Compensation : Chapter 3-6 and 12 Flashcards
1
Q
Refers to the relationships among different jobs/skills/competencies within a single organization → job structure.
A
Internal Alignment
2
Q
Often referred to as internal equity.
A
Internal Alignment
3
Q
Structure needs to:
A
Supports organization strategy
Supports work flow
Motivates behavior
4
Q
the process by which goods and services are delivered to the customer
A
Work flow
5
Q
relationship between each job and the organization’s objectives
A
Motivates behavior
6
Q
Refers to the array of pay rates for different work or skills within a single organization
A
Internal Pay Structure
7
Q
Factors that define internal pay structures
A
the number of levels,
the pay differentials between the levels, and
the criteria or bases used to determine those levels and differentials.
8
Q
The pay differences among levels
A
Differentials
9
Q
Higher pay is usually due to work:
A
requiring more skill/knowledge,
performed in unpleasant work conditions, or
work that adds more value to the company.
10
Q
Work performed in a job and how it gets done
A
Content
11
Q
The worth of the work.
A
Value
12
Q
A structure based on this criteria ranks jobs based on skills required, complexity of tasks, problem solving, and/or responsibility.
A
Content
13
Q
A structure based on this criteria focused on the relative contribution of the skills, tasks, and responsibilities of a job to the organization’s goals.
A
Value
14
Q
relies on the work content – tasks, behaviors, responsibilities
A
Job- and Person-Based Structures
15
Q
shifts the focus to the employee
A
person-based structure
16
Q
The skills, knowledge, or competencies the employee possesses and if they are used in the job
A
person-based structure
17
Q
What Shapes Internal Structure?
A
External Factors and Organizational Factors
18
Q
What are the External Factors?
A
Economic Pressures
Government Policies, Laws and Regulations
Stakeholders
Cultures and Customs
19
Q
Organizational Factors
A
Strategy
Technology
Human Capital
HR Policy
Employee Acceptance
Cost Implications
20
Q
determine the pay for the different jobs within a single organization
A
Internal Labour Markets
21
Q
allocate employees among those different jobs.
A
Internal Labour Markets
22
Q
Strategic Choices in Designing Internal Structures
A
Tailored
Loosely Coupled
Egalitarian
Hierarchical
23
Q
Adapted by organizations with a low-cost, customer-focused strategy
A
Tailored
24
Q
Has well-defined jobs with detailed steps or tasks.
A
Tailored
25
Adapted by organizations that require constant innovation.
Loosely Coupled
26
Jobs are flexible, adaptable and changing
Loosely Coupled
27
Pay structures are more loosely linked to the organization to provide flexibility.
Loosely Coupled
28
Has well-defined pay structure
Tailored
29
Example of Tailored internal structure
McDonald’s, Walmart
30
Example of Loosely coupled structure
3M
31
Fewer levels and smaller differentials.
Egalitarian
32
Have multiple levels and have detailed job descriptions
Hierarchical
33
Equal treatment can mean knowledgeable employees feel underpaid, who may quit or change their behaviours.
Egalitarian
34
Results in higher performance when collaboration is required.
Egalitarian
35
Results in higher performance when work flow depends on individual effort.
Hierarchical
36
People compare the ratio of their own outcomes to inputs with that of others.
Fairness
37
Employees judge fairness by comparing:
to jobs similar to their own,
their job to others at the same employer, or
their pay against external pay levels.
38
Relationship between motivation and performance.
Tournament Theory
39
Works best in situations where individual performance matters most
Tournament Theory
40
Example of Tournament Theory
players perform better where prize differentials are sizeable.
41
Organizations use “best practices”, and are simply copied
Institutional Theory
42
Copy others and conform
Institutional Theory
43
Disadvantages of Institutional theory
What aligns with the strategy of one organization may not align with that of another.
It may not be possible to have “competitive advantage” by simply imitating practices.
44
Consequences of an Internally-Aligned Pay Structure / Internally-Aligned pay structure can help an organization achieved these?
Efficiency
Fairness
Compliance
45
Comply with regulations of the country.
Compliance
46
Fair differentials motivate.
Fairness
47
Aligned structures lead to better performance.
Efficiency
48
Potential Outcomes of an Internally-Aligned Pay Structure:
Undertake training
Increase experience
Reduce turnover
Facilitate career progression
Facilitate performance
Reduce pay-related grievances
Reduce pay-related work stoppages
49
What are the theoretical approaches
equity theory, tournament theory, institutional model.
50
look at what people are doing and the expected outcomes
Job-based structures
51
look at the person
Skill- and competency-based structures
52
What is the purpose of both Job-based and skill-and competency-based structures?
Collect and summarize work content information that identifies similarities and differences.
Determine what to value.
Assess the relative value.
Translate the relative value into an internal structure.
53
the systematic process of collecting information about the nature of jobs.
Job Analysis
54
Involves the identification and description of what is happening on the job
Job Analysis
55
Why does an organization needs to perform job analysis?
Job analysis potentially aids every HR function.
An internal structure based on job-related information provides a work-related rationale for pay differences.
In compensation, job analysis has two critical uses:
-it establishes similarities and differences in the work contents of the jobs, and
-it helps establish an internally fair and aligned job structure
56
The information to be collected in job analysis
Related to the job and Related to the Incumbent
57
Related to the job includes the following:
Job Identification and job content
58
Related to the incumbent includes the following:
Employee characteristics
Internal relationships
External relationships
59
includes job titles, departments, and the number of people who hold the job
Job Identification
60
elemental tasks or units of work, with emphasis on the purpose of each task
Job content
61
Methods for Collecting Information
Interviews
Focus Groups
Questionnaires
Observation
Journals and Diaries
62
Who Collects job information?
Human resource generalists and supervisors.
Someone thoroughly familiar with the organization and its job.
63
Who provides job information?
Jobholders and supervisors.
Subordinates and employees in other jobs that interface with the job under study.
Number of incumbents from which to collect data varies with the stability of the job and ease of collecting the information.
64
Outcomes of Job Analysis
Job description, job specification
65
A written record of the tasks, duties, and responsibilities that make up a job.
Job description
66
Identifies and describes the job title, job summary, relationships to other jobs.
Job description
67
Specifies the knowledge, skills, and abilities necessary to perform the job.
Job Specification
68
The steps to conventional job analysis include:
1. develop preliminary job information
2. conduct initial tour of work site,
3. conduct interviews,
4. conduct second tour of work site,
5. consolidate job information
6. verify job description.
69
The information that must be collected for job analysis includes :
job identification data, job content data, and data on qualifications necessary to do the job
70
True or False: Conventional methods are being replaced by online quantitative questionnaires or inventories which are more objective and less time-consuming
TRUE
71
What is the benefit of traditional job analysis?
that it provides the basis for defensible job-related decisions and establishes a foundation for career paths.
72
What is the disadvantage of traditional job analysis?
it is sometimes considered too rigid for today’s more flexible organizations with fluid work assignments.
73
Job analysis (both the process and the outcomes) should be ______ in order to achieve its purpose?
reliable, valid, acceptable, current and useful
74
A measure of the consistency of results among various analysts/methods/ sources of data, or over time.
Reliability
75
Examines the convergence of results among sources of data and methods.
Validity
76
Data and process must be acceptable to job holders and managers.
Acceptability
77
Refers to the practicality of the information collected, e.g. Can it be used for multiple purposes?
Usefulness
78
The job information must be current
Currency
79
Refers to the movement of jobs to locations beyond a country’s borders
Offshoring
80
How much detail is needed to make these pay decisions?
enough to set pay levels, encourage continuous learning, increase the experience / skill of the work force, and minimize the risk of pay-related grievances.
81
differences in work determine ____________
Pay differences
82
needed to determine pay
Work-related information
83
Employers are doing these in order to increase productivity and reduce cost
reducing jobs, cross-training employees so they can do a wider variety of tasks
84
This kind of job description can increase flexibility
Generic
85
True or False: Generic job descriptions can decrease flexibility
False - increase flexibility
86
True or False: It is very important to verify the description with jobholders and supervisors to make sure it is accurate and complete, note needed clarifications.
True
87
These are often more detailed – the job, its scope and accountability.
Descriptions of managerial/professional jobs
88
to avoid starting from scratch or to cross-check externally use this type of job description
use generic job descriptions
89
What are the disagreements that can occur when doing job analysis?
clarify expectations, learn a better way to do a job, and document how the job is performed.
90
How to resolve job analysis discrepancies?
Collect more data and discuss discrepancies, asking for sign off on revised results.
91
What is critical in the job analysis?
Support of top management, and union officials
92
process of systematically determining the relative worth of jobs to create a job structure within an organization
Job Evaluation
93
What is job evaluation based on?
combination of job content, skills required, value to the organization, organizational culture, and the external market
94
these are strengths and challenges of job evaluation
potential to blend organizational forces and external market forces
95
Major Decisions in Job Evaluation
Establish purpose of evaluation
Decide whether to use single or multiple plans.
Choose among alternative approaches.
Obtain involvement of relevant stakeholders.
Evaluate the usefulness of the plan.
96
A structure is aligned if it:
supports organization strategy,
supports work flow,
is fair to employees, and
motivates behavior toward organization objectives.
97
What's the objective of establishing a purpose?
helps ensure the evaluation is a useful systematic process
98
True or False: Many employers may design different evaluation plans for different types of work.
TRUE
99
The number of job evaluation plans hinges _________
how detailed it needs to be to make pay decisions, and how much it will cost.
100
Job Evaluation Methods
Job Ranking
Job Classification
Point Method
101
Raters examine job description and arrange jobs according to their value to the company
Job Ranking
102
Classes or grades are defined to describe a group of jobs
Job Classification
103
Numerical values (points) are assigned to specific job components; sum of values provides quantitative assessment of the job’s worth
Point Method
104
Types of Job Ranking
Simple, Alternation & Paired Comparison
105
Orders job descriptions from highest to lowest based on relative value.
Simple Ranking
106
Advantages of Simple Ranking Method
Simple, fast, and easy to understand and explain to employees; least expensive, initially.
107
Disadvantages of Simple ranking method
If ranking criteria is poorly defined, evaluations become biased.
Evaluators must be knowledgeable about every job.
Results are difficult to defend and costly solutions may be required.
108
Orders job descriptions alternately at each extreme
Alternation Ranking
109
Evaluators agree on which jobs are the most and least valuable, then the next, etc.
Alternation Ranking
110
Uses a matrix to compare all possible pairs of jobs.
Paired Comparison
111
When all comparisons are completed, the job judged “more valuable” becomes the highest-ranked job, and so on
Paired Comparison
112
A series of classes covers the range of jobs.
Classification
113
the labels which capture general nature of work
Class descriptions
114
compared to class descriptions to determine class level.
Job descriptions
115
True or False: Greater specificity of the class definition improves the reliability of the evaluation.
TRUE
116
this is the end result of a series of classes with a number of jobs in each class
Job Structure
117
This method allows the assignment of a numeric score to each job in an organization, through the identification of factors that are valued by the organization.
Point Method
118
This procedure results in a relative ordering of jobs based on the number of points that each job “scores”.
Point Method
119
Steps in Designing a Point Plan
1. Conduct Job Analysis
2. Determine the compensable factors
3. Scale the factors
4. Apply to remaining jobs
5. Communicate and train users
6. Weight factors by imporatnce
120
Its contents are well known and relatively stable over time
Benchmark jobs
121
The job is common across employers
Benchmark jobs
122
A reasonable proportion of the work force holds this job
Benchmark jobs
123
Characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives.
Compensable factors
124
Compensable factors should be:
based on the strategy and values of the organization,
based on the work performed, and
acceptable to the stakeholders affected by the resulting pay structure.
125
four universal compensable factors
Skill, Effort, Responsibility and Working Conditions.
126
small numbers is defined by:
If even one job has a certain characteristic, it is used in the entire work domain.
127
Criteria for scaling factors
ensure the number of degrees is necessary to distinguish jobs,
use understandable terminology,
anchor degree definitions with benchmark job titles and/or work behaviors, and
make it apparent how the degree applies to the job.
128
range of degrees that most factors scales have
4 to 8 degrees
129
In step 3 of designing a point plan, factors are scaled according to ___
Factors are scaled for presence
130
In step 4 of designing a point plan, factors are weighted according to ___
Factors are weighted for importance
131
How are factor weights being determined?
Weights are often determined through an advisory committee – a priori judgment approach
132
policy capturing
Statistical modeling techniques determine the weight for each factor
133
True or False: Factor weights reflect the relative importance of each factor
TRUE
134
In communicating the plan and training the users what is crucial?
Employee acceptance
135
this may be included for employee recourse
An appeals process
136
Who Should Be Involved in Job evaluation?
involve managers and employees with a stake in the results
committees, task forces, or teams that include:
Employees from key operating functions
Union representatives
Compensation professionals
Consultants
137
Fairness of the design process helps achieve____
employee and management commitment, trust, and acceptance of results.
138
Why the need for appear/review procedure in job evaluation?
This ensures procedural fairness.
Procedures should be judged for their susceptibility to political influences.
139
What is the final result of the job evaluation process?
Job Structure or hierarchy of work
140
The disadvantage and advantages of Point method
Although the point method allows an organization to develop one job evaluation plan for all jobs in the organization, most times it is difficult to identify one set of compensable factors that is applicable for all jobs
141
True or False: organizations commonly have multiple structures, derived from different approaches, and applicable to different functional groups or units.
True
142
Balancing Chaos and Control in Job Evaluation Process
Complex procedures and bureaucracy can cause users to lose sight of the objectives.
Allow flexibility to adapt to changing condition.
Flexibility without guidelines increases chaos.
Balanced guidelines ensure employees are treated fairly.
143
Link pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that is relevant to the work.
Skill-Based Plans
144
pay individuals for all the relevant skills for which employees have been certified regardless of whether the work they are doing requires all or just a few of those particular skill – the wage attaches to the person.
Skill-Based Plans
145
Difference between skill-based and job based plan?
A job-based plan pays employees for the job to which they are assigned, regardless of the skills they possess
146
pays employees for the job to which they are assigned
Job-Based plan
147
Advantages of Skills-Based plans
higher flexibility as multi-skilled employees can be better matched to the work flow.
148
Types of Skill-Based Plans
Specialist and Generalist
149
Pay is based on knowledge of the person doing the job, rather than on job content or output.
Specialist: Depth
150
Higher pay from certification of new skills.
Generalist/Multiskill Based: Breadth
151
Responsibilities can change over a short time.
Generalist/Multiskill Based: Breadth
152
Pay increases by acquiring new knowledge.
Generalist/Multiskill Based: Breadth
153
Basic responsibilities do not vary on a day-to-day basis.
Specialist: Depth
154
Purpose of a Skill-Based Structure
Supports organization’s strategy
Supports work flow: A main advantage is matching people to changing workflow
Fair to employees: Skill-based plans may give workers more control over their work life but favoritism and bias may be a problem.
Motivates behaviours toward organization objectives
155
Skill-based structure is well suited for ____________
Suited for continuous-flow technologies where employees work in teams
156
A systematic process to identify and collect information about skills required to perform work in an organization
Skill Analysis
157
What information to collect?
Defining the skills
Arranging them into a hierarchy
Bundling them into skill blocks
158
methods to determine and certify skills
Peer review, on-the-job demonstrations, or tests
Scheduled fixed review points and recertification
159
Who are involved?
Employees and managers
160
Outcomes of Skill-Based Plans
Well accepted by employees and provide strong motivation for individuals to increase their skills.
Become increasingly expensive – when workers top-out
Unless flexibility permits a leaner staff, labor costs will be higher
A plan’s success is determined by how well it aligns with the organization’s strategy.
161
True or False: Research showed 60% of companies starting a skill-based plan continued using the plan after seven years.
TRUE
162
Are jack-of-all-trades really a master of none?
Greater increments of flexibility achieve fewer improvements.
There may be an optimal number of skills per individual.
163
True or False: The skill based plans may be a better fit in industries where labor costs are a small share of total costs.
TRUE
164
estimated percentage of higher labor costs.
10-15%
165
Purpose of a Competency-Based Structure
Supports organization’s strategy
Supports work flow: Competencies may require more tacit knowledge
Fair to employees:
- Advocates say they can empower employees.
- Critics worry about basing pay on personal characteristics.
- Justifying pay differences may create risks that need managed
Motivates behaviours toward achieving organization objectives
166
These are underlying, broadly applicable knowledge, skills, and behaviours that form the foundation for successful work performance (exhibited by excellent performers more consistently than average performers)
Competencies
167
are often linked to the mission statement
Core
168
translate each core competency into action
Competency sets
169
are the observable behaviors that indicate competency.
Competency indicators
170
A systematic process to identify and collect information about the competencies required for successful work performance.
Competency Analysis
171
are not unique for each company
Core competencies
172
derive from leadership’s beliefs about the organization and its strategic intent.
Competencies
173
True or False: There seems to be no objective way of certifying competency.
False
174
have relatively few levels and wide differentials for increased flexibility.
Competency-based structures
175
True or False: Competencies may identify outstanding performance but there is debate on whether they can be measurable and objective.
TRUE
176
Competencies often morph into ___________
compensable factors
177
What is the purpose of job-and-person-based procedures?
to design and manage a pay structure that aids success
178
How do managers ensure that the structure remains aligned?
by reassessing work/skills/competencies as necessary.
179
True or False: when evaluating higher-value, nonroutine work, the distinction between job- and person-based approaches blurs
TRUE
180
Essential criteria in administering and evaluating the plan:
Fairness in the plan’s administration.
Availability of sufficient information to apply the plan.
Adequate communication and employee involvement are critical for acceptance.
181
one where different evaluators produce the same results.
reliable evaluation
182
How can reliability be improved?
by using evaluators familiar with the work and trained in job evaluation.
Some organizations use group consensus.
183
refers to the degree the evaluation assesses relative job worth.
Validity
184
TRUE OR FALSE: Validity needs to be broadened to include the impact on pay decisions.
TRUE
185
Methods to assess and improve employee acceptability
formal appeals process allows a request for reanalysis and/or skills reevaluation.
employee attitude surveys assess perceptions of how useful evaluation is as a management tool.
186
TRUE OR FALSE: Job evaluation may be susceptible to gender bias
TRUE
187
Recommendations to ensure bias-free evaluation plans:
Define the compensable factors and scales to include the content of jobs held predominantly by women.
Ensure that factor weights are not consistently biased against jobs held predominantly by women.
Apply the plan in as bias-free a manner as feasible. Ensure that the job descriptions are bias-free, exclude incumbent names from the job evaluation process, and train diverse evaluators.
188
Internally aligned pay structures can be designed to:
Help determine pay for the wide variety of work and ensure that pay influences attitudes and behaviors and directs toward objectives.
189
The major skills analysis decisions are:
(1) What is the objective of the plan? (2) What information should be collected? (3) What methods should be used to determine and certify skills? (4) Who should be involved?
190
TRUE OR FALSE: Employee acceptance is crucial for person-based plans
TRUE
191
ways to enhance employee acceptance in person-based plan
Employee involvement, having a formal appeals process, and conducting employee attitude surveys
192
Possible sources of bias in internal pay structures
bias in the job evaluation of traditionally female-dominated jobs
bias in current wages that may be perpetuated when job evaluation plans are structured to mirror existing pay rates.
193
TRUE OR FALSE: Skill-based pay plans and competency-based pay plans are conceptually identical, but skills are very specific and competencies are more general.
TRUE
194
Governments’ interest in part of employment relationship includes:
procedures for determining pay are fair (no pay discrimination)
safety nets for the unemployed and disadvantaged are sufficient (minimum wage, employment insurance)
employees are protected from exploitation (human rights, pay equity)
195
These are continuing compensation objectives
Compliance and fairness
196
Employment Standards Acts/Codes
minimum wage
paid vacation
paid holidays
standard hours of work and overtime pay
pay on termination of employment
minimum age of employment
equal pay for equal work by men and women
197
equal treatment in employment and opportunity for employment regardless of race, colour, religion, sex…
Human Rights Legislation
198
the amount by which the average pay for female workers is less than the average pay for male workers
gender wage gap
199
issue relating to the gender wage gap
Pay Equity
200
one of the compensable factors that includes experience, training, education, and ability as measured by job performance requirements
SKILL
201
one of the compensable factors that includes mental or physical, the degree of effort actually performed on the job
effort
202
the degree of accountability required in the job performance
responsibility
203
the physical surroundings and hazards of a job; inside/outside, heat/cold, and poor ventilation
working conditions
204
Reasons for Gender Wage Gap
1. differences in occupational attainment; women historically segregated in small number of occupations e.g., sales, nursing
2. differences in number of hours worked
3. differences in industries and firms
4. differences in union membership
5. presence of discrimination
205
What is the role of government in compensation?
is to assess whether procedures for determining pay are fair, whether safety nets for the unemployed and disadvantaged are sufficient, and whether employees are protected from exploitation. Governments also affect the supply of and demand for workers.
206
What are the major compensation-related provisions of employment standards legislation
minimum wage, paid vacation, paid holidays, standard hours of work and overtime pay, pay on termination of employment, minimum age of employment, and equal pay for equal work by men and women.
207
This affects compensation in that compensation decisions based on any of the prohibited grounds for discrimination are illegal.
Human rights legislation
208
This intended to redress the portion of the wage gap assumed to be due to gender discrimination.
Pay equity legislation
209
Effect of Government on Supply of & Demand for Workers
Demand
- Governments (federal, provincial/territorial and municipal) employ a lot of workers
- Indirectly affects labor demand through its purchases and financial policy decisions
Supply
- Affects labor supply through legislation
- Licensing requirements restricts labor supply.
- Immigration policy and how rigorously it is enforced is an important factor in labor supply
210
The Impact of Unions
General wage and benefit levels
The structure of wages
On non-unionized firms (also known as spillover effect)
Wage and salary policies and practices in unionized firm
211
Union Impact on General Wage and Benefit Levels
union workers earn about 10 percent more than non-union workers
size of the gap varies from year to year
-union impact higher during periods of higher unemployment and slow economy
-union impact smaller during strong economy
union benefits 20 to 30 percent higher than non-union
212
For management, wage tiers can be used
as a cost control strategy to allow expansion or investment, or
as a cost-cutting device to allow economic survival.
213
differentiate pay based on hiring date
Two-tier wage pay plans
214
The spillover effect occurs when
employers avoid unionization by offering wages, benefits, and conditions won in unionized firms.
