Determining The Pay Structure Flashcards
What is internal alignment?
Pay relationships among different jobs or skills in the company
Internal alignment addresses relationships ____ the organisation.
Inside.
The relationships in internal alignment should form a pay structure that should? (3)
(1) support the organisation strategy
(2) support the work flow
(3) motivate behaviour toward organisation objectives
How can internal alignment motivate behaviour? (2)
(1) engage people to help achieve organization objectives
2) structure must be fair to employees (employees should feel that it is fair
Each level of work has its ___.
Job description
Each level will be paid ____. Decisions on how much to pay each level create a _____.
Differently, pay structure.
Is taking a “bigger” job worth it? Does it pay off to take more training to get promoted?
Yes, in a well-designed pay structure.
What is a pay structure?
An array of pay rates for different work or skills within a single organization.
The _____ (3) describe the structure./An internal pay structure can be defined by ______.
(1) number of levels
(2) differentials in pay between the levels
(3) criteria used to determine those differences
What does the number of levels concern?
Whether the pay structure is hierarchical.
What defines hierarchy? (2)
(1) number of levels
(2) reporting relationships
Explain the levels in a more hierarchical pay structure.
Multiple levels.
Explain the levels in a less hierarchical/compressed pay structure.
Few levels.
What are pay differentials?
The pay differences among levels.
What is the intention of pay differentials?
To motivate people to strive for promotion to a higher-paying level.
The same basic structure can be paired with _______.
Different pay level policies
What is the criteria used to determine the pay differentials in a pay structure? (2)
(1) work content
(2) value
What does content mean?
The work performed in a job and how it gets done.
What does value mean? (2)
(1) worth of the work; or
(2) relative contribution to the organization’s objectives
How does a pay structure based on content typically rank jobs? (4)
(1) skills required
(2) complexity of tasks
(3) problem solving
(4) responsibility
How does a pay structure based on value typically rank jobs? (3)
The relative contribution of: (1) skills (2) tasks (3) responsibilities to the organization's goals.
What is a job-based structure?
It relies on the work content- tasks and responsibilities.
What is a person-based structure?
It focuses on the employee’s skills, knowledge and competencies.
In reality, _______ structures are included.
Both job and person.
What shapes internal structures? (2)
(1) external factors
(2) organization factors
What are the external factors? (4)
(1) economic pressures
(2) government policies, laws and regulations
(3) stakeholders
(4) cultures and customs
What is economic pressure? (2)
(1) to let economic market forces influence pay structures
(2) supply and demand for labour and products
What is an example of economic pressure?
One job is paid more or less than another because of a higher demand for that job.
What are government policies, laws and regulations?
Where employment legislations may affect the internal structure of wage rates in society.
What are examples of employment legislations?
(1) fair employment practices
(2) re-employment of older workers
(3) minimum wage requirement
What are examples of stakeholders?
It can be unions and stockholders.
How do unions affect the internal structure?
They may fight for bigger pay differentials among jobs.
What are cultures and customs?
Shared beliefs or mindsets may judge what size differentials is fair.
What is an example of cultures and customs affecting the internal structure?
Japan: heavy emphasis on seniority- based pay
What are the organisational strategies? (6)
(1) strategy
(2) technology
(3) human capital
(4) hr policy
(5) employee acceptance
(6) cost implications
What is organisation strategy?
How pay structures are aligned with organizational strategy
How do stakeholders affect the internal structure?
They have a stake in how internal pay structures are determined.
What is organization strategy?
Pay structures need to be aligned with organizational strategy.
What is human capital? (5)
(1) education
(2) experience
(3) knowledge
(4) abilities
(5) skills required to perform the work
How does human capital affect the internal structure?
The greater the value added by the skills and experience to the organization’s objectives, the more pay those skills will command.
What makes up the organization work design? (4)
(1) technology
(2) temporary work supplier
(3) outsourcing specialists
(4) delayering
How does technology affect the internal structure?
As it is used in producing goods and services, it influences the organizational design, the work to be performed, and the skills/knowledge required to perform the work. Hence, someone working with technology may require more skills and will be paid more.
How do temporary work suppliers and outsourcing specialists affect internal structure?
Pay for these employees is based on the internal structure of their home employer rather than of the workplace at which they are currently located.
What is delayering?
Cutting unnecessary work or adding work.
How does delayering affect internal structure?
It changes the job’s value and subsequently, the job’s structure.
What is an example of overall HR policies? How does it affect internal structure?
Promotions to induce employees to apply for higher-level positions. More promotions with smaller pay differences between levels.
What is employee acceptance?
Employees judge the fairness of their pay through comparisons with the compensation paid to others for work related to their own. It relates to how willing employees are to accept their pay.
What are the strategic choices in designing internal structures?
Fit matters- there is an aligned pay structure.
What happens when there is an aligned pay structure? (2)
(1) support the way the work gets done
(2) fits the organisation’s business strategy
(3) fair to employees
What is a hierarchical internal structure?
(1) multiple levels- detailed description of work done at each level
(2) outlined responsibility for each
What message does a hierarchical structure send?
Organisation values the differences in work content, individual skills, and contributions to the organisation
What is an egalitarian structure?
Few levels and small differentials between adjacent levels.
What does an egalitarian system bring to light?
Averagism.
What might happen with averagism?
Equal treatment can mean more knowledgeable employees feel underpaid.
What message does an egalitarian system send?
All employees are valued equally.
Do companies adopt a hierarchical or egalitarian system?
Not or but a range between both.
What are the advantages of a hierarchical structure? (2)
(1) greater performance- work flow depends on individual contributors
(2) high performers quit less- pay is based on performance rather than seniority
What are the advantages to an egalitarian structure?
Greater performance- teamwork, close collaboration and sharing of knowledge
What are the disadvantages of a hierarchical structure?
With the number of levels, they may not feel the need to take on extra responsibility as they think that it is suited for the level above or below.
What are the disadvantages of an egalitarian structure?
Top performers who are already at the highest level will not feel recognized and may feel underpaid because there are lesser levels to advance to.
What are the consequences of an internally aligned structure? (7)
(1) undertake training
(2) increase experience
(3) reduce turnover
(4) facilitate career progression
(5) facilitate performance
(6) reduce pay-related grievances
(7) reduce pay-related work stoppages
