E-lecture 5: Reward Management

Question 1

What is a whole job ranking?

Answer 1

base pay is determined based on the importance of their job for the organization in terms of value. It is quick and easy. But it can be subjective and could be perceived as fair. Avoid if possible.

Question 2

What are three methods for determining pay

Answer 2

1. Whole job ranking
2. Point-factor method
3. Factor-comparison method

Question 3

What is a point-factor method?

Answer 3

creating a pay structure based on a job evaluation of positions in the organization through compensable factors: factors organizations use to evaluate jobs and choose to pay for. Creates a point value for each job.

Question 4

What is a factor-comparison method?

Answer 4

pay comparisons of the same position in the market. Pay survey of benchmarking. Only for firm-general jobs.

Question 5

Name two types of performance-related pay?

Answer 5

1. Consolidated: added to base pay, based on performance.
2. Non-consolidated: one-off payment in addition to base pay. Divided into individual and group performance bonuses.

Question 6

What is the sorting effect?

Answer 6

people are more attracted to an organization that has performance related pay if this matches their preference (risk-aversion), (attraction). Low performers receive lower pay and are more likely to leave the organization (retention).

Question 7

What is the incentive effect?

Answer 7

performance related incentives show organization appreciates efforts of individuals and provides direction in what they should focus their efforts on. (motivation)

Question 8

Name three characteristics of motivation?

Answer 8

1. Intensity of effort
2. Direction of effort
3. Persistence of effort

Question 9

What are the two types of direction of motivation?

Answer 9

1. Intrinsic motivation: People put in effort because they genuinely enjoy it.
2. Extrinsic motivation: people put in effort because of external rewards (money, attention, status etc.)

Question 10

What are benefits?

Answer 10

Rewards that have financial value but are rewarded in forms other than cash. Statutory and organizational.

Question 11

Name four influences on organizational benefits?

Answer 11

1. Strategic goals of benefits: different benefits send different messages to employees.
2. National characteristics: law and culture
3. Workforce demographics: preferences for benefits are likely to be influenced by generation and life stageL:
   - Generational differences: more current older workers may have built historical expectations about career development
   - Life stages and life choices: parents and those planning to be parents are likely to prefer work-family and financial benefits
4. External influences

Question 12

What is pay secrecy?

Answer 12

organization’s policy to pay communication which limits the access of employees to pay-related information and discourages discussion among employees about pay issues.

Question 13

What are rewards?

Answer 13

financial and nonfinancial elements used to compensate employees for their time, effort and commitment. Can be base pay, short- and long-term incentives, and benefits.

Question 14

What are the key objectives of reward management?

Answer 14

1. Attracting talented individuals to organization
2. Retaining employees
3. Motivating employees to boost performance, engagement and job satisfaction

Question 15

What two points does reward management ensure?

Answer 15

1. Meet legal and ethical responsibilities (fair pay, acceptable working conditions)
2. Achieve organizational goals.

Question 16

Name four key decisions in reward management?

Answer 16

1. How do we determine how much we pay employees
2. Should we use financial incentives to motivate people to work harder
3. What benefits should be offered in addition to legally mandated ones?
4. Should we encourage transparency about pay levels?

Question 17

Name five factors that influence reward decisions?

Answer 17

1. Competition and market forces
2. Organization’s philosophy
3. Legal responsibility
4. Strategy
5. Ability to pay (budgetary constraints)

Question 18

What is pay structure?

Answer 18

hierarchical organization of jobs in terms of pay. Consists of job structure and pay level

Question 19

What is job structure?

Answer 19

hierarchy of the jobs in the organization

Question 20

What is pay level?

Answer 20

average pay range for specific job in organization.

Question 21

What are the benefits of pay transparancy?

Answer 21

1. Removes uncertainty/ asymmetrical information as a basis for perceptions of unfairness/ discrimination
2. Promotes trust and fairness in the organization.
3. Promotes motivation and performance

Question 22

What are the benefits of pay secrecy?

Answer 22

1. Organizational control: avoiding conflicts of pay dispersion
2. Protection of privacy.
3. Decreased labor mobility of productive workers.

Question 23

Name three types of pay secrecy?

Answer 23

1. Distributive pay nondisclosure
2. Pay communication restriction
3. Procedural pay nondisclosure

Question 24

What is pay communication restriction?

Answer 24

stopping employees from talking about their pay.

Question 24

What is distributive pay nondisclosure?

Answer 24

restricting the amount of information the organization shares about employee pay levels.

Question 25

What is procedural pay nondisclosure?

Answer 25

restricting the amount of information the organization shares about employee pay decisions.