighted mean
the distribution of rates around a measure of central tendency
variation
A measure of the changes in prices in a fixed market basket of goods and
services purchased by a hypothetical average family. Not an absolute
measure of living costs; rather, a measure of how fast costs are changing.
Published by the Bureau of Labor Statistics, U.S. Department of Labor
consumer price index
links a company’s benchmark jobs on the horizontal axis (internal structure) with market rates paid by competitors (market survey) on the vertical axis
market line
aging the market data to a point halfway through the plan year
lead/lag
Representation of the organization’s pay-level policy relative to what
competitors pay for similar jobs.
pay-policy line
One of the classes, levels, or groups into which jobs of the same or similar
values are grouped for compensation purposes. All jobs in this have
the same pay range—maximum, minimum, and midpoint.
pay grades
The salary midway between the minimum and maximum rates of a salary
range. Usually set to correspond to the pay-
policy line and represents the rate paid for satisfactory performance on the job
range midpoint
Collapsing a number of salary grades into a smaller number of broad
grades with wide ranges
broad banding
Ranges of pay used as controls or guidelines within pay bands that can keep the system more
structurally intact. Maximums, midpoints, and minimums provide guides to appropriate pay
for certain levels of work.
zones
Relationship among jobs inside an organization, based on work content
and each job’s relative contribution to achieving the organization’s
objectives
job structure
The array of pay rates for different jobs within a single organization; they
focus attention on differential compensation paid for work of unequal worth.
pay structure
What is the equation of market pay
intercept + slope x job evaluation points
The process of multiplying survey data by some factor judged to reflect the difference between a survey benchmark job and a company job is called _______________.
point factor adjustment
Basic elements of a pay survey:
nature of the organization
HR outcomes
total compensation
