Chapter 8

Question 1

The point method steps (5)

Answer 1

1. Identify compensable factors
2. Scale the factors
3. Determine weights of the factors
4. Evaluate all jobs
5. Testing the job evaluation system

Question 2

Step 1: identifying compensable factors

Answer 2

Compensable factors - characteristics of jobs that are valued by the organization and differentiate jobs from one another (skill, effort, responsibility, working conditions)

Question 3

Step 2: Scale the factors

Answer 3

• Define the factor (ex. Mental effort)
• Understand the range or degrees or levels of compensable factors (1-8)
• Understand that weight will be attached to the scale/degrees

Question 4

Step 3: determine weights of the factors

Answer 4

• Use compensation committee
• Weights have meanings for pay
• can be equal weights by degrees or not
• Determine total possible score (ex. 1000), then work backwards

Question 5

Step 4: Evaluate all jobs

Answer 5

• Do an assessment,ent of each job
• use job evaluation/compensation committee

Question 6

Step 4: Evaluate all jobs

Answer 6

• Do an assessment,ent of each job
• use job evaluation/compensation committee

Question 7

Step 5: Testing the job evaluation system

Answer 7

Benchmark job - a job in the firms job evaluation system for which there is a good match in the labour market data
Market comparator job - a job in the market data that matches a benchmark job in the firm

Question 8

Market line

Answer 8

A regression line that relates job evaluation points to market pay (in dollars)
Y = a + bX

Question 9

Pay policy line

Answer 9

The intended pay policy for the organization, generated by adjusting the market line for the intended pay level strategy of the organization

Question 10

Correlation coefficient

Answer 10

A statistic that measures the extent to which plots of two variables on a graph fall in a straight line
‘b’ in the market line equation

Question 11

Base pay structure

Answer 11

The structure of pay grades and pay ranges, along with the criteria for movement within pay ranges, that applies to base pay

Question 12

Pay grade

Answer 12

A grouping of jobs of similar value to the organization, typically grouped by point totals

Question 13

Pay range

Answer 13

The minimum and maximum pay rates (in dollars) for jobs in a particular pay grade

Question 14

Establishing pay grade sizes (4)

Answer 14

• Equal increase approach
• Equal percentage approach
• Telescopic approach
• Broadbanding

Question 15

Equal increase approach

Answer 15

method to establish pay grade sizes, in which each pay grade increases in size by a constant number of points

Question 16

Equal percentage approach

Answer 16

Method to establish pay grade sizes, in which the point spreads increases by an equal percentage

Question 17

Telescopic approach

Answer 17

Method to establish pay grade sizes, in which the point spreads increase but not by an equal equal percentage

Question 18

Broadbanding

Answer 18

The practice of reducing the number of pay grades by creating large of “fall grades, sometimes known as “bands”

Question 19

Establishing the range spreads (3)

Answer 19

• Range spread
• Range spread percentage
• Just noticeable difference (JND)

Question 20

Range spread

Answer 20

The difference between the maximum and minimum pay level, in dollars for a given pay range

Question 21

Range spread percentage

Answer 21

A percentage calculated by dividing the range spread for a given pay range by the minimum for that pay range

Question 22

Just noticeable difference (JND)

Answer 22

The amount of pay increase necessary to be considered significant by employees receiving the increase