Pay

Question 1

Pay Level

Answer 1

Refers to the average of the array of pay rates paid by an employer

Question 2

What is the pay level equation

Answer 2

Sum of base, bonuses, benefits, and value of options DIVIDED by # of employees

Question 3

Pay Mix

Answer 3

Various types of payments, or pay forms, that make up total compensation

Question 4

External Competitiveness

Answer 4

Refers to the pay relationships among organizations, pay relative to its competitors

Question 5

What is external competitiveness shaped by?

Answer 5

Labour market factors
Product market factors
Organizational factors

Question 6

Labour Market Factors

Answer 6

Nature of demand and supply

Question 7

Product Market Factors

Answer 7

Level of product demand and Degree of competition

Question 8

Organization Factors

Answer 8

Industry and Technology, Employer Size, Employees’ Preferences, and Organizations Strategy

Question 9

Factors that Affect Labour Demand

Answer 9

General economic Conditions
Business Strategy
Demand for product or service
Technology
Ability to Pay

Question 10

Factors that Affect Labour Supply

Answer 10

Use of new technology
Timing of entering labour force
Taking time of work for family plans
Timing of retirement
Hours worked each day/week/month/year
Type and Location of work
Area of study

Question 11

Marginal Product of Labour

Answer 11

additional output associated with employment of one additional person, with the other production factors held constant

Question 12

Marginal Revenue

Answer 12

money generated by the sale of the marginal product, with other production factors held constant

Question 13

Modifications to the Demand Side

Answer 13

Compensating Differentials
Efficiency wage
Signaling

Question 14

Compensating Differentials

Answer 14

If a job has negative characteristics, employers must offer higher wages

Question 15

Efficiency Wage

Answer 15

High wages may increase efficiency and lower labour costs

Question 16

Signaling

Answer 16

Employers design pay levels and mix to a signal of kinds of behaviours they seek

Question 17

Modifications to Supply Side

Answer 17

Reservation Wage
Human Capital

Question 18

Reservation Wage

Answer 18

Job seekers have a wage level that if wage is lower, they will not accept the job

Question 19

Human Capital

Answer 19

those who improve potential productivity by investing in themselves receive higher earnings

Question 20

Product Market Conditions

Answer 20

Determine what an organization can afford to pay

Question 21

Product Market Factors

Answer 21

Product Demand
- Sets maximum pay level
Degree of Competition
- Competitive markets; employers are unable to raise prices without loss of revenues
- Single sellers are able to set whatever prices they choose

Question 22

Industry and Technology

Answer 22

Labour-Intensive industries pay less than technology-intensive industries

Question 23

Employer Size

Answer 23

Large organizations pay more than smaller ones

Question 24

Employees’ Preferences

Answer 24

Understanding preferences of pay forms is important in external competitiveness

Question 25

Organization’s Strategy

Answer 25

Variety of pay-level and pay-mix strategies

Question 26

Competitive Pay Policy Alternatives

Answer 26

To lead (Lead)
To meet (Match)
To follow competition (Lag)

Question 27

Lead Pay-Level Policy

Answer 27

Maximizes the ability to attract and retain quality employees, minimize dissatisfaction with pay

Question 28

Lag Pay-Level Policy

Answer 28

Paying below market rates may hinder an organization’s ability to attract potential employees unless coupled with higher future returns

Question 29

Match Pay-Level Policy

Answer 29

Most common policy
Match rates paid by competitors

Question 30

Consequences of Pay-Level and Pay-Mix decisions

Answer 30

Efficiency
Fairness
Compliance