Module 1--Statistics: Data, Information and Levels of Measurement Flashcards
Why Do Compensation Professionals Collect and Use Data/ Information?
■ Finance and planning
As a strategic business partners, compensation professionals must be aware of how design
and implementation of programs affect the overall company financial statements.
■ Budgeting
* Compensation professionals must be able to read and interpret organizational/departmental
budgets, as program costs to an organization can be significant.
* The compensation department has responsibility for managing a portion of the human capital
budget. By analyzing data/information, they can make effective, empirically sound decisions.
■ Investment management
Interest rates, earning/purchasing power, risk and return factors – Compensation professionals should have a general knowledge of interest rates, earning power/purchasing power and risk and return factors that will assist in decision making for those with investment
policy and monitoring responsibilities.
■ Economic conditions – Organization objectives and available resources will be affected by current
economic conditions.
* Stock price volatility
* Salary budgets
* Interest rates
■ Metrics
* Monitor and measure performance goals – Metrics provide a quantifiable means of monitoring and measuring key performance goals; organizations use them in identifying,
tracking and correcting problems as they occur.
* Measure return on investment – Metrics can be used to measure ROI for proposed and existing programs.
* Incentive plans and payouts – Metrics can be used in developing incentive/ commission plans and in determining payouts.
* Measure outcomes of objectives – Metrics can be used to evaluate the potential success or failure of outcomes relative to an organization’s objectives
■ Modeling
* Modeling provides a way to test data in various scenarios in order to observe potential outcomes. Models may offer a clearer picture of what may occur given different circumstances.
What are Six Compensation Applications?
■ Sign-on bonuses – implementation of sign-on bonuses
■ Pay adjustments – examining the consequences of adjusting pay now versus adjusting pay later, along with cost implications
■ Salary survey data – using salary survey data to price jobs based on the market
■ Pay-for-performance programs – developing pay-for-performance programs
■ Commissions – calculating the budget for commission plans
■ Incentives – determining the target and maximum potential payout of an incentive plan
What are the five Key Questions about the Variable of Interest? **
- What is the variable of interest?
- What is the level of measurement?
- Do the data represent a population or a sample?
- Are the data suitable for grouping?
- Are there any other variables available or under consideration?
What are the Levels of Measurement?
**give us an indicator of our ability to mathmatically manipulatate
■ Nominal
* Information that can only be used to categorize
uses words and numbers as a lable (weakest level). not really much you can do with them
■ Ordinal
* Data that can be placed in a rank order (Likert Scales)
*using # in a RANK ORDER POSITION
■ Interval
* While the zero point is arbitrary, equal and meaningful intervals between points on a scale exist and can be determined.
2 main characteriezed–no true zero, #2 differences between the numbers have meaning Mean, median and mode
■ Ratio
* With ratio scales, a true zero point exists; ratio measurements are meaningful and indicate how much of the quantity is being measured.
two characteristics 1: seos is abosolute
the differences among the numbers in a ratio system hasve meaning.
As long there is an true abosuloe zero, you have a ratio system
Allows the use of virtaull
What are some examples of Nominal Measurement?
■ Ethnicity
■ Military Status
■ Survey Cuts
■ Gender
■ Passport
■ SSN #
What are some examples of Ordinal Measurement?
■ Performance Ratings
*Outstanding
*Above standard
*Standard
*Below standard
*Unsatisfactory
Olympic Medals
Gold, silver and bronze
■ Job Levels
*Individual Contributor
* Supervisor
* Manager
What are some characteristics of Interval Measurement
1 ■ No true zero – There are no true zero points on the scales. Zero is relative and not absoluted
Characteristics of Interval Measurement
■Distances/Differences have meaning – Distances between points do have meaning, for example, the difference between 30-40 degrees F is the same as the difference between 70-80 degrees F.
Great example is temperature measurement: Farehneit and Celsius
Two characteritics of interval Measurement Systems:
■ Ratios don’t make any sense – 80 degrees is not twice as hot as 40 degrees.
What are the characteristics of Ratio Measurement?
Characteristics of Ratio Measurement
■ There is always an absolute zero that is meaningful.
■ Because of this, all fractions, or ratios, between measurements are also meaningful.
■ Measurements indicate how much.
Two characteristics:
- Zero means nothing
- Differences between the numbers have real meaning. You can do any type of mathmatical manipulation
What are some examples of Ratio Measurement
■ Money (amount earned)
■ Number of employees
■ Number of Parts produced
■ Number of defects
■ Turnover
■ Health care premious
■ Pension Benefits
Religious affiliations
Nominal
A list of temperatures in European capitals (in Celsius)
Interval
College class standing (freshman, sophomore, junior or senior)
Ordinal
A list of the ages of your senior managers
Ratio
Political party affiliations
Nominal
Heights of a group of employees
Ratio
